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Economy

Rick Santorum: We Should Have Let The U.S. Auto Industry ‘Melt Down’

Faced with an disintegrating American auto industry in 2009, President Obama opted to rescue General Motors and Chrysler from bankruptcy. His decision invited immediate derision from Republicans, but, after paying back millions of loans and adding thousands of additional jobs, GM and Chrysler are on track to sell millions more cars and hire thousands of workers in 2012. Indeed, GM rebounded to become the top-selling automaker of 2011.

That level of success, however, has done little to dislodge some Republicans’ delusion that the auto rescue was bad for business. Today on C-SPAN, GOP presidential candidate Rick Santorum completely dismissed the necessity of a rescue, stating that “the greater meltdown over the long term for this country is having the government inject itself into the private sector” at all. GM and Chrysler should’ve “gone through a structured bankruptcy,” he said. “You pretty much would’ve had the same company, maybe even a better company”:

SANTORUM: I called for a structured bankruptcy from the very beginning. Look, I opposed the Wall Street bailout, which of course was the funding source for the auto bailout. I was the only one up on that stage — between myself, Gingrich, and Romney — that did on principle oppose it, even though people were saying there could be a financial meltdown. The bottom line is, the greater meltdown over the long term for this country is having the government inject itself into the private sector in such a huge way. Allow the capitalist system to work, and that’s what I believe in. The same thing with GM and Chrysler, they could’ve gone through a structured bankruptcy and the only difference between those two companies coming out of bankruptcy and the bailout that Obama put in place was that the unions wouldn’t have a big ownership share of the company…You pretty much would’ve had the same company, maybe even a better company, because they would’ve been stripped of even more legacy costs that frankly makes it hard for them to be competitive.

Watch it:

Santorum’s obstinence in the face of such success is somewhat surprising especially given the fact that other Republican naysayers have been quick to about-face. Once calling on America to “let Detroit go bankrupt,” his competitor Mitt Romney now insists that the auto rescue was his idea first. Ohio Gov. John Kasich (R), who originally dismissed the rescue, suddenly is “very pleased” that Obama went through with a decision that turned out to be vital to his state. Michigan Gov. Rick Snyder (R) praised the government intervention and explicitly “warned GOP presidential candidates against criticizing the bailout.”

The industry has now hired back just about everybody from the automotive side that had been laid off — a feat that would not have been possible without the auto rescue. If Santorum wants to continually denigrate that decision, he’ll continue to do so without an ounce of evidence to back him up.

Climate Progress

GM: Bikes Will Make You Unattractive to Ladies

by Jess Zimmerman in a Grist cross-post

Enough people thought this was a good idea that the ad made it into print. How did this ad meeting go? “We need to convince the youth to buy giant boat-cars.” “Okay, tell them bikes will cockblock them.” “Perfect, let’s call it a day.” Nice work, Don Draper.

GM has clearly been getting a lot of blowback for this ad, which presents biking as an embarrassment so profound you’ll want to hide your face from the sight of pretty girls. They’ve been falling over themselves to apologize on their Twitter feed. It’s tough for them! Reality sucks, guys.

UPDATE:  David in the comments directs us to the great response ad by Giant Bicycles:

Read more

Climate Progress

GE May Lease Vehicle Batteries for Electric Cars, Used Batteries May Get Second Life Storing Power for Grid

General Electric Co may lease costly vehicle batteries to electric-car buyers, joining other companies looking to get more people to buy alternative-energy automobiles.

The largest U.S. conglomerate is just at the “thinking stage” of such a move, said Mark Little, head of GE’s research and development efforts, on Friday at an event at Nissan Motor Co’s (7201.T) research center near Detroit….

A battery leasing program is a venture that could allow GE to show off its range of businesses, from its industrial core which could be influential in manufacturing the batteries, to its GE Capital finance arm which could support the leasing.

This could be a crucial strategy for keeping down the first cost of electric cars.  Cost is one of the biggest barriers to entry for any alternative fuel vehicle, but especially electrics, since batteries can add considerable cost upfront and take many years to pay for themselves.

Indeed, batteries continue to come down in price, and  the slow global economy continues to keep oil prices down.  In a decade, EVs  will be considerably more cost-effective, but  the key is to jumpstart the market now so you can start getting economies of scale and heading down the learning curve

A key reason this strategy may be viable is that there is likely to be a large aftermarket for these batteries.

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Politics

‘Michigan Message To Mitt’: GOP Rep. McCotter Slams Romney For Not Supporting Auto Rescue

GOP presidential candidate Mitt Romney is in the state of his birth this week — and receiving an icy reception. Michigan is home to General Motors and Chrysler, two U.S. companies for which the 2009 auto rescue “was seen as a matter of life or death by both parties.” Romney, however, opted for death when the Motor City native penned a op-ed entitled “Let Detroit Go Bankrupt” and slammed the rescue as “tragic.” This supposed tragedy, however, allowed Chrysler and GM to restructure and repay over $60 billion in taxpayer loans and add about 50,000 jobs nationwide.

As is his nature, Romney quickly switched positions in light of the rescue’s success and actually claimed last month that he “had the idea first.” However, Michiganders are not buying it. Rep. John Dingell (D) said yesterday that he hopes Romney “has answers for Michigan’s working families he abandoned two years ago” and “threw them under the bus.” Former Democratic Gov. Jennifer Granholm offered a pithier take in her own op-ed titled, “Let Mitt Romney Go Bankrupt.” Now, even Michigan Republican Rep. Thaddeus McCotter is wiping his hands of Romney. McCotter, who “supported the government intervention for General Motors and Chrysler,” sent “a Michigan message to Mitt” on his auto failure:

“Motor City hospitality dictates a Michigan message to Mitt that our struggling families, entrepreneurs and workers think Mr. Romney and Mr. Obama are not rivals, they’re running mates,” McCotter, who is considering his own run for the White House, said in a statement.

Watch video of his remarks:

Of course, President Obama actually delivered the auto rescue McCotter asked for. Conversely, auto industry officials say Romney’s rejection of that rescue “would have led to liquidation and the loss of more than one million jobs nationwide.” McCotter’s argument that Obama and Romney are similar when it comes to their health care plans and beliefs that global warming is a real problem, however, is much more accurate.

Whatever his current positions may be, it’s clear that Romney’s failure to back the auto rescue when it was most needed and his general “anti-auto sentiments” may prompt Michiganders to kick him to the curb. As Michigan Democratic Party Chairman Mark Brewer noted, “I don’t think we’ve seen a less inviting homecoming since LeBron (James) went back to Cleveland.”

Climate Progress

Obama Nominates Superfund Polluter Lawyer To Run DOJ Environment Division

Bedford, IN
GM cleanup of the Bedford Superfund site.

President Barack Obama has nominated a lawyer for the nation’s largest toxic polluters to run the enforcement of the nation’s environmental laws. On Tuesday, Obama “announced his intent to nominate” Ignacia S. Moreno to be Assistant Attorney General for the Environment and Natural Resources Division in the Department of Justice. Moreno, general counsel for that department during the Clinton administration, is now the corporate environmental counsel for General Electric, “America’s #1 Superfund Polluter“:

Number five in the Fortune 500 with revenues of $89.3 billion and earnings of $8.2 billion in 1997, General Electric has been a leader in the effort to roll back the Superfund law and stave off any requirements for full cleanup and restoration of sites they helped create.

This February, General Electric lost an eight-year battle to “prove that parts of the Superfund law are unconstitutional.” One of the 600-person DOJ environmental division’s “primary responsibilities is to enforce federal civil and criminal environmental laws such as” the Clean Air Act, Clean Water Act, the Safe Drinking Water Act, and the Superfund.

Before General Electric, Moreno worked as a corporate attorney at Spriggs and Hollingsworth. Moreno’s name is found in the Westlaw database as an attorney defending General Motors in another Superfund case, the GM Powertrain facility in Bedford, Indiana:

Historical uses and management of PCB containing hydraulic oils and PCB impacted materials has contaminated on-site areas as well as the sediment and floodplain soil within Bailey’s Branch and the Pleasant Run Creek watershed.

Although General Motors entered into an agreement in 2001 with the EPA to clean up the site, a number of local residents whose land has been contaminated by polychorinated biphenyls (PCBs) have sued for damages in Allgood v. GM (now Barlow v. GM), in a contentious and caustic dispute over cleanup, monitoring, and lost property values.

During the Clinton administration, Moreno was involved in another controversial case, unsuccessfully defending the Secretary of Commerce’s decision to weaken the dolphin-safe tuna standard. In Brower v. Daley, Earth Island Institute, The Humane Society of the United States, and other individuals and organizations brought suit against the United States government for actions that were “arbitrary, capricious, an abuse of discretion, and contrary to law,” winning their case in 2000.

Update

Clean Air Watch president and regular Wonk Room contributor Frank O’Donnell expressed his concerns to Greenwire:

The question is: Is she the best possible person for that job, given the sensitive nature of that position? It seems as if she has spent maybe more time defending polluters than prosecuting them.

Health

GM Pushes UAW To Accept More Health Care Concessions

gm.jpgThe New York Times leads this morning with word that General Motors– which is busily restructuring itself to “justify its use of a $13.4 billion loan package from the federal government” — is pushing the United Auto Workers (UAW) to accept serious concessions on retiree health care benefits:

G.M. has the most at stake with the U.A.W. Its future obligations for retiree health care are estimated at $47 billion, and by next year it is required by its contract to contribute more than $10 billion to the trust set up in 2007.

The company, which nearly ran out of money before receiving the first $9.4 billion of its $13.4 billion in late December, is pressing the U.A.W. to accept stock for as much as 50 percent of its next contribution to the trust, according to two people knowledgeable about the discussions.

Recall that in 2007, GM struck a deal with the union to remove $51 billion of retiree health obligations from its balance sheet by contributing to a new trust fund for retiree health benefits. In return, the union got “to set and manage the health-insurance benefits.” Now, the company seems to be balking its commitment, pressing auto workers “to accept stock for as much as half of its next contribution to the trust.” On Saturday, the UAW called proposals to modify a union-run health care fund “a non-starter.”

Indeed, GM’s so-called compromise jeopardizes the future of the trust and may force the labor union to shoulder more of the cost or cut back on health benefits. As Phyllis Borzi, a research professor in health policy at the George Washington University pointed out in 2007, “the nature of GM’s contributions is almost as important as the size.” As an employee, “I would want cold hard cash — I don’t want any employer stock or any of that stuff in there,” Borzi said.

Update

NYT: The U.A.W. said on Tuesday it had reached “understandings” with the Detroit companies on modifications to their contracts. Ron Gettelfinger, the union’s president, said “discussions are continuing” regarding how to fund the health care trusts at each of the companies.


Update

,I asked Phyllis Borzi to comment on the latest developments surrounding GM and the VEBA:

Contributions of employer stock in lieu of cash create an additional layer of volatility for the VEBA trustees to deal with. If the value of the stock declines sharply, the VEBA may have to make up the shortfall over a relatively short period of time in order to continue to pay benefits. Given what we know now, allowing the company to substitute stock for cash will seriously undermine the economic security of the VEBA and the retirees which is, of course, the reason that the UAW is strenuously opposing this.


Update

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Climate Progress

GM’s Britta Gross Talks The Volt, Smart Grids, And The Future Of Detroit

Editor’s note: The Wonk Room’s Brad Johnson is attending the Los Angeles Auto Show this week. Here is his first dispatch.

In an interview earlier today, Britta Gross, General Motors’ manager of Hydrogen and Electrical Infrastructure Development talks about working with electric utilities to prepare for the widescale deployment of the plug-in hybrid Chevrolet Volt. As she and the other managers of the Volt project discuss the next-generation vehicle they plan to put into production in 2010, GM’s CEO Rick Wagoner flew down to Washington, D.C. to plead for a bailout for his teetering company.

Watch it:

The mood at the auto show is subdued and uncertain, with mixed messages of machismo, affordability, and environmental responsibility. How the industry handles the great challenges of today will determine its future. As Gross said, “These are tough times for automakers, but a very exciting time.”

Climate Progress

Revolting: GM Executive Bob Lutz Denies Global Warming, Trashes His Company’s Car

General Motors vice chairman Bob Lutz, on the 100th anniversary of GM’s founding, appeared on Stephen Colbert’s show last night, and embarrassed his company. Lutz, unfortunately for this aging industrial giant, is a Luddite, supporting the most extreme crackpot denials of the science of climate change and attacking the Volt — GM’s next-generation hybrid automobile that can run entirely on electricity for trips of 40 miles or less — as a weak, unattractive car. His extremism was barely matched by Colbert’s parodic statements:

Colbert: Why not just call this the Chevy Gore? You don’t believe global warming is real, you’ve said so.

Lutz: I accept that the planet is heated, but I, like many noted scientists, I don’t believe in the CO2 theory.

Colbert: Exactly! I just think that people are leaving their toaster ovens open. [Or] it’s just sun-spot activity.

Lutz: In the opinion of about 32,000 of the world’s leading scientists, yes.

Watch it:

Lutz’s “32,000 of the world’s leading scientists” nonsense is taken from press releases by the right-wing industry-funded Heartland Institute, amplified by right-wing blogs and radio shows. This is a zombie lie, which was begun in 1998 by the right-wing industry-funded Oregon Institute. The National Academy of Sciences, whose name was misleadingly used, issued this warning on April 20, 1998:

The petition project was a deliberate attempt to mislead scientists and to rally them in an attempt to undermine support for the Kyoto Protocol. The petition was not based on a review of the science of global climate change, nor were its signers experts in the field of climate science.

One might think Lutz was merely joking along, but this February, Lutz called global warming “a total crock of shit.” General Motors deserves better leadership, particularly when its economic future depends on escaping the suicidal oil-based economy that has driven the company to the brink. As Max Gladwell writes:

The irony is that Lutz and his ilk are buying this Big Oil propaganda. Meanwhile, his company’s cozy relationship with Big Oil has lead them to the verge of bankruptcy, unless American taxpayers come through with a bailout. The supreme irony is that the bailout is to help GM meet efficiency standards that it needs to achieve anyway to stay competitive with foreign automakers. When will they learn?

UPDATE: The Seminal‘s Josh Nelson notes, “On their website, GM claims to be concerned about the environment. They even specifically address their greenhouse gas emissions:”

There is no question that our products and manufacturing facilities have an impact on the environment. Not only do internal combustion engines produce emissions and greenhouse gases, but in the process of building millions of vehicles per year, our manufacturing facilities emit CO2 and greenhouse gases as well. The good news is that GM is hard at work trying to reduce our impact on the environment.

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