"The Truth About Cars and Trucks"

Here is more evidence to support my remarks in a previous post concerning the UAW as the WSJ's Holman C. Jenkins, Jr. tells "The Truth About Cars and Trucks":

For more than 40 years, a 25% tariff has kept out foreign-built pickup trucks even as a studied loophole was created in fuel-economy regulations to let the Big Three develop a lucrative, protected niche in the "passenger truck" business.

This became the long-running unwritten deal. This was Washington's real auto policy.

For three decades, the Big Three were able to survive precisely because they skimped on quality and features in the money-losing sedans they were required under Congress's fuel economy rules to build in high-cost UAW factories. In return, Washington compensated them with the hothouse, politically protected opportunity to profit from pickups and SUVs.

...the muddled, covert bailout continues: Washington's latest fuel-economy rules actually reward manufacturers for increasing the size and weight of some vehicles. The truck tariff remains in place. The fuel-mileage rules continue to protect the UAW monopoly by discouraging the Big Three from shipping small-car production offshore.

Lately some have doted, with wonderment and admiration, on the Obama administration's apparent willingness to drive a hard bargain with the UAW as it tries to impose a stage-managed replica of bankruptcy on GM and Chrysler. Please.

In a real bankruptcy, which is the natural fate of companies unable to meet their obligations, Chrysler and GM would be run (or liquidated) for the benefit of their creditors, not their workers. But, here, "pattern bargaining" will remain the law of the Detroit jungle. The UAW will continue to use its unnaturally augmented clout to extract uncompetitive pay and benefits (it can do no other given its internal incentives). As it has for 40 years, Washington will pitch in with one improvisation after another, disguised as energy policy, trade policy, health-care policy or environmental policy, to stop the rivets from popping off. Politics, especially Democratic electoral politics, will play a more dominant role than ever.

Look closely and the hidden subsidies to keep the dismal beast alive have already started flowing -- tax credits for UAW retirees to make up for reduced health-care benefits, loans to help Detroit "invest in green cars." And plenty more will be needed to sustain Obama Motors on life support, at least through the 2012 election.

The Obama strategy does nothing to change the basic dynamics of the homegrown auto sector -- a labor monopoly combined with endless finagles in Washington to help the Big Three survive competition from Japanese, German and Korean auto makers. But maybe the shock of seeing GM nationalized will at least cause some in politics and the press finally to think about how we got here.

The travesty is how long this will continue to play out to the detriment of the US auto industry and especially to the US taxpayer.

Labor's Impact on Free Trade: Bad Economics, Bad Foreign Policy, Bad for America

It seems that only a few strong sources report on the trade shenanigans of the US Congress. Bob Novak is one of the most clear which he continues in "How Labor Rules." Read it all to belueve it. This is bad economics, bad foreign policy, very bad for all Americans including, I believe, big labor, and bad for America.

Ignoring pleas from outraged South American governments, Democratic leadership of the House this week was adamant about Congress going into its August recess without taking action on free trade agreements with Peru and Panama as promised....

Why did House Speaker Nancy Pelosi renege on her previous commitment? She dances to the tune of AFL-CIO President John Sweeney, who preaches outright protectionism. Hostility toward not only the Peru and Panama pacts but also a vital agreement with Colombia can be traced to influence on U.S. unions by South America's leftist labor leaders, originating in Hugo Chavez's Venezuela.

Beyond U.S. unpopularity in the Western Hemisphere, this exposes deeper problems for the new Democratic majority in Congress. While the AFL-CIO's authority is diminished in the labor movement and among the nation's workers, its chief rules in Congress. Democrats bowed to Sweeney's wishes in voting to end secret ballots in union recognition elections, but the more audacious demonstration of labor's influence on Capitol Hill was getting the House leadership to renege on a bipartisan deal affecting world trade.

Democratic leaders are impervious to the reality that Colombia, Peru and Panama now enjoy one-way trade access to the United States, whereas the agreements would open their markets to U.S. goods. Nor do the Democrats show concern about alienating Uribe and Garcia as Hugo Chavez's menace spreads through the hemisphere.

Sweeney's marching orders are not limited to Latin America. He dismisses the negotiated agreement that finally would open South Korea to U.S. autos as "a losing, one-sided agreement." Obediently, House Democratic leaders declared the Korean pact dead on arrival.

Earmarks: McHenry, Murtha & The House

Two stories that say a lot about the US House Of Representatives:

From The Crypt's Blog at Politico.com entitled "What's In Your Wallet?":

Republican Rep. Jeff Flake of Arizona, the fiscal crusader who's never met an earmark he likes, questioned Democratic Rep. Peter J. Visclosky of Indiana on the House floor Tuesday about whether the Center for Instrumented Critical Infrastructure actually exists - since, hey, it's getting like a million bucks or something.

Visclosky, who chairs the spending subcommittee responsible for the project, had to admit that, well, he didn't have a clue.

After a lengthy back-and-forth, Flake, complaining that his staff couldn't find a website for the center, asked Visclosky, "Does the center currently exist?"

"At this time, I do not know," the Indiana Democrat replied. "But if it does not exist, the monies could not go to it."

And who could possibly be the sponsor of such an earmark? Yes, you guessed it, the man Republicans love to hate, Pennsylvania Democrat John P. Murtha. Despite the money's uncertain destination, the House rejected Flake's measure to strike the funds, 326-98. And the Visclosky bill also sailed through, 312-112.

And this update now in the article:

UPDATE: I failed to report last night that a certificate filed with the requested funds says the money is actually earmarked to Concurrent Technologies Corporation, a nonprofit technological consulting firm. A brief search of campaign finance records shows CTC President and CEO Daniel R. DeVos, of alternately Central City and Johnstown, Pa. has contributed $7,000 to Murtha's reelection campaign since April 2002.

Now, story number two concerning my own Representative from North Carolina, from the Winston-Salem Journal, "House Axes Perfect Christmas Tree":

The House killed The Perfect Christmas Tree.

When U.S. Rep. Patrick McHenry, R-10th, asked for federal tax money to expand a commercial development in rural Western North Carolina known as the Home of the Perfect Christmas Tree, the House turned him down flat.

So far this year, the House had not voted to reject a single earmark request - until this one.

McHenry had angered so many House members with attacks on earmarked spending that when he put in a request of his own, the long knives came out.

By a 249-174 vote, the House voted on June 28 to eliminate $129,000 from a spending bill that would have expanded a Christmas-crafts store in economically depressed Mitchell County.

...Two weeks before the vote, McHenry helped tie up the House for more than three days by criticizing the secrecy of special projects other House members wanted. He said he wanted to “hold the Democrats accountable for their slush fund, their secret earmarks and their pork-barrel projects.”

McHenry insisted that he was not fighting earmarked projects but the secrecy. The Democratic leadership did not want to disclose the earmarks until just before a final vote.

“I fought against keeping earmarks secret,” McHenry said in an interview. “I’m proud to say we won that battle.”

...In 2003, the Mitchell County Development Foundation started the Home of the Perfect Christmas Tree in Spruce Pine with money from the federal Appalachian Regional Commission and private investors. McHenry said he should have requested the earmark for the foundation, an
economic-development organization, instead of the Home of the Perfect Christmas Tree.

But he defended spending federal money to help a local economy devastated by international trade. Over the last five years, the county has lost a third of its manufacturing jobs to overseas furniture and textile competition.

The craft center’s name came from a popular children’s book, The Year of the Perfect Christmas Tree by Gloria Houston.

Last Christmas, first lady Laura Bush picked the store’s hand-blown ornaments and Carolina Snowflake woven-reed ornaments for two White House Christmas trees. She lauded the people of Spruce Pine for working together “to figure out a new industry for themselves.”

You will find an earlier post of mine on McHenry's tough relationship with the other side of the aisle and earmarks a few weeks ago. That post is here.