Bailing Out the Auto Makers

The latest buzz in the news is that added to the bailout of the financial industry, the auto makers now want a piece of the pie.  In fact, they want a rather large piece, asking for $25 billion in loans from the federal government.  In the grand scheme of things, this amount only equals about 3.5% of the total $700 billion bailout that Congress has already approved, but for those of us who live in reality, $25 billion is a lot of money.

The main question that needs to be answered is, do the auto manufacturers deserve our help? Should we add them to the growing list of industries that need money to keep from shutting their doors?  Political talk show host Stephanie Miller feels they do, and she states it openly on her program every morning.  Her reasoning is that the health benefits of the workers are in jeopardy. She and her team expound daily on the need for the government to help out these people.

I have to disagree with her on this.  I think bailing out this industry is not in the best interest of America because this industry should be in the financial position to help itself, and if it's not, then we shouldn't be rewarding an industry that bankrupts itself out of its own greed, arrogance and ignorance.

Allow me to explain my position by looking at the city of Detroit, Michigan.  Detroit has traditionally been the home of the auto industry, so it seems to me to be a good place to start.  For this discussion, I am looking at the three automobile manufacturers who recently sent their CEOs to Washington to ask Congress for money; GM, Ford and Chrysler.  The CEOs are Rick Wagoner (GM), Alan Mulally (Ford) and Robert Nardelli (Chrysler).

According to City-Date.com, the median household income in Detroit in 2007 was $28,097, below the state level of $47,950.  As a comparison, the median household income in Los Angeles for the same period was $47,781 and for California it was $59,948.  Detroit, then has a rather low household income when comparing it to the rest of Michigan, or to my area.

Using these numbers, the median worker in Detroit is earning $13.50 per hour, assuming they work full-time (2,080 hours per year) and are not earning overtime wages.  Higher than the minimum wage, certainly.  Using an assumption from the housing industry, that houses should cost four times the annual median income, would mean that the median price of a home in Detroit should be no more than $112,388.  The median home price for 2007 was $88,800, which means that a salary of $28,097 is a livable wage.  (As a comparison, the median home price in Los Angeles for 2007 was over $660,000).  $13.50 an hour may not sound like a lot of money (and it's truly not), but it would allow the average person to purchase a home and enjoy the benefits of a being a homeowner in Detroit.

http://www.city-data.com/city/Detroit-Michigan.html#top

According the Los Angeles Times, the average autoworker for the three automakers named above earns $73 per hour.  Assuming this person works full-time for a year without overtime, they would earn $151,840 per year.  The UAW (United Auto Workers) has negotiated a two-tier payment system where persons employed in the industry who do not actually work on automobiles earn considerably less; $27 per hour, or $56,160 annually.  Note that in either case these workers earn well above the median average for Detroit.

What do the workers do with this money?  Apparently, they spend it.  Pundits like Stephanie Miller are calling for the government to bail out these people because their health benefits are in jeopardy, but my question is, why can't they afford to bail themselves out?  With a salary of over $150,000 they should certainly be able to put money away for emergencies such as this.  Added to this, while they were earning these wages, what were they doing to prepare for their futures?  The majority of jobs in the auto industry don't require a college education, but many industries do.  At a salary of $150,000 annually, why weren't they attending college in the evenings to earn a degree?

Now we (the American taxpayers) are being asked to bailout an industry that has paid higher than average wages to people who have not done anything to earn them.  I don't see the logic in this.  I do agree that CEO compensation is insane, and that legislation to curb such earnings would be beneficial to our country.  I think that CEO and other executives should cap their salaries at five times the wages of the lowest paid person within their company.  I also believe that this cap should extend to any perks that come with the job, not only on the salary itself.  This would mean that if the lowest paid person earns $27 per hour, the highest-paid executive would make roughly $280,800 per year.  That's a far cry from the millions they currently make, but I'm sure most people would agree that one can live quite comfortably on a quarter of a million dollars annually.

It should be noted that the salaries paid in Detroit are not necessarily indicative of the remainder of the industry.  Toyota pays an average of $48 per hour, which equates to $99,840, still more than enough money to live on.  Toyota is not asking the government to bail them out, so before Stephanie Miller and her ilk jump on a bandwagon, perhaps she should investigate the cause of this dilemma.  Greedy unions, over-paid executives and a lack of personal betterment are not reasons for the rest of us to incur further debt.

The Bailout

As I see it, the bailout of the financial industry is caused by the deregulation of said industry, and practices involving bad loans to homeowners.  If this is true, then we need to explore the cause more deeply before we can solve the problem.

From the looks of it, it appears that the initial mistake was made by the banks (and other lenders) in writing mortgages for people who truly could not afford to buy a home.  Take an example; John makes $35,000 a year.  His wife stays home to care for their two children.  A family of four making $35,000 a year is not a wealthy family.  After taxes John makes about $28,000 annually, which is $2,333 monthly.  Following the formula that his housing should cost no more than 25% of his income, he needs a mortgage at $583 per month.

Here in Los Angeles, where homes go for huge amounts of money, it's not possible to find such a mortgage.  Let's say he finds a house for $300,000 and gets a 4.5% loan with nothing down, his payments will still be $1,500 a month for 30 years.  If he extends the loan to 60 years he would only lower his monthly payment by $300.

So, the big huge bank loans John the $300,000 he needs to buy the house at 4.5% interest.  His wife takes a part-time job to help pay the mortgage, and for the next two years they struggle to make the $1,500 payment each month, but they manage to get by.  Then the "teaser" rate adjusts and their 4.5% interest rate jumps to 7.5%.  which means over $2,000 a month for their mortgage payment.  This is impossible for John and his wife to handle, and they try to raise the money, but simply can't.

Now, at the same time the house has increased in value from $300,000 to $450,000.  This gives them $150,000 in equity in the home.  If they were to sell the house they could use that equity to either put a down payment on a smaller house, or simply bank the money and have the start of a nest egg for their future.  Unfortunately, like many of these borrowers, John and his wife don't understand the market and didn't realize that selling the house was an option.  Worse, they waited until the foreclosures had started, and now the market is saturated with houses, so no one is buying.

Enter the bank (again).  This time with a notice of foreclosure.  John and his family vacate the property and move into an apartment.  The bank takes over the property, which has now fallen in value (because of the large number of foreclosures in the area) and is currently worth about $200,000.  John bought the house for $300,000 (the original loan) and paid on the loan for two years.  He paid $1,500 a month for a total of $36,000.  If the bank sells the house for $200,000 the bank will lose $64,000 on the deal.

What the bank calculated was a) interest rates rising (which they did) and b) the economy remaining so strong that John would receive raises that would allow him to meet the higher interest payments, which did not happen.  The bank was counting on getting it's $36,000 in the first two years, and then getting higher rates for the remainder of the loan.  Let's assume that it remained at 7.5% for the next 28 years, and the payments were $2,000 per month.  That would be $672,000 plus the $36,000 paid in the first two years for a total of $708,000 on a $300,000 loan.

There is a third possibility.  When the market turned bad, the banks could easily have converted the 4.5% adjustable rate mortgage into a 4.5% fixed rate mortgage.  This would mean that the payment would remain $1,500 for the entire loan (30 years), and the bank would be paid a total of $540,000.  This would show a profit of $240,000 or $8,000 annually.  Granted, not much of a profit, but still better than a loss of $64,000.  The banks chose not do this, however, because they wanted their entire projected profit.  

This crisis was brought about by greed.  As such, it should not be up to the taxpayers to bail out the banks.  Let them work out their own mess.  Sell the houses they currently hold below market value to get their cash flowing.  This would also allow more people to buy homes, stimulating the economy.  If our congress wants to do something constructive, work on keeping jobs in America.  Pass legislation to disallow tax breaks to companies that send jobs oversees.  Deny tax breaks to companies that have automated voice answering systems instead of human beings answering their phones.  Cut tax incentives to companies that outsource their customer service departments to India or the Philippines.

Our Congress needs to work on legislation that would benefit all Americans, and let the banks take care of their own messes.

A Salute to Heroes

It was seven years ago today when tragedy struck America in the form of airplanes being flown into New York city and Washington, D.C.  On that day, the United States was under attack from an enemy few of us saw as much of a threat, but when the dust had settled we had losses of several thousand people.

While September 11 will live on as a day of tragedy, it was also a day of hope.  What was caused by the worst in people also brought out the best in them.  Many of those who lost their lives that day did so while helping others.  While there were many victims on that horrible day, there were also a great many heroes.

In the days and weeks following the incident, we stopped losing victims, but the heroes kept showing themselves.  Certainly running into a burning building to save others is heroic, but heroes come in all shapes and sizes, and show themselves in a great many ways.  Reaching out to those who lost loved ones is heroic.  Holding concerts to raise money for the survivors is heroic, and even making contributions to help out is heroic.

Our nation came together in a way few of us can recall seeing this country do, and the heroes rose to the surface.  Men, women and children across this land joined their fellow Americans to help out in any way they could, and their heroism should be remembered as well.

I would like to suggest that henceforth September 11 be known as National Heroes Day.  This day will commemorate those heroes of September 11, but also all American heroes, in every generation.  Heroes deserve to be honored, and we should set time aside to say thank you to those people who are heroes every day.

Heroes can be glorious, as the firefighter rushing out of a burning building holding a small child, but they can also be the school teacher who takes the time to work with a student and make the difference between that child going on to college, or dropping out of school.  The nurse at the hospital who takes the time to comfort the patient who is in pain and creating an unpleasant atmosphere for the other patients is a hero.  The local minister who comforts his parishioners when they lose a loved one is just as heroic.  Heroes are born out of love and compassion, and they are truly heroic when that love is expressed to someone they have never met.

There are heroes among us.  We should honor them, for in that honor, we encourage others to let the hero within shine forth.

Is Palin the Best Choice for Vice President?

According to Karl Rove, the person who runs for vice president of this country must not be a person whose only experience is as mayor of a small city and less than one term in office as a governor.  Oddly enough, he was not speaking about Sarah Palin.  He made these statements on "Face the Nation" on Sunday, August 10, 2008 while explaining why Tim Kaine (Governor of Virginia) would not be experienced enough to be the Vice President should Obama have selected him.

So, how does he explain John McCain's choice of Sarah Palin, who was the mayor of Wasilla, Alaska before becoming governor of the state, without sounding like a hypocrite?

I think I just answered my own question.

Is Palin the best choice?  Look at her record.  She was mayor of a town of 5,000 that has now grown to nearly 10,000 people.  Growth is indicative of progress, and progress is good.  Right?  More people means more homes, more businesses, more jobs and a better economy.  

It also means fewer trees, an impact on the environment, loss of shelter for wildlife, more pollution and increased crime.  Growth doesn't always mean progress.

During her term as mayor, she approached a local librarian about the idea of banning certain books.  The story is murky, but what appears to be clear is that the librarian refused and was fired, but a backlash in the community forced Palin to re-hire the woman.  The librarian later resigned on her own, and moved out of the town.  While the story ended without the books being banned, isn't attempted censorship still a threat?  If not, does the term "Freedom of Speech" ring a bell?

Also as mayor, Palin issued an order that no one employed by the city was allowed to speak with the press without first clearing it with her.  This not only violates their rights to freedom of speech, but another founding tenet of our nation, the idea of freedom of the press.  Perhaps Palin didn't study history when she was growing up in the frontier.

She was also apparently a member of a group that supported the idea of succession of Alaska from the Union, so when she speaks about this great country, she's not being very sincere.

When Palin left the job of mayor, she left behind $20 million in long-term debt that the residents of the small city will be paying for many years.  How progressive is that?  In all fairness, they did get a nice ice rink, and since she proudly admits to being a "hockey mom" that must have been very important.  To her, at least.

As governor of Alaska she supports drilling in the Arctic National Wildlife Refuge, but then she states that she's against Big Oil.  Those two positions don't work together, but I don't think she's figured that out yet.  Drilling will also jeopardize the wildlife in that area, but she's against polar bears being on the endangered species list, so that's not an issue.  For her.

Perhaps the most disturbing allegation against her is her abuse of power.  She is currently under investigation for firing Safety Director Walter Monegan after he refused to dismiss Trooper Mike Wooten.  Wooten is divorced from Palin's sister, Molly.  The results of the investigation are due by October 31, 2008.  For a candidate who is supposed to be a "maverick" and someone who will change Washington, she certainly sounds an awful lot like the guy who has the job right now.

Palin is anti-choice and anti-abortion.  She is a proponent of abstinence, yet her 17-year-old daughter is now pregnant.  This clearly demonstrates to me that a) abstinence does not work, and b) a woman who chooses to have a child needs to be a mother to that child.  Perhaps if Sarah had guided her child (meaning spent more time with her daughter and less time trying to fire her daughter's uncle), her daughter wouldn't be in this condition.

Palin also brags about her blessing from God in the form of a child with Down Syndrome, yet at five-months-old the child is left in the care of a nanny because once again, motherhood is secondary to a political career.  I'm not saying that a woman can't be both a mother and a politician.  Hillary Clinton has done both, and done both very well.  Hillary spent time with her daughter when the child needed her mother.  Sarah seems more driven with her own ambitions than with the needs of her children.  

Is that the sort of person we want as second in command of our country?

Abortion in the 21st Century

With the Democratic National Convention currently being held in Denver, the topic of abortion is once again being thrust into the spotlight, albeit in a much less brightness thanks to Bush's efforts in Iraq.  Be that as it may, this topic should have been put to rest a long time ago, and by people on both sides of the issue.  It certainly should not be a tool used by the Republicans to garner votes, and yet that is exactly what it has become.

Republicans have successfully convinced Democrats that if they vote for anyone in their party they are voting for abortion.  These politicians have used religious innuendo to sway voters away from their own party, and have shown a great amount of success in this endeavor.  One must applaud their efforts.

Republicans are not interested in changing our abortion laws, and their actions have proven this.  They need this issue to stay alive to be able to use it as a wedge issue come election time, and anyone who wishes to outlaw abortion in this country needs to realize this.  Consider the facts: since the passage of Roe vs. Wade in 1973 there have been six presidents of the United States.  In that time, four of them (Ford, Reagan and both Bushes) have been Republican.  Only two (Carter and Clinton) have been Democrats, yet the laws have not been changed.

Further, when Clinton took office in 1993, the Democrats controlled both the House and the Senate, but two years later, the Republicans won both houses.  For the remainder of Clinton's terms in office, the Republicans were in control of the congress.  The laws remained unchanged.

Finally, in 2001, George W. Bush, a Republican, took office.  For the next two years the Republicans were fully in control, holding the White House, the Senate and the Congress, and yet the laws remained unchanged.  This would have been the opportune time to enact legislation to outlaw abortion HAD THEY TRULY MEANT TO DO SO.  No such legislation was ever passed.

The Republicans need this issue to win elections.  As long as good-hearted Democrats believe that Republicans want to outlaw abortion (which they don't), those Democrats will vote the Republicans in and the Democrats out.  So, what's to be done?

First, we need to look at abortion logically rather than emotionally.  In the days before the passage of Roe vs. Wade abortions were being performed in this country, but not legally.  The following statistics come largely from the Centers for Disease Control, as this group has been recording such information since 1969.  

In 1972, the year before the legalization of abortion by the U.S. Supreme Court, there were 586,760 abortions performed in this country.  It is necessary to interject here that this number is lower than the actual number of abortions, as the practice was illegal at the time.  This number reflects the women who were known to have had an abortion, either because of an examination by their doctor, or by being brought to an emergency room because of the results of that abortion.

Using this number as our base, and looking at the total number of births in this country in 1972 (3,258,411) we have 18% of pregnancies that were ended in abortion.  In 2003, 30 years later, when abortion had been legal for three decades, the total number of births has risen to 4,089,950 and the total number of abortions has increased to 854,122.  Again, it's important to note that the number from 1972 is lower than the actual number of abortions, so the increase is not as significant as that.  Taking the total number of abortions in 2003 as a percentage of the number of pregnancies brings us to 21%.  From 18% to 21% is not a huge increase, so anyone who thinks that legalizing abortion has caused more abortions is not accurate.

So what does cause abortion?  Women who do not want to be pregnant.  According to the CDC, 91.8% of women who have had abortions did not want to be pregnant in the first place.  Only 8.2% of pregnancies are aborted because the woman's health is at risk, or the baby's health is at risk, or for some other reason.

What this tells me is that the pro-life groups need to shift their focus if they truly wish to lower the abortion rate in this country.  If the goal is to achieve zero abortions, the goal is not reasonable.  Abortions are not new and will not end with legislation against them.  The goal needs to be something reasonable, and that can be achieved.  Taking the figures for 2003, if only those abortions were conducted where someone's health was in danger, then rather than 854,122 abortions there would have been 70,038.  This lowers the percentage of abortions per pregnancies from 20% to less than two percent.  

This is a goal that can be achieved, and all it takes is for the pro-life groups to work with groups like Planned Parenthood to educate women on birth control.  Women who do not get pregnant do not have abortions 100% of the time.  This simple act would reduce the number of abortions in this country by a larger number than any legislation possibly can.  This action would also allow good-hearted Democrats to vote their conscience, and keep our government in the hands of the party that runs it best.

Joe Biden -

So, Obama has made his choice and his choice is Joe Biden.  Is this a good move, or has he single-handedly taken one of the most successful presidential campaigns in American history and nullified it?  Time will tell.

I have to wonder if Biden is the right choice, given Obama's stance.  The main platform of the Obama campaign was that our country needed change, and to that effect he (and his administration) would be the ones to initiate that change.  To exemplify that change, he has selected a man who spent the last 36 years working as a Senator.  How much change is that?  Wouldn't it make more sense to take someone relatively new to Congress (as Obama himself is), and thus show that change is really in the air?

It should be noted that both Hillary Clinton and Evan Bayh were considered to be on the list as potential running mates, and that both of these Senators have less than a decade in the senate, thus the selection of either would indicate that the candidate of change was true to his word.  By selecting Biden, it seems that his administration is not so much about change as it is about more of the same.  One of Obama's strengths is that he's an African American and by electing him, we're showing that the age of racism is over.  Hillary Clinton, while not African American (that I know of) is a female (as far as I know) and the election of her shows that sexism is also over.  On the other hand, the Republicans only had old white men to select from.  So, who does Obama choose as a running mate?  An old, white man.

I also have to wonder about Biden's ideology.  While many of the votes taken in the senate while all three were in office were in agreement, there were a couple of times when Biden seems to go off on his own.  For example, on November 17, 2005 the senate voted to amend the Internal Revenue Code of 1986 to put a temporary tax on oil and give $100 per personal exemption to each taxpayer.  Obama voted in favor of the bill, as did Clinton, yet Biden voted against it (which put him in agreement with McCain.  Coincidence?).

On March 2, 2005 a vote was held to require credit card companies to provide information to consumers on the ramifications of making minimum payments on their credit card debt.  Both Obama and Clinton voted in favor, while Biden and McCain voted against.  Why would Biden vote against such legislation?  Hmmmmmmm.

On May 11, 2005 a bill was put forward to fund motorcycle safety programs specifically in those state that did not have helmet laws.  It seems to me that if you're stupid enough to get on a motorcycle without wearing a helmet you deserve what you get, but legislation was put forward to spend our tax dollars on these folks.  Obama and Clinton both voted no, as did McCain, but Biden voted for it.  I wonder if Biden rides without a helmet.  That could explain many things.

One of Obama's key messages was that the war in Iraq is wrong, and he points to the fact that he did not vote for it (which he couldn't because he wasn't in the senate yet), but that Hillary Clinton did.  So did Joe Biden.  Wouldn't that make Joe Biden just as wrong as Hillary?  Then why choose him as a running mate?

One vote that I found particularly disturbing was on October 26, 2005 when the senate voted on a measure to increase funding for AIDS drugs.  McCain voted for the funding, but Obama, Biden and Clinton all voted against it.  On November 3, 2005 a measure was put forth to give financial assistance to schools devastated by hurricane Katrina, and again McCain voted in favor while the other three opposed it.  It kind of makes you wonder who the good guys are, doesn't it?

I have to question whether Biden is really a good choice, given his record.  I understand that he has foreign policy experience, but Obama has to win the election before that experience can come in handy.  At this point, I seriously doubt that he's done that.

What is McCain Doing?

What is John McCain doing? During the last election, it seems to me that he was able to defeat other candidates (many of whom I considered much more worthy) by showing people what a nice person he is. Now that he's the last man standing, that niceness has fallen off of him like teeth from a hockey player.

Now that the election is down to two opponents, McCain has taken the gloves off. Actually, I think it's more accurate to say he's taken the mask off and is showing his true face. He doesn't seem to have any interest in telling us what he will do if elected, but rather by telling us what he believes Obama would do if Obama were elected. McCain is apparently clairvoyant.

Clairvoyance is a wonderful ability to have, and certainly one that would be a bonus to a president, but before we all go rushing off to the polls to vote Republican, we have to remember that McCain has not proven that he is clairvoyant; he has only attempted clairvoyance.

I think the best thing that McCain can do at this point is to tell us what will happen next week. Who will die, who will file for divorce, where will the next major tragedy strike, how well will Madonna's next album do, etc. The things that matter. Once he's done this, then we can look at his predictions and decide for ourselves if he actually has the gift or not. If he does, we would do well to vote for him. If he doesn't, then Obama might be a better choice.

Clairvoyance certainly isn't the only ability that a president should have, but in looking over the last eight years, and the last campaigns, I can't help but be concerned. The Republicans have shown a history of running smere campaigns, particularly when they run candidates without much merit (I know, many people believe that no Republicans have merit, but I'm not going there). Looking at McCain's campaign, what I see is an extension of the current administration.

Sorry John. You almost had my vote. I was concerned that Obama's lack of experience would not be in the best interest of this country, and that is still a concern to me, but your campaign tactics make me question your abilities even more. I've ordered my Obama bumper sticker and will be supporting the Democrat this time around.

One suggestion for any future campaigns; stick to your strengths. Tell the people what you can do that will make you the best person for the job. Don't tell us what someone else won't do (or will do that's bad), because you don't know that. Don't tell us why the other person is not the right person for the job; we have Fox News for that. Tell us what makes you the right person. Without that, you tell us that you're not.