Dear Readers: A wonderful piece by our resident expert on all things economic and financial, Professor Athena.
Driving to work during a recent severe thunderstorm provided me an object lesson that is pertinent for current events in relation to the economy. I drive a Hummer (H3). Hummers are a synonym in the current administration for “wasteful excess”. Any day now I expect to see Webster’s latest abridged version defining, “Hummer n: a flashy and wasteful extravagance”. In fact, the administration classifies most SUV’s in the same way, and have legislated their “Cash-for-Clunkers” fuel hog exchange rebate tailored to streamline the process of buying a newer and more energy-efficient vehicle. It is only slightly ironic that the savings to qualify is in many cases quite marginal, and even over time savings for the consumer is so unnoticed as to be brushed aside in the exchange of weighing being able to fit things like your family, your dog, your camping gear, etc. in a new and shiny and incrementally more fuel-efficient car. But of course, we must remember we are dealing with the government. This isn’t really about results. It is about power and about votes and how things look on television.
Which took me back to the days of those commercials (you remember the ones) where it shows an SUV hauling everything from kayaks to bicycles to snow skis, and in so many words mentions that the vehicle can keep up with all the fun you are having. Those commercials, suddenly no longer in vogue, did something to differentiate the American consumer from the European or Japanese automobile buyers. Our country is big and spread out once you leave the cities, with lots of mud and water and mountains to roll through. Some of us work farm equipment, pull trailers, and need a sport-utility vehicle that can take a lot of road and weather. Others choose the roomy comfort of SUV’s for child car seats and DVD screens to keep children smiling and clapping to “Sponge Bob”, and for hauling the soccer balls and players to the game. Consumers have been the ones overwhelmingly to choose this type vehicle, the one category of profitability for General Motors in the last decade, and whose new CEO was heard to say recently, “Our goal is to be the world’s greenest car-maker”. And here we have it. Business designed not around what the customer desires and what is selling, but instead designed around what the greenies want. We’re being told to eat our vegetables (organic and of course green), and we don’t even get dessert. I guess that means I am going to bed without my dinner.
In the middle of a bad storm, the Hummer was so heavy it never hydroplaned, despite accidents happening around me. It made the trip like it has made every trip on hazardous roads in the three and a half years since I have owned it. Which is like a champion. Driving through the flood in my Hummer, the cars I saw at the side of the road were all sub-compacts, the type with good fuel mileage and which did not do the job for their drivers in bad weather. I’ll let you guess in an accident which vehicle would incur the least damage between theirs and mine. Which brings me to why choices matter. Individuals and not the government are responsible for their own personal safety choices. What a surprise it will be for the Obama administration that many Americans may choose personal safety at the expense of fuel economy for themselves and their wives and their children. How dare they be vilified for such choices for their lifestyles? We have come to the point in America where it isn’t enough to increase taxes. We now have to justify it as somehow “noble” and characterize those who are being taxed disproportionately as “greedy”. Such class warfare must seem really strange to the farmer headed to the feed store, or the bulldozer owner. Both of whom are being taxed as to newer and much more strict fuel emission standards under the new “Cap and Trade” Waxman-Markley bill, overwhelmingly the worst debacle of legislation ever to threaten the U.S. economy. And it is threatening much more than the American economy. It is threatening the American way of life, the pioneering and exploratory spirit which has historically made us stand out.
As I write this, the steel industry as we once knew it in America is dead, and we can thank our politicians. The final nail in the coffin was this bill, as a friend of mine who owns a company that employs almost a thousand people told me over dinner quietly a few weeks ago. He whispered, “If this thing passes it will kill the steel people”. He runs a specialty steel fabricating company. He can see his clients switching to cheaper products made in China, where they don’t care about emission and industry pollution control standards, and where workers cost much less. It is a math problem even he cannot solve, and he is losing a company he built from the ground up thirty years ago.
Driving through the flood in my Hummer, I pondered the financial upheaval and the likely bankruptcy of CIT, who is deemed “small enough to fail”. With CIT goes financing for most small businesses. These are the same small businesses who are looking at a requirement of an additional 8% in withholding taxes if they do not provide health insurance under the Democrats’ latest version of the health care bill. They are the same small businesses who Charlie Rangel has decided are “rich”, and who need to pay extra taxes to fund the same health care bill. Faced now with no financing, extra employee costs mandated by the government, and a tax increase, we cannot look for small businesses to provide growth we need for those “green shoots” the administration keeps talking about. The very middle class Americans who voted for President Obama are the ones who will be most hurt by Waxman-Markley, and the recent decision that small business owners are not nearly as imperative to our government as General Motors’ GECC and all the other companies who received assistance from the federal government underscores the disdain with which middle America is really held by those in power. A storm, whether generating a great amount of water on the road or an amount of upheaval in the economy is after all temporary. It is the effects which may become permanent, if care is not taken during the progress through it.