Senate set to consider plan to boost auto sales

[Hazcat]

WASHINGTON (Reuters) - The Senate could vote as early as Tuesday on a proposal to spur auto sales by underwriting some of the cost to consumers of buying fuel-efficient cars.

A bipartisan plan authored by Senators Debbie Stabenow of Michigan and Sam Brownback of Kansas comes into focus a day after General Motors Corp followed Chrysler LLC into bankruptcy.

It also comes as automakers are reporting yet another month of recession-fueled steep sales declines.

Ford Motor Co said on Tuesday its domestic sales in May were off 24 percent.

The Senate proposal, known as "cash for clunkers," would provide up to $4,500 in vouchers to car buyers who trade in their older, less fuel efficient models for vehicles that get better gasoline mileage.

New cars must get at least 22 miles per gallon while sport utilities and pickups -- the biggest sellers for U.S. manufacturers -- must achieve at least 18 mpg. Vehicles over $45,000 are ineligible.

The program would be in place for a year and proponents hope it would facilitate about 1 million new car purchases.

A Reuters poll of analysts expect median sales to hit 9.4 million units on an annualized basis. That would be slightly higher than April but far below the 14.3 million unit rate a year earlier.

President Barack Obama encouraged Congress on Monday to approve a voucher program.

Leading auto manufacturers also support the plan, a similar version of which is working its way through the House of Representatives.

"Around the world, consumers are already benefiting from similar programs, and the resulting economic stimulus has been significant," said Dave McCurdy, president of the Alliance of Automobile Manufacturers, an industry trade group.

The Senate proposal could be attached as an amendment to legislation that would grant the Food and Drug Administration new power to regulate tobacco products, officials said.

http://www.reuters.com/article/politicsNews/idUSTRE5515YB20090602?feedType=RSS&feedName=politicsNews

[fightingquaker13]

Well, we all knew they were a bunch of used car salesmen anyway.
FQ13

[WatchManUSA]

Hey, how do you get one of those credit cards congress has?  One of those cards that you never have to make a payment.  Oh, and I promise not to spend a lot of money on stuff I don't need.   I’ll only use it in emergency situations.

[twyacht]

Well, we all knew they were a bunch of used car salesmen anyway.
FQ13

Also the gov't are pros at "running" things, look at AMTRAK, or The Post Office? Social Security, Medicaid, always in the black, no red tape, smooth operations there...

 

[tumblebug]

 PUT US BACK TO WORK then we will buy the fing cars   we   want.

[Sponsor]

[jaybet]

That has been the problem all along...if they had let ING and GM fail in the beginning and given the money to us folks, we would have kept up with our mortgages, bought more cars, washers, dryers, etc. And especially more guns!

[Hazcat]

PUT US BACK TO WORK then we will buy the fing cars   we   want.

And there's your poblem.

They don't want you to buy cars you want, they want you to buy cars they have decided you are allowed to have.

[tt11758]

And there's your poblem.

They don't want you to buy cars you want, they want you to buy cars they have decided you are allowed to have.

Exactly!!  It's starting to feel like 1984.

[fightingquaker13]

Exactly!!  It's starting to feel like 1984.

Both figuratively and literally.
FQ13

[PegLeg45]

Analysis: Gov't firmly behind the wheel at GM

  By JIM KUHNHENN, Associated Press Writer Jim Kuhnhenn, Associated Press Writer   – Mon Jun 1, 6:41 pm ET

WASHINGTON – President Barack Obama now owns General Motors, even though he insists he's taking it out only for a spin.

Hours after the government sent GM into court Monday to file for Chapter 11 protection, Obama declared, "What I have no interest in doing is running GM."

But with a 60 percent equity stake in the carmaker and $50 billion in taxpayer money riding on GM's success, the federal government is far from a hands-off investor.

Obama and his economic team stress that the government's goal is to get GM back on its feet, maximize the return to taxpayers, and exit quickly from its involvement. But as one administration official put it, there is an inevitable tension between those objectives.

And the snap in that tension could sting — politically for Obama, economically for the auto industry and fiscally for the taxpayer.

How well a leaner GM adjusts after a trip through bankruptcy court is an open question. So is the payback to taxpayers. Administration officials already have warned that $2 of every $5 pumped into GM might be difficult to recover.

Given the economic crisis, the Obama administration's aggressive intervention is a defining moment for capitalism. Whether the president's actions serve as a private sector lifeline or a tether is a question that Obama and his economic team must confront not only with GM and Chrysler, another bailed-out automaker, but with the financial sector as well.

But the sheer size of GM's bankruptcy protection filing, the magnitude of the government's role and the company's status as a fallen symbol of American industry might make this intervention perhaps the most remarkable — and among the riskiest.

"There is a huge wish list of things they want," Julian Zelizer, a professor of history and public affairs at Princeton, said of the administration. "They don't want any risk for taxpayers, at the same time they are promising potential rewards for taxpayers. They don't want to run this forever, but at the same time it's a failed company and they're taking on responsibility for it without any clear exit strategy. The longer the promise, the bigger the potential disappointment for people."

It's certainly not lost on the administration that automakers have a huge presence in Indiana, Michigan, Ohio, Wisconsin and Missouri — all potential battlegrounds in a presidential contest. Whether voters there will remember the 66 percent of GM jobs Obama helped retain, or the 34 percent that GM had to shed to satisfy Washington, won't be known until the next election.

The administration's role to date has certainly been forceful.

The president a month ago forced Rick Wagoner out as GM's CEO. The Treasury Department dictated what bondholders should get for the $27 billion they held in GM debt. Obama's team determined that GM needed to downsize so that it could break even if auto industry car sales remain at 10 million vehicles a year, instead of the 16 million auto sales threshold it needs today.

And on Treasury's instructions, GM will replace a majority of its board members in consultation with the Obama administration.

Monday's Chapter 11 filing by GM was enough to spark a new round of partisan criticism. House Republican leader John Boehner of Ohio asked, "Does anyone really believe that politicians and bureaucrats in Washington can successfully steer a multinational corporation to economic viability?"

Eager to put a benign tone on their interventionist role, the White House and the Treasury Department issued a set of "principles for managing ownership stake."

In the principles, the administration acknowledges that in "exceptional cases" of substantial assistance to the private sector, it reserves the right to set up conditions to protect taxpayers, promote financial stability and encourage growth.

But, Obama stressed: "The federal government will refrain from exercising its rights as a shareholder in all but the most fundamental corporate decisions."

The head of Obama's auto task force, Steven Rattner, explained that those fundamental decisions would include the selection of directors and major issues such as the acquisition or the merger of the company.

"No plant decisions, no job decisions, no dealer decisions, no color of car decisions," he added. "Those are all going to be left to management."

For the president, though, doing little could prove to be quite demanding.

The administration already has proposed tougher fuel efficiency requirements by which GM will need to abide. The government also has pumped billions into the auto company's lending arm and assured consumers that it will backstop GM warranties, putting it only a few bureaucratic steps away from fixing a transmission.

And if Obama doesn't find cause to meddle, Congress very well might. The administration declared that it will have no say in what dealerships are closed in the Chrysler and GM restructuring, but members of Congress have tried to step in, asking that dealers be given more time to wind down.

House Speaker Nancy Pelosi, D-Calif., and Majority Leader Steny Hoyer, D-Md., asked administration officials on a Sunday night conference call how they would prevent sending GM manufacturing jobs overseas to China. Last month, several lawmakers were furious the administration didn't speak out publicly when GM considered importing a fuel-efficient car made in China. GM has since announced it will build the car in the U.S. in one of the plants that had been targeted for closing.

And even in their criticism, Republicans themselves suggest a more hands-on approach by the president. Rep. Eric Cantor of Virginia, a member of the House Republican leadership, said the infusion of money means "taxpayers deserve far better oversight and accountability."

That could mean occasionally getting under GM's hood.

___

EDITOR'S NOTE — Jim Kuhnhenn covers politics and economics for The Associated Press.


http://news.yahoo.com/s/ap/20090601/ap_on_go_pr_wh/us_automakers_obama_analysis;_ylt=AkJSvOzBSgJXH.9bwgOL.MzBF4l4;_ylu=X3oDMTE2cWhqcmt0BHBvcwMyBHNlYwN5bl9mZWF0dXJlZARzbGsDYW5hbHlzaXNnbWJh


Bold emphasis mine.