Thursday, November 13, 2008

No to Auto-Bail-outs

• CTF calls on Harper and McGuinty Governments to stand-up for taxpayers, not failed American corporations

OTTAWA/TORONTO: The Canadian Taxpayers Federation (CTF) today released figures that trace how much Canadian taxpayers have spent to prop up the Big Three domestic auto makers since 2003, and is calling on the federal and Ontario governments to resist sinking even more tax dollars into companies that need to be radically restructured.

Access to Information documents and campaign promises in the table below, show that since 2003 alone, the Big Three, General Motors, Ford, and Chrysler, have received or been promised $782-million from taxpayers. This figure does not include hundreds of millions more committed previous to this.

“Taxpayers cannot afford to continue to bail out mismanaged companies that expect perpetual handouts in good and bad times,” stated CTF Acting Federal Director Adam Taylor. “The Big Three’s demand for tax dollars occurs as regularly as these same companies shed shifts and jobs and it’s time to put a stop to throwing good money after bad. Thousands of layoffs have shown clearly that these subsidies are not working.”

Automakers are now looking to Prime Minister Harper and Premier McGuinty for more public money to the tune of $1-billion. CTF data also reveals that firms receiving handouts in the form of “repayable loans” don’t pay back the money or in some cases aren’t required to for 50 years.

“A clear example of the Ontario government’s misguided auto strategy is its decision to give millions of dollars to General Motors to build a gas-guzzling muscle car like the Camaro, at a time when most companies are moving to fuel efficient vehicles,” stated CTF Ontario Director Kevin Gaudet. “Ontario taxpayers have provided more than half the money to the Big Three only to see jobs disappear as quickly as the handouts do. Further, the so-called $175-million “loan” to General Motors in November 2003 won’t even come due until Dec. 31, 2055. Do you know of a bank that offers an interest-free loan without a single payment due for two generations?” asked Gaudet.

Taylor concluded: "If governments continue to shore-up the ailing auto industry expect other industries -- from textiles to aerospace -- to come cap-in hand pleading the case for how “special” their industry is and how worthy it is for handouts. This nonsense has to end. The CTF will be mobilizing its supporters this week encouraging Canadians contact the government en masse and say NO to an auto bail-out. The Harper and McGuinty governments need to stand-up for taxpayers and not failed American multi-national corporations."

For further information please contact:

Adam Taylor, 1-800-265-0442 or 613-794-6554 (cell) or,
Kevin Gaudet, 416-203-0030

2 comments:

Authentic Connecticut Republican said...

It looks like the folks in DC are hell-bent to give the stimulus package another try seeing as the first one didn't have any real effect.

This time it's the car industry.

While the sanity of blowing cash around and running the national debt up even further is questionable; it seems inevitable - so this time let's target unemployment, create AMERICAN jobs and pump up the economy all at one time.


Consider the following:

Manufacturing costs of motor vehicles are 65% labor (i.e.: W-2 income), that's not all direct but due to suppliers. GM alone has over 1300 suppliers. (That's a lot of jobs!)

1 in 10 Americans makes all or part of their income due to the automobile industry.

Money turns over 5 times in a year.
Thus a vehicle with a manufacturing cost of 20K produces 13,500 in W-2 income which in turn becomes a total of 65K in 12 months due to the 5 turnovers.
(This isn't magic, it's simply how the economy works.)

Our domestic car makers are saddled with legacy costs, most of which will reduce dramatically in 2010 due to contract changes. They need to survive to get there.

Our own over-zealous government with a virtual alphabet soup of regulatory agencies has been no help either.
Foreign competitors have worked off-shore collectively to meet various US gov't. imposed emission and safety standards, thus dramatically reducing those R&D costs. American car companies are prohibited from that by our FTC.

Make no mistake; it’s no surprise that once again government has been a major part of the problem.

Here's the solution.

Instead of either shipping cases of cash off to car makers; or sending us all another check:

Send out a voucher for say $1,000 good on a motor vehicle for the percentage of the vehicle that's domestic. (Civic = 70% Ford Explorer=80%)

Let those not interested in a new car sell or give away their vouchers (Ebay would be loaded with them in no time flat) and those that are so inclined can use as many as they can get their hands on up to the full MSRP of the vehicle.

This would bail out the car industry without giving them a dime directly
Further it would reduce the overall age of the nation’s cars which would in turn;
increase overall fuel economy
& decrease pollution.

Strengthen the dollar!

Since vehicles with a higher domestic content would be moving better this would reduce our imports, strengthening our dollar which would in turn further reduce what we pay for anything imported ...like gas!


Jobs

Instead of simply bailing out a few big companies, this would cause such a run that it would create employment throughout the industry affecting over 1300 suppliers and their workers.
That would give the economy good swift kick right where it needs one!

Pays for itself!

Since money turns over 5 times, and the vouchers are only good for the domestic content of the vehicle, every dime would be spent in the United States creating taxable income.
What is the income tax on 65,000 anyway?
(Remember? 20K manufacturing cost = $13,500 W-2 income x 5 = $65,000)


Another Stimulus Package?

I'm sure you'll agree that this makes more sense than simply sending out checks; many of which will be used to buy new flat screen TV's usually made in Malaysia or some such place.

Melissa said...

What happened to the days when the owner of a company or corporation was the first one to go down? Can they maybe reduce thier annual pay? No, instead they put the hard working middle class out of work. They don't offer any solutions, instead they look to our government for bail-outs. I for one will be petitioning to ensure this does not happen until the exectuives are all at or below middle class wages. If they are not willing to sacrifice, why should we? There is no reason the taxpayers(who already are struggling to pay thier bills due to job loss) need to suffer in any way. When will the greed stop? IT IS TIME FOR CHANGE!!!!

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