House Approves "Cash For Clunkers" Money Waster

This is a follow-up of a story that I reported on earlier. Thanks to the House, your tax dollars are one step closer to going down the drain with no chance of a return on or investment:

The House on Tuesday approved a "cash for clunkers" bill that aims to boost new auto sales by allowing consumers to turn in their gas-guzzling cars and trucks for vouchers worth up to $4,500 toward more fuel-efficient vehicles.

President Barack Obama has encouraged Congress to approve consumer incentives for new car purchases as part of the government's work to restructure General Motors and Chrysler. The House approved the bill 298-119.

How much is this abomination of a bill going to cost us?

Separately, House and Senate appropriators were discussing providing $1 billion to a supplemental war funding bill for the "cash for clunkers" program, which aims to generate about 1 million new auto sales. Since the yearlong vehicle program is expected to cost $4 billion, lawmakers would attempt to find the additional money later this year.

Where are they going to find this "additional money"? We're already in a deep enough deficit hole as it is. There aren't any money trees or pots of gold at the end of any rainbows in DC last time I checked.

They are just trying to boost sales of Government Motors. They've made the mistake of taking it over, and now, they have to cover their tracks and make it profitable at all costs.

Will General Motors, Chrysler Follow Amtrak's Lead of Government Corporate Takeovers?

As General Motors goes into bankruptcy and the government becomes 60% owner, parallels are being brought up between Amtrak and GM:

Some analysts say the federal government's effort to prop up the nation's largest auto manufacturer is eerily similar to a 40-year effort to revive the nation's ailing railroad system. Billions of taxpayer dollars later, Amtrak still needs the government to survive -- and critics say General Motors appears to be headed down the same track.

"I see no hope whatsoever for the situation," said Wendell Cox, a policy consultant who sat on the government-appointed Amtrak Reform Council a decade ago and draws parallels to the GM intervention today.

Amtrak could be a winner in America today, if the government wasn't doing its usual bang-up job of running things.

Why are we allowing Obama and the government to be the new de facto CEO of GM? Obama hasn't ever been an executive of any businesses, and the government has a horrible track record with such takeovers?

It's Official: Obama's Bailout Success Record Goes To 0-3

This was a long time coming:

General Motors will file for bankruptcy on Monday in federal court in New York City, FOX Business Network has confirmed.

Looks like billions of taxpayer money that both Bush and Obama threw at GM and Chrysler to keep them out of bankruptcy was just an exercise in futility.

Almost $30 B More Given to GM As White House Prepares Them for Bankruptcy

GM moves one step closer to bankruptcy:

The Obama administration is preparing to move General Motors into bankruptcy as early as next week under the terms of a plan that would give GM tens of billions of dollars more in government financing, the Washington Post reported.

Under the GM draft bankruptcy plan, the automaker would receive just under $30 billion in additional federal loans, a source told the Post, which would up the government's overall investment in the company to nearly $45 billion.

GM is one more step toward officially becoming a baliout failure for Obama. The writing has been on the wall for months here, here, and here. Why is Obama determined to throw good money after to fail?

Auto Bailouts Success Rate Looks to Fall 0-for-2

Here's more news from on wasted government money:

For General Motors Corp., the task at hand is so difficult that experts say a Chapter 11 bankruptcy filing is all but inevitable.

To remake itself outside of court, GM must persuade bondholders to swap $27 billion in debt for 10 per cent of its risky stock. On top of that, the automaker must work out deals with its union, announce factory clo­sures, cut brands and force hundreds of dealers out of business — all in three weeks.

“I just don’t see how it’s possible, given all of the pieces,” said Stephen J. Lub­ben, a professor at Seton Hall Uni­versity School of Law who specializes in bankruptcy.

This further confirmation that all the bailouts done by Bush and Obama only delayed the inevitable outcome of bankruptcy.

Chrysler already declared Ch. 11. Now, GM is about to follow it. That's billions more down the drain.

$2B More Goes Down GM Rathole As CEO Says Bankruptcy "More Probable"

More of our money goes down the drain:

The Treasury Department says it has provided General Motors Corp. with another $2 billion in federal loans as the giant automaker struggles to restructure.

The Treasury said that the payment was made to GM on Wednesday and provides working capital to the company.

This comes after many stories have come out that has the new GM CEO saying that bankruptcy is "more probable". We are just delaying the inevitable. In fact, the GM CEO said that it is even "more probable than it was in the past."

Why are we throwing more of our taxpayer money into a company that their own CEO doesn't believe will recover without bankruptcy? It doesn't make any sense at all. What happened to cutting out things that doesn't work? Obama is dropping the ball big time on this.

Your Taxes Hard at Work: Top 10 Bailoutees Spend $9.5 Lobbying DC in 1Q of 09

The pigs that fed out of the government's trough, apparently, spent some the money they received out of our hard-earned tax money to panhandle in the halls of Congress to get more of the taxpayers' money.

The top 10 recipients of the government's $700 billion financial bailout spent about $9.5 million on federal lobbying during the first three months of the year.

Of those who ate at the government's bailout buffet on our dime, the nearly bankrupt GM was the number one offender. They spent $2.8 million on begging for more scraps.

To get a full list of the deadbeat CEOs here.

New GM CEO States Obvious: Bankruptcy "More Probable"

GM's new CEO says bankruptcy is 'more probable'
By KIMBERLY S. JOHNSON and TOM KRISHERAP
March 31, 2009

General Motors Corp.'s new chief executive said Tuesday that more of the automaker's plants could close and bankruptcy is "more probable" as GM works to meet new, tougher requirements for government aid. In his first news conference as CEO, Fritz Henderson said he expects the company would "need to take further measures" beyond the five plants the company said it would shutter when it submitted a restructuring plan to the government last month.

GM also is likely to offer another buyout program to workers as it looks to cut labor costs, Henderson said.

President Barack Obama said Monday that GM's initial plans to become viable didn't go far enough. He gave the company 60 days to make more cuts and get more concessions from bondholders and unions or it won't get any more government help.

The Obama administration also asked former CEO Rick Wagoner to resign, and Henderson took over as CEO on Monday.

Henderson said that although GM would prefer not to use bankruptcy protection to save itself, it is "certainly more probable" than in the past.

The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can't be made by the deadline, GM could go into court sooner, he said.

"It doesn't have to take 60 days. If it's quite clear that we're not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment" reviewed by the Obama administration's autos task force, he said.

Henderson also said GM is still talking with potential buyers of the Hummer brand, and a decision on the brand's fate will come in the next few weeks. GM said in a viability plan filed with the government in February that it would make the decision in the first quarter, which ends Tuesday.

In an effort to increase sales, GM launched a program called "Total Confidence" that will make car payments for customers who lose their jobs through no fault of their own.

GM will make up to nine payments of $500 each to qualifying customers. Consumers must qualify for state unemployment benefits to be eligible for the program.

The program starts Wednesday and runs until April 30.

Ford Motor Co. announced a similar program Tuesday, which will take over customer's payment of up to $700 a month for a year in the event of job loss.

Shares of GM fell 32 cents, or 11.9 percent, to $2.38 in midday trading. Ford shares fell 6 cents, or 2.2 percent, to $2.70.

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My Thoughts

If it is "more probable" that they are going to declare bankruptcy anyway, why did we pay them billions of dollars to keep them alive? That is money that the taxpayer will never get back. Bush should've let them fail like many conservatives thought he should've last year.

Also, about the "Total Confidence" program, it is a moronic idea. It invites people who cannot afford cars anyway to try and get one. The bad thing is that many will more than likely default, and the auto companies and beacuse we are financing them right now the taxpayers will have to foot the bill.

Obama Promotes Backing Big 3 Car Warranties

Government to Back Car Warranties to Boost Sales
Monday, March 30, 2009

In an effort to boost sales and calm consumer fears, the Obama Administration unveiled a new warranty program Monday morning backing the warranties on new vehicles purchased from domestic auto manufacturers.

"Your warranty will be safe. In fact, it will be safer than it's ever been. Because starting today, the United States government will stand behind your warranty," President Obama said in a press conference Monday.

Both General Motors (GM) and Chrysler have agreed to participate in the plan. Despite being eligible, Ford (F), which has not accepted any government assistance, has not opted into the program.

The guarantees will be available on warranties issued by the participating American auto makers during the companies' restructuring period.

Under the new Warrantee Commitment Program, the Treasury will work together with auto makers to cover 125% of the estimated warranty costs. Auto makers will provide 15% of the estimated costs, while the Treasury supplies 110%.

Consumers who purchase a GM or Chrysler vehicle during the restructuring period are eligible for the warrantee. The White House has not provided an estimated cost of the program.

Auto sales have been falling off a cliff recently as consumers curb their spending. In February, auto sales plummeted more than 41%. GM led the Big Three with a 53% drop in sales from the same time a year before. Ford posting a 48% drop, while Chrysler weighed in with 44% decrease.

Many fear that if GM or Chrysler were to file for bankruptcy, sales would drop even because consumers are leery to buy from a bankrupted company.

“However, no matter what the outcome, consumers should have confidence that if they buy new cars from either company their warranties will be honored,” the task force said in a statement.

Despite the backstop from Uncle Sam, questions regarding Detroit’s survival still linger.

Also on Monday, the White House rejected the plans GM and Chrysler submitted in February, saying they did not establish a credible path to viability.

GM was seeking more than $16 billion in fresh capital, while Chrysler was asking for $5 billion. GM has three months to rework its plans and Chrysler gets funding for 30 days as it works to complete a partnership with Italy's Fiat.

The task force, which was created by the Obama Administration instead of one “car czar,” also asked GM CEO Rick Wagoner to step down. Fritz Henderson, the company's chief operating officer, will fill the CEO spot.

“On Friday I was in Washington for a meeting with administration officials. In the course of that meeting, they requested that I “step aside” as CEO of GM, and so I have,” Wagoner said in a statement.

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My Thoughts

I think that the warranty plan could be good. It could do for the car industry what the FDIC has done for the bank industry. However, it should only be a last resort backup like the FDIC.

Although, it strikes me as odd that the people that will hold the record for the biggest deficit spending in one year ever is the one telling this two companies that their recovery plan isn't good enough. After all, Obama never ran any sort of business at all. He has no track record for business success. Where does he get off telling them that it isn't good enough? They should be making the same demands for the UAW if their going to go after GM and Chrysler.