Tuesday, December 23, 2008


I will see you all after the first of the New Year!
Note: I am currently heading towards beautiful Tennessee and will be truly out of pocket until after the holidays.

So Mean, So Funny I Couldn't Resist

Happy Holiday from Sarah Palin

Monday, December 22, 2008

Seven Big and Dangerous Myths About the Auto Industry

A friend just emailed me this article from the Knoxville News' on-line business section. It's a compilation of the seven biggest myths about the Big Three automakers. Here's their opening salvo.
The debate over aid to the Detroit-based automakers is awash with half-truths and misrepresentations that are endlessly repeated by everyone from members of Congress to journalists.
1: Nobody buys their vehicles.

Reality: General Motors Corp., Ford Motor Co. and Chrysler LLC sold 8.5 million vehicles in the United States last year and millions more around the world. GM outsold Toyota by about 1.2 million vehicles in the United States last year and holds a U.S. lead over Toyota of nearly 700,000 so far this year. Globally, GM in 2007 remained the world's largest automaker, selling 9,369,524 vehicles worldwide - about 3,000 more than Toyota.

Ford outsold Honda by about 850,000 and Nissan by more than 1.3 million vehicles in the United States last year. Chrysler sold more vehicles here than Nissan and Hyundai combined in 2007 and so far this year.
The article goes on to debunk other oft-repeated fables, such as the one that U.S. made cars are unreliable junk.
Reality: The creaky, leaky vehicles of the 1980s and '90s are long gone. Consumer Reports recently found that "Ford's reliability is now on par with good Japanese automakers."

The independent J.D. Power Initial Quality Study scored Buick, Cadillac, Chevrolet, Ford, GMC, Mercury, Pontiac and Lincoln brands' overall quality as high as or higher than that of Acura, Audi, BMW, Honda, Nissan, Scion, Volkswagen and Volvo.

J.D. Power rated the Chevrolet Malibu the highest-quality midsize sedan. Both the Malibu and Ford Fusion scored better than the Honda Accord and Toyota Camry.
And this one, which will be an eye opener for my fellow environmentalists.
Myth No. 3: They build gas-guzzlers.

Reality: All of the Detroit Three build midsize sedans that the Environmental Protection Agency rates at 29-33 miles per gallon on the highway.

The most fuel-efficient Chevrolet Malibu gets 33 mpg on the highway, 2 mpg better than the best Honda Accord. The most fuel-efficient Ford Focus has the same highway fuel economy ratings as the most efficient Toyota Corolla. The most fuel-efficient Chevrolet Cobalt has the same city fuel economy and better highway fuel economy than the most efficient nonhybrid Honda Civic.

A recent study by Edmunds.com found that the Chevrolet Aveo subcompact is the least expensive car to buy and operate.
And this one, also important to those of us concerned with climate change, renewable energy, and energy conservation.
Myth No. 5: GM, Ford and Chrysler are idiots for investing in pickups and SUVs.

Reality: The domestics' lineup has been truck-heavy, but Toyota, Nissan, Mercedes-Benz and BMW have spent billions of dollars on pickups and SUVs because trucks are a large and historically profitable part of the auto industry.

The most fuel-efficient full-size pickups from GM, Ford and Chrysler all have higher EPA fuel-economy ratings than Toyota and Nissan's full-size pickups.

Myth No. 6: They don't build hybrids.

Reality: The Detroit Three got into the hybrid business late, but Ford and GM each now offers more hybrid models than Honda or Nissan, with several more due to hit the road in early 2009.
And finally, for the union-busting anti-labor critics on the right, this should finally put to rest their favorite whipping boy.
Their union workers are lazy and overpaid.

Reality: Chrysler tied Toyota as the most productive automaker in North America this year, according to the Harbour Report on manufacturing, which measures the amount of work done per employee. Eight of the 10 most productive vehicle assembly plants in North America belong to Chrysler, Ford or GM.

The oft-cited $70-an-hour wage and benefit figure for UAW workers inaccurately adds benefits that millions of retirees get to the pay of current workers, but divides the total only by current employees. That's like assuming you get your parents' retirement and Social Security benefits in addition to your own income.

Hourly pay for assembly-line workers tops out around $28; benefits add about $14. New hires at the Detroit Three get $14 an hour. There's no pension or health care when they retire, but benefits raise their total hourly compensation to $29 while they're working. UAW wages are now comparable with Toyota workers, according to a Free Press analysis.
I actually find the union's capitulation to the two-tier system that leaves new workers not only earning half the amount of older GM workers, but also bereft of a pension when they retire, appalling. I understand why the union had to agree to this to be competitive. But it means that America, far down the road, is going to have a looming crisis for that generation of blue collar workers when they hit retirement age that will make the concern over the baby boomers pale.

Let's face it, most baby boomers still are in some kind of pension system, many in the old defined benefits type, and a majority in a defined contribution, 401K plan - but regardless of which type of plan we have, we have something in a nest egg. With no pension plan at all, it leaves blue collar workers, who are not at the upper end of the pay scale nor particularly investment savvy, to fend for themselves. Most of those workers are in the 20s right now. But what happens when they hit 65 or 70 and are too old for hard, physical labor, because we're not talking about desk jockeys here?

Just a thought.

Meanwhile, lots of people, even those who are intelligent and well informed, believe the myths just debunked. I had dinner the other night with somebody who is one of my smartest friends - she's an orthodontist who guest lectures at Vanderbilt University in Tennessee - and she was shocked when I told her that auto workers do not make $70 an hour. Before this, she said that, although she is usually a pro-labor Democrat who thinks we need to bring our manufacturing base back inside this country, she had little sympathy for the auto industry and their workers. She also was surprised to learn that labor costs were only 10 percent of the Big Three carmakers expenses.

If this was an eye opener to her, I would guess an awful lot of other people would be just as shocked to learn that much of what they hear on televsion, radio, and local newspapers may just be free trade, anti-union, right wing talking points with little relation to reality.

I guess we still have a lot of work cut out for us, deconstructing the seven big myths that still guide the public's perception. It would be nice if more of the media took the lead in correcting those myths rather than being the ones largely responsible for spreading the misperceptions. Kudos, however, to the Knoxville News for stepping up and doing what a newspaper should do, investigate and spread the truth!

Saturday, December 13, 2008

TARP Money for Auto Industry Bailout - I Hope So!

Since it looks like the Bush administration will push for TARP money to bailout the auto industry after all, we’ll be hearing a lot more from the rightwing bloviaters and their mainstream media colleagues about overpaid auto workers who make $70 or more per hour. Some have even set the figure as high as $78 an hour because, like the childhood game of telephone, where the message gets more garbled the more times its whispered in the ear of the next player, the hourly wage of the average UAW worker keeps getting higher each time another reporter or blogger reports it. The amount grows exponentially with media exposure. The only problem is it's all wrong. Let’s examine how this myth actually got started.

According to Jonathan Cohn, at TNR, here’s where it began. (And for more to back his assessment up, go to Media Matters too)
But then what's the source of that $70 hourly figure? It didn't come out of thin air. Analysts came up with it by including the cost of all employer-provided benefits--namely, health insurance and pensions--and then dividing by the number of workers. The result, they found, was that benefits for Big Three cost about $42 per hour, per employee. Add that to the wages--again, $28 per hour--and you get the $70 figure. Voila.

Except ... notice something weird about this calculation? It's not as if each active worker is getting health benefits and pensions worth $42 per hour. That would come to nearly twice his or her wages. (Talk about gold-plated coverage!) Instead, each active worker is getting benefits equal only to a fraction of that--probably around $10 per hour, according to estimates from the International Motor Vehicle Program. The number only gets to $70 an hour if you include the cost of benefits for retirees--in other words, the cost of benefits for other people. One of the few people to grasp this was Portfolio.com's Felix Salmon. As he noted yesterday, the claim that workers are getting $70 an hour in compensation is just "not true."
Cohn also points out the main reason the Big Three automakers have such high legacy costs for retirees is that, after being in business on U.S. soil for over a hundred years, domestic car makers simply have more retirees than auto companies that have only been here since 1980. In fact, as of 2007, Toyota only had about 1,000 retirees. Of course, their legacy costs are less. Further, if you factor in Detroit’s overseas competition, foreign workers get their health insurance from single payer plans, so car companies outside the U.S. are more competitive. Domestic manufacturing, in general, is hamstrung by our out of control health care system, which is eating away at profits.

Now that you know the truth, let’s put the recent failure of the Senate to pass a bailout package for the domestic auto industry into its real perspective.

A group of very rightwing, Southern senators, from right to work states with non-union auto factories, simply banded together to obstruct the bailout efforts because they smelled an opportunity to bust the union, more for purely ideological reasons than because the unions are truly draining the corporations of profits. Indeed, there are several other factors that can explain the Big Three automakers current financial problems.

Let’s start with bad management decisions. The car makers simply never diversified and produced a mix of small, fuel efficient cars as well as large, gas guzzling SUVs. In fairness, the SUVs were hot sellers earlier in this decade and not many business people were smart enough to predict the spike in gas prices this past summer. Just as nobody was betting that credit would dry up and our whole financial sector would near collapse. So, just at the time that Detroit’s products were no longer as desirable, even those who wanted to buy them couldn’t get credit. That’s not because consumers necessarily had bad credit ratings but because credit was simply so tight that banks weren’t even lending each other money. It was a liquidity problem, one which crippled GMAC, the financial arm of GM.

Let’s also not forget that while a bunch of Southern senators, from states that paid handsomely to attract foreign, non union car makers to their locales, decided to declare war on Northern workers, nobody should even be criticizing the average CEO salaries and bonuses. For example, Richard Wagoner of GM makes $8.5 million per year, with bonuses. The truth, though, is that the whole domestic auto industry is not the worst transgressor when it comes to inflated salaries and greed. Compared to the hundreds of millions of dollars in salaries, bonuses and perks that Wall Street’s high flyers routinely paid themselves, while bringing the economy crashing down, these guys appear modest in their salary demands.

So, why did the senators from Nissan, Tennessee; Toyota, Kentucky; and Mercedes Benz, Alabama vote to kill the Detroit bailout in the first place?

It could be to enhance the competitiveness of those foreign car manufacturers who were paid so well with tax breaks and other incentives by those respective Southern states to locate there.

But, as Jonathan Cohn and Media Matters point out, all of those foreign companies pay roughly the same wages to their non-union employees ($25 per hour as opposed to $28 for a senior union worker, and with comparable benefits). The danger, however, is that if Detroit and the UAW fold, that could be the signal for those foreign companies to begin slashing wages and benefits. With no threat of union organizing in their own U.S. plants, there would be no reason for foreign manufacturers to honor their wage agreements with non-union employees. Just as the airlines used bankruptcy to slash wages and destroy benefits in that industry, this could lead to the devastation of the entire domestic manufacturing sector.

If the government allows the auto industry to go bankrupt and those good paying manufacturing jobs to vanish, the domino effect on the American economy could be devastating. Perhaps the only wise thing the Bush administration has done in its eight years in power is realize that it doesn’t want the total collapse of the American economy and the end of the middle class as we know it to occur on its watch. It could be the legacy thing for Bush, but for whatever reason, it’s a welcome relief and I hope it happens sooner rather than when it’s too late.

Tuesday, December 09, 2008

Virginia GOP Lt. Governor's Race Heats Up

After their recent striking electoral loses in the commonwealth, Virginia Republicans were consoling themselves with the comforting notion that history is now on their side, leaving them poised for a come back. That’s because, as they’ve argued in several places, in the midterm elections, the party out of power usually picks up more seats in Congress. And in Virginia whichever party occupies the White House loses the Governor’s Mansion.

Additional comfort came from the fact that the GOP had gotten their ducks in order early and would be spared a costly and divisive nomination battle in the 2009 Virginia races, at least at the top of the ticket. Because of a gentleman’s agreement, which was worked out early, the current AG, Bob McDonnell would be the gubernatorial candidate and the present Lt. Governor, Bill Bolling, would run for re-election. There would, of course, be a contest for the open AG’s seat. That couldn’t be helped, and it’s shaping up to be a three-man race. But with unity in the top two spots, the expense and fallout of a divisive party battle could be limited.

Alas, the plans of mice and men, as they say, don’t always work out. Although McDonnell is still unopposed, it seems that Bill Bolling has picked up an opponent for the Lt Governor seat. His name is Patrick Muldoon. I don’t know much about him, but since I received an emailed press release from his campaign, I’ll reprint it in full here.
ALEXANDRIA, VA – Patrick C. Muldoon, an attorney and farmer from Virginia's "fighting 9th" Congressional District, today officially announced his candidacy for Lieutenant Governor of Virginia.

Muldoon, no stranger to challenging political contests, joins Republican incumbent Bill Bolling in seeking his party's nod for the Commonwealth's second statewide office. The 43 year old specialist in intellectual property law has a message for the Republican Party.

Muldoon referenced former Republican presidential candidate Barry Goldwater as he opened his campaign, saying: "I offer a choice not an echo"

"I am running for the Republican nomination for Lieutenant Governor of Virginia because I believe the brightest days for our Commonwealth are ahead. These are difficult times – a massive budget deficit has replaced the surplus we once enjoyed. College costs are rising and family incomes are shrinking. Local governments are raising taxes on cash-strapped families to compensate for their own budget shortfalls. And hard-working Virginians are left wondering whether the changes coming in 2009 will be better or worse for them personally."

"Republicans face a choice between business as usual and being consigned to minority status for the foreseeable future or returning to our core principles and fighting for the honest, open, limited government our fellow citizens expect."

"I grew up in rural Virginia but I work right outside our nation's Capitol. I've found that the political elites have a tendency to complicate things. I learned a few simple truths growing up: 'when you're in a hole; stop digging' At the grassroots level, Virginia Republicans know that it is time to stop digging and start changing the way we do business in Richmond."

"I understand the rough and tumble of politics. I know a convention challenge is a bit like stirring a bees' nest. But we simply cannot continue the path we are on."
"No one is entitled to a nomination. And, as the highest-ranking elected Republican in our Commonwealth, the incumbent has an unfortunate record of passivity at a time when we need forward-thinking leadership."

"For the future of the party and the good of the Commonwealth we need to regain the focus, passion and unity of purpose fostered through healthy debate. I believe in the core Republican principles of limited constitutional government, the sanctity of life, the 2nd Amendment, free enterprise and protecting our Constitutional liberties for the next generation. I am committed to advancing those principles to the best of my abilities."

"Sadly, a handful of political operatives in Richmond wish to forestall any internal discussion about the direction of the party. From the top down, they want to slate candidates based on traded favors, brokered promises, and their own career plans. This government of the insiders, by the insiders, for the insiders costs our party what it cannot afford – the trust of the voters across our beloved Commonwealth."
"The Republican creed recognizes the intrinsic benefits of competition. In education and healthcare and business, competition is the consumer's friend. Can any less be the case in American government? Now is the time for a debate across Virginia with my opponent on what it means to be a Republican and conservative. Over the next several months I look forward to this debate of the principles that are the backbone of the Republican Party."

"My life has been about bringing different aspects of what makes Virginia work together. I worked my way through college, grad school and law school as a construction worker and maintenance man. I grew up raising beef in rural Virginia. Now I help turn great ideas into reality through patent law. I'm a Republican but a Conservative first.

As Senator Barry Goldwater so memorably said in his 1964 presidential campaign, I am offering "a choice, not an echo." To my fellow Virginians, I pledge to work with all people of good faith to guide our Commonwealth through the difficult changes ahead to a prosperous future. And, I will never put personal gain ahead of the principles that unite us."

"Over the next six months, I will be traveling around the Commonwealth. I look forward to in depth discussions with local Republican volunteers who are already leading our party into a victorious 2009. I ask for your support and your renewed commitment to work for the future of shared ideals."
What's interesting about this official release is that Muldoon is harkening back to the conservative legacy of Barry Goldwater. Although the late senator from Arizona was the father of the modern conservative movement, he is not the person usually invoked by modern conservatives. They usually look to Ronald Reagan, a truly iconic figure for them, for their inspiration.

Although Goldwater excited the conservatives in the Republican Party with his 1964 presidential run, he lost badly to LBJ and was a divisive figure within the party, alienating many moderates. Back in the 60s, pundits thought he set the GOP cause back and it did it more harm than good. It wasn’t until 1980 that another conservative, one with a sunny optimism, was able to accomplish what Goldwater could not. Ronald Reagan had the magical ability to unite the disparate factions in the GOP into a winning coalition that rode into office on the coattails of his personal popularity. In that one respect, he is to the GOP what FDR was to the Democrats. To this day, he’s the one whose legacy is invoked by the most ardent conservatives.

Goldwater, on the other hand, has fallen into a bit of disfavor because his once fierce conservatism seemed almost moderate by the end of his life as his party actually drifted to his right on social issues. In fact, Goldwater was known to favor small government across the board and was pro choice.

So, I wondered if perhaps Muldoon was trying to send his party a libertarian message by harkening back to Goldwater rather than Reagan. Not so.

According to his website, he’s pro-family (code for against gay marriage) and pro life. That’s pretty much the antithesis of what Goldwater came to stand for. So, I’m left scratching my head as to why invoke him rather than Reagan, who at least was as much a hero to the social conservatives as to the libertarians in the party.

Anyway, Muldoon’s candidacy has not been met with much warmth in the party. According to The Contemporary Conservative, Bolling has lost no time mounting a counter-offensive and enlisting a long roster of prominent Republicans who support his candidacy, including McDonnell.
For bloggers and pundits, it will be an interesting race. For Republicans, it’s probably a nomination fight they would have preferred to avoid.

Thursday, December 04, 2008

Welcoming Some New Kids On the Block

Blogs come and go. Sometimes the ones you've come to rely on take their leave and that's a sad fact. So, we've all been saying good bye to Raising Kaine and wishing Lowell and Eric the very best in all their new endeavors. Like many others, I know I'll miss them and RK.

At the same time, there are some new blogs to welcome to the Virginia blogosphere. I've added two of them to my blogroll. The first is Josh Chernila's effort to create a new virtual town square for progressives across the commonwealth. It's aptly named Blue Commonwealth. Josh was central to Raising Kaine and to the Internet movement in 2006 to draft Jim Webb. While nothing can replace the unique energy and spirit of RK, Blue Commonwealth is off to a great start in the ongoing effort to continue a statewide progressive presence on the Internet and in the blogosphere, which will make a difference in future campaigns.

Another new blog I am happy to welcome to my blogroll is an effort by Kenton Ngo, Johnny Camacho, and Aimee Fausser. It's called The New Dominion Project. Kenton and Johnny were, respectively, the youngest bloggers in the Virginia blogosphere at one time. Both of them presented insightful writing and analysis. They will be joined by Aimee whose equally intelligent writing will only add to their effort.

I remember working for a university in Florida in the 1980s when the Young Republicans were the most active and popular political club on campus. It was depressing because I could look down the years and realize that without Young Democrats and young people carrying on the progressive cause, our future would not be promising.

What a difference twenty something years makes. Today, I think the liberals and progressives and the Democrats have the momentum among young people in colleges and high schools around the country. In no small part, it's because of efforts by young people like Johnny, Kenton, and Aimee.

Good luck to all of you. And to my readers, all of these blogs look good - go check them out.