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Dec. 2, 2008 - Rush Limbaugh Program
35:58
December 2, 2008, Tuesday, Hour #1
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Welcome to today's edition of the Rush 24-7 podcast.
I didn't realize John McCain was that overconfident on Election Day.
Apparently on Election Day, Senator McCain told his young, lovely wife Cindy to go out and buy the sleekest, sexiest nightgown she could find because tonight she would be sleeping with the future president.
Well, off they go, and on election night, we know how the returns came in.
The very dejected Senator McCain, apparently, so the rest of the story goes, comes back to their home.
The returns are in.
He trudges up the stairs.
He looks for Cindy.
Can't find her.
Goes up the stairs even further to the second floor.
And there is his beautiful young wife sitting there on the side of the bed in that sleek, silky, sexy nightgown.
And he looks at her.
She looks at him.
He looks at her again.
And finally, she just says, well, and he says, well, what?
Well, is Mr. Obama coming over here or do I go over there?
That's got to sting.
I'm telling you, that's just got to sting.
But hey, you know what?
There are advantages to having a younger wife, my friends.
You get along better with your in-laws when they're your age.
Hi, everybody.
Jason Lewis in for the alien El Rushbo today on this terrific Tuesday.
Rush still under the weather a tad.
We're monitoring the situation very closely.
You know, he had a group of people, I believe, down for Thanksgiving.
And, you know, there's nothing, I hate to be the bearer of bad news during the holiday seasons.
There's nothing worse than winter.
You know, that's when the schools become these incubators of germs.
Everybody shuts their windows.
The density of the germ factory increases exponentially.
That's when everybody gets sick.
They can't stand winter, which is why I live in Minnesota.
But other than that, Rush is recuperating, and we will try to hold the fort down until El Rushbo is back.
In the meantime, you can always check out RushLumbaugh.com as we proceed here on the Excellency and Broadcasting Network.
Well, what do we have?
The automobile companies back in Washington today.
I shouldn't say the automobile companies, Detroit back in Washington today, slated to ask for yet again another $25 billion.
Now, remember, they've got $25 billion already there on the condition they create cars nobody wants.
The green retooling revolution.
The Bush administration correctly had said, well, why don't we just let them have the $25 billion for the bailout, remove the environmental mandate that they produce all these hybrids and all the cars that run on ethanol.
By the way, ethanol isn't such a bargain anymore, is it?
It can't compete without the subsidies.
We've gone over this, my friends.
It can't compete without the subsidies, and especially when gasoline is now $1.70, $1.80 a gallon.
And so you're going to have to have subsidies to make this very, very efficient food source into a very, very inefficient fuel as far as the eye can see.
And if you add up all of the subsidies, the 51 cent gallon tax blending credit, the tariffs on cheaper ethanol from abroad, the farm bill bailouts, the state, the state of Minnesota to date has given $300 million to ethanol plants.
You add all those up and you couldn't sell a gallon of ethanol probably for under $350.
It's hard to say.
Nobody knows for certain the subsidies are so ubiquitous.
But nevertheless, that's what the CEOs of Detroit, the members of Congress, are telling them to do.
Make cars that can't compete.
We're going to ban their most profitable line, the SUV, via environmental regulations.
So you would think these Detroit CEOs, if we had that old self-reliant, you know, American capitalist ethic that we used to have, you would think they would take their private jets to Washington.
That's right.
They take their private jets and say, hey, members of Congress, I got news for you.
Henry Waxman, how many automobile companies have you run again?
You want to tell us that one?
John Conyers, just how many times have you been the chief financial officer of an automobile company?
Oh, none, huh?
But you want to tell us how to run a company?
You're already putting us out of business with cafe standards that are downsizing cars so we have to compete with others where we don't compete very well.
You're not letting us re-import our most profitable lines overseas.
They may be running on diesel, but they get 50 miles per gallon.
May not be that high, but you get the drift.
You have effectively put us out of business, members of Congress.
So here's what we're going to do.
We're not going to give up our private jet because that's not going to save the industry.
What we need to do is get you off our back.
That's what we need to do.
And let us compete.
And if we've got to file bankruptcy and reorganize and redo the labor contracts, redo the number of dealerships we have, redo all of this, we'll do that.
But we're not going to come to you hat in hand on our knees begging.
Well, would that it were true.
That's exactly what they're doing.
And the poster child, I guess, would be the Ford CEO who is driving to Washington.
They caught such a ration for the false liberal symbolism as though private jets were the real reason Detroit was failing.
They weren't.
Now, is it bad PR to fly a private jet when you're asking for a hand?
Of course it is.
But does anybody out there think seriously that if they abandoned their private jets, if they got rid of them, that all of a sudden the market would change?
All of a sudden, they could create SUVs that people actually want again?
No, not without Washington relaxing some of the environmental insanity.
But no.
So the private jet became the symbol.
So these guys, instead of standing up to Washington, are begging Washington.
The specter of the CEO of Ford driving his Ford Focus 1,000 miles.
The good thing about a Ford Focus, however, is you can drive it right through the door of the Senate hearing room.
So, you know, if you can't catch a cab, you can just drive right up there.
Actually, I think he's driving the what?
The escape hybrid.
There goes that ethanol thing again.
This is really getting sad.
This is really getting sad.
Everybody knows what has to be done to Detroit.
They are not competitive.
They've been losing market share for years and years.
The UAW, while making some concessions recently, still has legacy costs attached to Detroit that the other competitors, primarily in the southern United States, where you've got 113,000 workers making a fine living selling cars people want, not asking for a bailout.
That is the insanity or the insidiousness of a bailout.
Remember the old adage, capitalism is the unequal distribution of wealth and socialism is the equal distribution of poverty?
That's exactly what we do when we bail out firms who should be failing and filing bankruptcy so we can get to a market bottom and allow this recovery to turn the corner, if you will, or to start, I should say.
We don't do that.
We prop up firms and all that does, these failing firms, when we prop them up, and I don't care whether it's Bear Stearns or whether it's Ford or GM or Chrysler, when you prop them up, you actually cut into the profits of their profitable counterparts.
And no one gains the equal distribution of poverty.
You want to know what a Barack Obama stimulus package is going to look like, $700 billion more to the national debt?
We're going to have a deficit next year of $1 trillion?
Look at Detroit.
They're going to mandate.
I mean, liberals love to own businesses.
That way they can control them.
And that's really the quid pro quo here.
You and I, as free market capitalists, believe there should not be any limits on success, any limits on a corporate jet, any limits on anybody's income, whether he's working the line or as a CEO.
But if you take the risk and you fail, we're not going to bail you out.
Capitalism without failure is an impossibility.
But our friends on the left, who are now in control in Washington and so many state capitals, say, no, We love to bail out businesses.
In fact, the Obama team, the economic team assembled, is going to double down on the silly Bush bailout and actually turn what was 1929 perhaps into 1932.
The reason nobody is lending anybody is they're waiting for the next bailout.
The credit markets are frozen because we keep propping up companies.
And if I've got a ton of money and these banks do, they're hoarding their excess reserves.
They've gone up, what did I read the other day, 14-fold in a couple of months, the reserves that banks are holding?
Why aren't they lending?
The Fed is injecting liquidity.
What's going on here?
What's the problem?
Well, I wouldn't lend anybody either if I didn't know what their balance sheet looked like, if I didn't know whether they're going to get a bailout or not.
If I didn't know what the government was going to do vis-a-vis fiscal policy or tax policy, I would.
You've got to be able to see the other guy's balance sheet.
We used to call this transparency.
And the only way to do that is to let the failing firms go bankrupt.
The other firms who survive will be that much more healthy.
They will buy up those assets.
And remember, we buy this old argument that, well, you can't allow an automobile company to go bankrupt.
Nobody would buy from it.
We buy from bankrupt firms all the time in bankruptcy.
Can you say the airline industry?
It's not necessarily total liquidation.
They could reorganize.
But even if they liquidate, somebody else, those other automobile companies I spoke of or some other Detroit company will buy the assets.
And then you might see an actual thaw in the credit markets because now you would have somebody, you would have the losers who have gone out of business and you would have the winners.
And that's the way our competitive society works.
And then someone might say, you know what, this is a risk worth taking.
But if I'm, you know, as one wag put it the other day, if I'm sitting at a poker table and we've all got our money, we've all anteed up, we've got our money in the till, but I know three out of my four competitors are bankrupt and they're not going to pay me if I win the bet, I'm not going to play poker with them.
It's a crude analogy, but it's fairly on point.
And that's where we are.
None of these bankruptcies will ever, I should say none of these bailouts will ever work.
Think about what we're doing with this bailout.
And, you know, don't get me wrong, I'm critical of Paulson and Bush, but Obama's going to be worse because he's going to double down on this just like Roosevelt did on Herbert Hoover.
Herbert Hoover was not a laissez-faire capitalist.
He increased spending.
He increased tariffs.
He increased taxes.
Roosevelt got in there and did the same thing on steroids.
And all of a sudden, by 1938, far from ending the Great Depression, unemployment was almost 20%.
It is an absolute fallacy that the New Deal ended anything.
It was government makework.
It did not save the economy.
We didn't come out of that malaise, if you will, until the post-World War II era and the boom in the 1950s when tax rates were brought way down.
Who on earth is going to invest, regardless of how much money the Fed prints, if the return on investment may or may not materialize due to insolvency or due to a rising tax burden?
We are in the bizarre position right now, my friends.
I keep saying my friends, I'm sounding like John McCain, aren't I?
We are in the bizarre position of saying, and now the Federal Reserve said yesterday that they may start buying longer-term Treasury notes and bills.
Well, why doesn't everybody just go to the Fed for their credit?
We don't need banks anymore.
We'll just all go to the Fed and then they can control interest rates.
It doesn't work that way.
You can't solve a debt-ridden economy with more debt.
You can't solve an economic problem of overspending, overinvestment, especially in the subprime housing market, by government stimulus and overspending.
You can't, and this one takes the cake, you cannot get out from under the moral hazard that Fannie and Freddie brought us by guaranteeing bad mortgages, by buying them and holding them on their books until they went kapoot and we had to bail them out.
You cannot get out from under these subprimes by having the Federal Reserve buy more of Fannie and Freddie's subprime mortgages.
Did you hear me?
Last week, the Fed said they were going to inject $600 billion into Fannie and Freddie.
Excuse me.
That's how we got into the mess.
We got into the mess where everybody was investing through derivatives or collateralized debt obligations into all of this bad mortgage paper.
Fannie and Freddie said, don't worry about it.
We've got your back.
We, the government, that's what Fannie and Freddie are, a GSE, we will bail you out if the paper goes bad.
Well, if I'm sitting on Wall Street and I know my CDO, my collateralized debt or my derivative or my credit default swap is backed by a mortgage that the government has said they will bail out, I'm going to issue a ton of them.
And that's exactly what they did.
And that's how we got in this mess.
So it might be a good idea to say to Fannie and Freddie, you're going out of business.
If there's a secondary mortgage market out there, it's going to be a private one.
Instead, we're doing exactly the same thing now with this extra $600 billion that got us into the mess.
The bailout will not work.
There's only one solution, and that's finding a market bottom.
And the only way, the only way to do that is to allow market forces to work through bankruptcy laws, through company failures, through success of other surviving companies, and quit trying to fight those market forces.
I'm Jason Lewis, In for Rush.
Let's talk about it when we come back on the Excellence in Broadcasting Network.
Greetings, conversationalists, all across the fruited plain.
I am Minnesota's real anchorman filling in for the big guy today, America's anchorman, Rush Limbaugh.
He's feeling a bit ill, but hopefully he'll be back tomorrow.
In the meantime, we will try to hold the fort down here on the Excellence and Broadcasting Network.
Jason Lewis here.
Let's go to the phones at 1-800-282-2882.
First up today in Fort Knox, Tennessee.
Michael, welcome to the Rush Limbaugh Program.
Hey, how are you?
One correction.
It's actually Fort Knox, Kentucky.
Ah, excuse me, sir.
No problem.
So my question today has to deal with the comment you made earlier about the inability of auto companies to bring overseas products to the American market.
And the question is, what if any restrictions are placed upon these companies by, let's say, state or federal governments from doing that?
Or is it just basically completely a market issue?
Say, well, I'll give you a perfect example.
I'll give you a perfect example.
The CAFE rules, that's the corporate average fuel economy standards that force car companies to make cars, well, much smaller, because the best way to get more miles per gallon is to make a car that's lighter.
It happens to be more dangerous.
Even such right-wing outfits as USA Today, not long ago, actually it was a few months back, did a series on how many people die needlessly because we've been forcing smaller cars on the American population with CAFE standards in the National Academy of Sciences.
And a number of studies have shown anywhere from 1,500 to 2,000 people may die per year.
When you hit a tree with a small car, you're much less likely to live.
But that's beside the point.
Environmentalism in many ways is deleterious to your health.
The point is that those rules, the CAFE rules, are forced on cars that are built domestically, domestically.
So are environmental rules on cars built domestically.
If they build cars overseas for the overseas market, in which case much of Detroit is profitable overseas, they don't have to meet all the environmental regulations, all the CAFE standards.
They can make cars people actually want.
And one example I was told not long ago was this Ford diesel.
Well, there are problems with diesel fuel and meeting a number of environmental restrictions that precludes the reimportation of some of these vehicles.
So fundamentally, it is American regulation, American, the business climate in America.
If you want to get America moving again against foreign competitors, make our business climate a little more inviting.
Get rid of so many regulations, which are a form of tax.
And more importantly, just as important, we've got the second highest corporate income tax rate in the world at 35%.
You add that on to a corporate tax rate, say here in Minnesota, of 9.8%, and you've got the highest corporate tax rate in some states, any place in the world.
Any wonder why jobs are moving overseas?
Oh, thank you, sir.
Thank you.
Glad you called.
Fort Knox, Kentucky.
Gary in Grand Rapids, Michigan.
You're on the Rush Limbaugh program with me, Jason Lewis.
Good Tuesday to you.
Hey, Jason, how you doing?
I'm doing well, sir.
Good.
I've been in the automotive business one form or another for all my dull life.
And I want to just address one fallacy that I think has been perpetrated on the American public.
And these Japanese cars are foreign cars are so much better than American cars.
American cars today are outstanding quality.
I'm driving a vehicle right now with 214,000 miles made in America that I have no intention of getting rid of.
Gas mileage on some of these cars today is just as good or better than Japanese cars.
I think a lot of the problem lies at the doorstep of the UAW with legacy costs on these cars.
If you know a boo next to a Camry and the price is $2,000 more because of legacy costs, with today's economy and the way people are pinching pennies, they're going to buy the Camry because it's cheaper.
It's not better.
It's cheaper.
And it's $8,000 per car that GM has to pay in legacy costs.
Now, the UAW would argue that in some cases, some of the newer models of the American cars are, in fact, cheaper than some of the middle-end or certainly the high-end Toyotas and some of the comparable Toyotas.
But I do think your overall point is absolutely right.
If you take a look at America's auto industry in Toto and you look at those companies like BMW and Kia and Toyota and Nissan and Honda and all of those, the wages aren't that far off, but it is the benefits.
If you include benefits in the total compensation picture, as the Wall Street Journal pointed out the other day, the hourly labor costs for those other car companies are about $44.20 on average.
For Detroit, $73.
Yeah.
But, you know, in years ago, you could probably make the argument those Japanese cars were better.
In the 70s, they probably were.
In the 80s, but today's quality of American cars is outstanding.
And the fuel mileage is good.
But when you just get it.
But how are you going to get rid of the extra baggage then?
The only way to do that, quite frankly, is not an endless bailout.
We'd end up bailing out the UAW, which is precisely what the members of Congress want to do.
The only answer, I'm afraid, is, in fact, bankruptcy to redo some of the contracts back after this.
You know, it is a little unfair to Detroit to be focused on just that industry when nearly everybody is queuing up to get a bailout these days.
Welcome back, Jason Lewis in for El Rushbo today.
Still out ill.
Hopefully he'll be back tomorrow.
In the meantime, check out rushlimbaugh.com.
Contact line remains the same, 1-800-282-2882.
And I can understand why Detroit feels a little besieged here, but the fact is that homebuilders now want to bail out.
I'm not making that up.
We've got a surplus stock of housing.
That's why prices are falling.
Nobody, you know, people are walking away from homes, which, by the way, the homeowner isn't getting hurt there.
It's the lender and now the taxpayer.
But we've got a surplus stock, but homebuilders want a subsidy to build more homes.
Shrewd, huh?
We've got the states queuing up.
The states now, your local governments, want $126 billion.
They're proposing a plan for that.
Obviously, we've already bailed out Fannie and Freddie.
We've bailed out much of Wall Street, which no longer exists.
I love the bailouts.
What was the purpose of the bailouts of Bear Stearns and company?
Actually, we bailed out J.P. Morgan, to be more honest.
But the bottom line is we were going to save Wall Street.
Wall Street's now a bunch of commercial banks.
For all practical means and purposes, there are no longer, there is no longer any Wall Street, non-deposit-taking institutions.
They all got on the commercial bank bandwagon so they could be eligible for FDIC insurance for more bailouts.
Literally, I don't know where this is going to stop.
Now it's Detroit.
Who else is going to want to bail out?
Anybody that moves.
Well, folks, who's going to bail out the federal government when our dollar isn't worth the continental?
Who is going to bail out the Treasury bill that nobody wants to buy when the Fed goes on a buying binge, injecting money into the economy by buying up Treasury bills, and now Treasury notes and bonds for crying out loud?
This is the real danger that nobody's talking about.
And that is who's going to bail out the people who are doing the bailout?
You, the taxpayer, the federal government.
You want to see a real crisis.
We are at the precipice, if history is any guide.
And the reason is we are loaded up to the max.
What is it, $4.3 trillion now in guarantees or bailouts the government has promised?
There is no such thing as a free lunch.
And essentially what's happening is in addition to the Treasury program, the TARP program that changes every week, you know, first they were going to buy the troubled assets, then they couldn't figure out, well, what do we value that at?
If we buy the troubled assets from banks at a too low a price, they'll have to write down their balance sheet, take write-downs, and that'll cause them to fail anyway.
But if we buy them at a high price, well, that'll encourage more irresponsibility and increase the cost of the bailout.
So that didn't work.
Then they were going to inject liquidity, but that didn't work because banks, as we spoke earlier, didn't want a loan regardless of how much money they had on their reserves because they don't know who's worthy and who isn't.
They don't know who's going to pay them back until the market clears itself.
That means bankruptcy filings.
So now what?
The TARP program and the Fed have just decided, oh, what the heck?
Let's just buy up a bunch of Treasury obligations.
We can just put a credit on the Treasury's checkbook and we can create money out of thin air.
We'll buy up Fannie's bad debt, which is precisely how we got in this mess to begin with.
And now we're going to exacerbate it by throwing in another $600 billion and thinking that's going to solve it.
This is the disease being cured by the disease.
Sooner or later, the world community, sooner or later investors are going to say, well, wait a minute here.
The dollar is going to be worth spit.
If we've got so many trillions of dollars chasing the same amount of goods and services, that's called inflation.
And when you devalue the dollar that way, it wipes out your savings.
The credit markets are going to see that.
They're not going to make loans and dollars, or if they make loans and dollars, they'll have an interest rate premium.
This is all very reminiscent of Jimmy Carter and stagflation, where you had 13% inflation and 21.5% interest rates.
You know, there's this talk yesterday about Bernanke saying, well, I think I'll start buying long-term treasuries, and that way we'll drive down interest rates.
And there are other apologists saying, yeah, the government ought to borrow more money at low interest rates.
I mean, the return on T-bills is, what, less than a percent?
So what?
It's still debt that's going to have to be paid back at some point.
You might have a reduced interest cost, but you're still talking about $4 trillion in new money, fiat money.
What's going to happen is pretty soon, people are going to say, don't want dollars.
There's going to be a run on the dollar.
Nobody's going to want to buy treasury bills without them, without the treasury now paying 10, 15 percent.
No private lender is going to lend money if we get a run on the dollar and keep doing what we're doing without an interest rate premium.
And that's exactly what happened in the 1970s when Jimmy Carter, and dare we say, before he got religion, Paul Volcker, expanded the money supply at a very, very frantic pace, and we got stagflation, which the Keynesians told us was impossible.
Well, we're running that risk right now.
And in the meantime, you've got firms that otherwise would be doing better having their profits kind of eaten away at by propping up all of these other firms who, quite frankly, should be failing.
What was it, Goldman Sachs yesterday lost $2 billion for the quarter.
And they didn't have as much exposure to some of these subprime derivatives or credit default swaps and collateralized debt obligations as others.
But they're hurting.
What I'm trying to get at here is that we are prolonging the malaise.
We are prolonging the recession.
We are actually creating the problem.
We've got a recession of doubt.
Everybody's frozen because nobody knows what the government is going to do next, whom they're going to bail out.
And that is a recipe for total paralysis in the economy.
The government, quite frankly, could do us all a favor by saying, that's it, gang.
Does anybody out there really believe that the bailout so far has worked?
Does anybody really believe that if we hadn't bailed out Bear Stearns and J.P. Morgan, taking on those Bear Stearns liabilities, that that would have been the end of it?
There was no run on the bank at that point.
Now, I understand what they say.
Some of the banks had a lot of these mortgage-backed securities.
There may have been, but there was none at that point.
No, this is a classic case of, quite frankly, what happened with Hoover and Roosevelt.
Hoover did the same mistakes that, frankly, I think we're doing right now, and then Roosevelt got in there and doubled down, which is precisely what Barack Obama promises.
Corbin in Salt Lake City, you're on the Rush Limbaugh program.
Hi.
Great.
Thanks a lot for having me.
You're doing a fantastic job sharing with everybody all these true economic situation that we're in.
You're exactly right when you say that right now is a very good comparable timeframe to what Hoover and FDR had in their day.
And the biggest comparison to that was the biggest kind of the reason why I believe that that's the case is the two things that Hoover tried to do to turn around, really the stock market crash.
It wasn't a depression when Hoover was in charge.
It was just a correction that needed to happen.
It was an asset bubble in the 1920s.
That's right.
That's right.
Rather than let the correction take its course, which needed maybe a 40 or 50 percent drop in the stock market, it ended up being an 80 and 90 percent drop in the stock market over Hoover's timeframe because he thought that the solution was government intervention and government work programs like you talked about earlier.
Rush has cited that article by UCLA economists a number of times.
And it's just you read that, you look back at history, what happened during that time period, what's going on today, and it is the exact same mess we're headed for.
Well, hopefully it won't be that bad, and it doesn't have to be that bad.
I mean, the real question, I think, Corbyn, is will it be, and are we a country of self-reliant individuals, or have we thrown in the towel on self-reliance?
Too many American businessmen, and the bigger the company, the more evident it is, have thrown in the towel on capitalism.
They want to get in bed with government.
They don't want to compete and get government off their back.
So you've got these guys going hand in hand to Washington.
You've got windmill manufacturers begging for environmental subsidies so that they can build their wind turbines, which are totally worthless.
We'll get to that a little later.
And so we don't have any John Galt capitalists anymore.
The question is, though, is it going to be 1929, 1932, 1938 all over again?
I don't think it will be that bad, quite frankly.
Or, however, is it going to be 1976 through 1980, where you get stagflation and the American people reject it.
They rejected Carter and in came Reagan.
I would hope so.
I remember I was a school-aged kid during the Carter years, and all the way to school and all the way back from school in Seattle, Washington when I was going to school.
We sang a song about Jimmy Carter and how he's screwing up the USA.
We thought we were rowdy kids.
Yeah, I got you.
Corbin, got to move.
Thanks for the call.
Robert in Sioux Falls, South Dakota.
You're up next on the Excellence in Broadcasting Network.
Yes, Jason.
I would like to take a contrary view to what your last couple of guests said.
You've been fireworking a $25 billion loan to the auto companies as a bargain.
It's a lot of bang for the buck.
And the reason for it is this.
Half of American households own a GMC, Ford, or Chrysler product.
It's the second largest purchase that most homeowners make or most households make, and it represents, in many cases, a large portion of a family's equity.
To allow these companies to go bankrupt would destroy that equity and would greatly impact these families.
Whatever happened to TWA Airlines, Pan American.
Is the airline industry no longer around?
No, you're missing the point here.
American auto manufacturing is essential to the American economy.
We need American auto manufacturers just like we need strategic stockpiles of oil and minerals and things in case of an emergency.
Well, what do you say to the 113,000 Americans making very good money working for some non-Detroit company who now have to pay taxes to bail out their competitors?
Well, that's precisely the point.
They have been able to thrive in this country because of the American automobile manufacturers.
The American automobile manufacturers are not making automobiles that the American public doesn't want.
They're selling half of the vehicles in this country.
And these companies are going to be able to do that.
Well, be careful about that.
If you go back to as recently as 1992, Detroit's share was about 70%, and now it is about 45%, while the international share has gone up to 55%.
So clearly, their market share has dwindled precipitously.
Right.
And part of that is the product of the federal government, as you pointed out.
They have created this problem.
Let the federal government give a tax break to all corporations that manufacture in this country, not just the automobile manufacturers.
I'm not disputing that point.
I think manufacturing is the backbone in many ways.
And if you look at manufacturing as a percent of GDP, it really hasn't declined as much as people think, but it has declined some.
And I think we ought to have accelerated depreciation, immediate expensing of those capital-intensive industries manufacturing.
I couldn't agree with you more.
But that's not what Washington is doing.
You know, Bush put on the proposal to his credit.
He put the proposal out that says, look, we've already allocated $25 billion for GM, Ford, and Chrysler.
Why don't we, let me put it to you this way.
We allocated that only if they made the Chevy Volt to put a fine point on it.
Only if they made the Ford Focus or a hybrid or this is.
I'm just missing the point.
No, I'm not.
Now, listen, listen, hold on.
Bush said, why don't we remove those environmental strengths and give them the $25 billion loan?
It is a subsidized loan.
Give them that.
And Democrats and Carpenter said, no way we want to tell Detroit what to make.
And now they want another $25 billion, and they'll gladly tell Detroit what to make.
And you know what?
Detroit's going along with it.
Are you going to buy a Chevy Volt at $40,000 a year and charge the battery every 10 miles?
You're going to do that?
Well, first of all, your information is wrong on that.
The Volt will not cost that much when it comes out.
Secondly, you'll be able to charge the Volt overnight.
You're not going to have to.
How far can it go before it has to be charged?
What is it, six hours?
It will go up to 45 miles, 95% of the driving that Americans do.
So it's going to work.
There's a car coming up.
No, it's not going to work, Robert.
No, it's not going to work.
Why on earth do you think the members of Congress had to already vote tax credits of $7,500 to purchase those cars if people would buy them at the full price?
Because it's a transitional technology.
Hogwash.
It's going to require some subsidy.
But the point you made about people buying airline tickets when an airline is in bankruptcy is a completely different analogy.
That's buying a ticket for a one-time use.
There's only one way.
When somebody in Minneapolis would buy a Cadillac Escalade for $80,000 or $70,000 from a company that's in bankruptcy is ludicrous.
That isn't going to happen.
You can't have a debt.
Who makes you think they're not going to re-emerge?
What you want, because you happen to like GM or Chrysler or you work there or whatever, what you want is an endless subsidy by the taxpayer.
Is capitalism dead in Sioux Falls, Robert?
No, no, Jason.
All right, well, gotta go, my friend.
I'm up against the clock.
Point so noted, but I take umbrage.
I'm Jason Lewis in for El Rushbo on the Excellence in Broadcasting Network.
Well, you know, you sit in the big chair behind the golden EIB mic and the Attila the Hun chair, and you end up running long as I did that last segment as well.
So this one will be a short one, but we'll get to all the calls: 1-800-282-2882 throughout the program today.
Jason Lewis sitting in for the big guy rush.
Hopefully, he'll be back tomorrow, recuperating from a little bug he got down there in the Southern Command.
But right now, let's go to Michigan.
Mary Jane, you're up next.
Welcome to the program.
Hey, Jason, just wanted to touch on a couple of points you made.
You had stated that General Motors Chrysler GM should be forced to file for bankruptcy.
Well, I wouldn't say that.
I don't force anybody to do anything.
I wouldn't force anybody to do anything, but the only thing that's being forced right now is yet another taxpayer-funded bailout.
That's the only thing being forced.
You've got a loan here.
It's not a bailout, and it's not money that the government back.
Well, if it's a loan, then they can go to some private lender.
They can't go to a private lender and receive the kind of funds that they're going to for the rate that they want off of the bank.
So that's not really a loan, then, is it?
It is a loan.
Come on, Mary Jane.
Chrysler repaid their loan in the 80s, and that saved Chrysler.
Yes, they did.
And where's Chrysler today?
Well, why don't you allow it to be a bad thing?
Why don't we just do, Jane?
Why don't we just do a Soviet five-year plan where the government can pick and choose industries it wants to get subsidized loans to?
They can pick and choose winners and forget about Adam Smith.
Forget about David Ricardo.
Forget about all those silly little founding fathers of capitalism.
And we'll just have the government pick and choose winners because look at Chrysler.
Jason, you're not for capitalism if that's what your belief is.
Because first of all, if you allow these big three to fail, or even two or one of them to fail, you are going to have such a trickle-down effect with a bankruptcies.
And I'm a credible professional, and I can tell you, the last thing I want to do is turn to the government for a handout because I do not want to be in bed with a government.
But the trickle-down effect that you're going to see from a bankruptcy to the supplier base, to the individual homeowner, to the grocery store owner, to the variety store is going to be horrendous.
And this economy will go into a depression if you allow this to happen.
Views like yours are absolutely incorrect.
Where do you work again?
Mary Jane, you don't have any connection to the automobile industry, do you?
Yes, I do.
Actually, like an executive.
I got to go to a break.
I'll answer your points when we return right after this on the Excellence and Broadcasting Network.
Okay, real quick, we're up against the clock.
Let me answer Mary's point.
Number one, going into bankruptcy doesn't mean the companies go out of existence.
Under bankruptcy, mortgage assets could be abandoned, health benefits, contracts renegotiated.
All the things that need to be done to make these companies viable and then re-emerge could happen.
But only then.
So nobody's talking about total liquidation.
But even if it were to occur, Mary, you confuse a fundamental rule of economics here, and it's called opportunity cost.
You say the trickle-down effect of this company goes bankrupt.
What happens to the trickle-down effect from all the subsidies we have to give them to stay afloat?
That money would have stayed in the economy, and that money would have trickled down.
You're not creating any new wealth.
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