From The Economist:

•  Government Motors no more: An apology is due to Barack Obama: his takeover of GM could have gone horribly wrong, but it has not
• A Detroiter in his own mind 

First, here are a few charts which show a clear correlation between the Obama administration’s actions and activity in the auto industry.

Because the above fact looks good for the Obama campaign, it looks bad on Republicans, especially Mitt Romney who suggested allowing Detroit to go bankrupt.  So Republicans have a list of “reasons” why the auto bailouts were still a bad idea.  I have organized them below and provided responses to them.

Only GM and Chrysler (not entire auto industry) were in trouble
GM and Chrysler going under would have resulted in the loss of not only GM and Chrysler jobs, but the jobs of many industry-related workers (think automotive supply, fabrication, aftermarket, etc).  The result would likely have been hundreds of thousands, possibly millions of job losses that would have further depressed non-automotive related industries (ie. retail companies where newly unemployed automotive or closely-related workers would no longer be spending their money).  Knowing that GM’s bankruptcy would have a domino effect that would affect auto suppliers throughout the supply chain, Toyota and Honda agreed that GM should be bailed oit.

Further reading: 

• Why Toyota wants GM to be saved
• Economist Devastates Romney on the Auto Bailout

GM and Chrysler did this to themselves
The argument here is that GM and Chrysler should have been allowed to fail because their predicament was a result of their own market-related failures.  Keeping these dysfunctional companies around is bad for the economy in general because it rewards failure and amounts to picking winners and losers.

While it’s clear that GM and the other major automotive companies made some bad decisions in the past that led to a less-then-ideal position in the market, what drove them over the edge were events they had no control over.  The near meltdown of the financial markets meant loans became more difficult for everyday people to get.  And vehicle sales depend on loans.  In other words, the downturn in automotive sales happened, not because GM made bad decisions, but because the loans became harder to come by, which made it more difficult to sell cars.

The  downturn also affected Toyota, which also received a small bailout from the Japanese government.  Furthermore, the argument that bailing out of even subsidizing an auto maker is tantamount to picking winners and losers ignores one basic fact:  GM’s Japanese counterparts receive subsidies from their government.  This is a common practice and many self proclaimed fans of the free market seem to overlook.

Further Reading:

• Toyota Wants Extended Government Subsidies in Japan
• Government Subsidies For Business

Obama saved the auto industry for political reasons (ie. go gain UAW support)
While this sounds superficially plausible, the math doesn’t add up. Politically, this was a very unpopular move.  Already angry over the bank bailouts, people were not happy with the prospect of bailing out more companies. According to a Gallup poll taken at the time, 72% of those polled were against bailouts, and only 25% were in favor.  This was not a party-based decision either.  It was nearly as unpopular with Democrats as it was with Republicans.  Against these numbers, any argument that this was a ploy for support from a few hundred thousand  United Auto Worker’s Unions makes no sense, given the tens of millions of people who were clearly against this.

Obama handed GM to the UAW
According to Mitt Romney, this deal “handed” GM over to the UAW. He is most likely referring to the fact that UAW workers now have more of a stake in the company through the UAW Retiree Medical Benefits Trust, (not the UAW itself).  Mitt Romney’s past in private equity may very well result in him being against employees owning a stake in the company.  But no one is more interested in the long term health and growth of a company than its employees, who depend on their company for a pay check (especially companies where employees expect to retire from).    This is in stark contrast to many private equity investors who can (and do) only look for short term profits and in doing so, may gut a company’s long term production capabilities for a short term gain.  A company’s health 5-10 years down the road many not be of concern to this class of investor who will likely be on to the next company by the time structural deficiencies or straddled debt from leveraged buyouts catch up to it.

What’s more is this: Union employee health care (one of the reasons GM has had trouble when it comes to employee costs) is now the responsibility of the UAW, not GM.  In other words, this placed a net burden on the UAW and shifted it away from GM.  This hardly amounts to a handout.

Read More: Mitt Romney says Obama gave away car companies to union

GM actually went through managed bankruptcy, just as Mitt Romney suggested
Mitt Romney suggested a private sector purchase, which wouldn’t have worked.  Prior to the government’s purchase, a private sector buyer was sought after.  None were found.  During a time of economic downturn, the private sector is holding onto cash, not looking to invest (especially in an industry where sales have been greatly reduced–for example, the auto industry).  In fact, one of the buyers that was unsuccessfully courted was Mitt Romney’s old private equity firm, Bain Capital.  Bain passed on this opportunity.

Further Reading: Why The Right Is Wrong About Saving Detroit 

This ‘bailout’ cost tax payers X amount of money
This may or may not be true depending on the “X” amount critics cite.  The “bail out” encompassed both a $6 billion loan (which has been paid back with interest) as well as about a $40 billion  purchase for 61% ownership by the Treasury Department.  Whether the latter portion of the bailout will result in a net gain or loss will depend on what sales of GM’s shares are when the Treasury department sells them.  At this point in time, it would indeed be a net loss.  But it this ‘loss’ would be far less than the total “bailout” amount.

One more thing, the figures above only take into account the money that directly invested and received by the Treasury.  What it doesn’t factor in is any money saved on unemployment insurance, or the tax revenues that would have been lost by an economy that would have been further depressed by the loss of hundreds of thousands, possibly millions of automotive-related jobs.

Further Reading: GM IPO: Auto Bailout Saved More Than 1 Million Jobs, Study Says 

The private sector should have been allowed to buy up GM
According to this argument, in times like this, the market will provide a buyer (or group thereof) who will purchase companies (or their assets) and put them to use.   This is unfortunately, not what happens during an economic downturn.  An economy in full recession and with vehicle sales at an all-time low doesn’t exactly encourage other automotive companies to simply buy and begin making use of these plants.  At best, whatever assets were deemed worthy would have been auctioned off at below market prices and most if not all of these employees would have been laid off.

Ford is doing fine, despite not receiving a bailout
Having recently set aside $25 billion for a turnaround fund, Ford was better prepared to weather the storm brought on by the recession. Nevertheless, Ford benefited from the bailout in the same manner other automotive companies did:  GM’s demise would have taken down the same supply chain Ford depends on.  This is why Ford urged the bailout for GM.  What’s more is that, while Ford may not have been bailed out per se, they have received generous subsidies from the Obama administration

Obama Saved The Auto Industry

Further Reading

• It’s a good thing Obama saved the auto industry
• Auto Industry Provides Bright Spot In Jobs Report, Proving Again That Letting It Fail Would Have Been The Wrong Course
• GM’s Profit Boosts Obama’s Second Term Prospects
• Romney Adviser Now Claims Auto Rescue Was Actually Romney’s Idea

• Stimulus Package (ARRA) - Supported  by Democrats and opposed by Republicans
• American Jobs Act - Supported  by Democrats and opposed by Republicans
• Affordable Healthcare Act - Supported  by Democrats and opposed by Republicans
• Ending Oil Subsidies -Supported  by Democrats and opposed by Republicans
• Keystone Pipeline - Supported by Republicans  and opposed by Democrats

Also worth noting is the change in troop levels since Obama has taken office.

Less entertaining and less appealing to our limbic system (but more informative), here is the breakdown of what’s causing our current and projected future debt.

• Roughly half of all Americans pay no federal income taxes specifically
• About 86% of Americans pay Federal taxes of some sort (because everyone who earns a paycheck pays payroll taxes).
• Lower income earners still pay local/state taxes
• Everyone pays a variety of sales taxes
• Payroll and sales taxes are highly regressive (they account for a much higher percentage of a lower income earner’s paycheck).
• The reason about 50% don’t pay federal income taxes is because the bottom 50% have seen their real earnings drop over the last few decades, as the top 1% has seen a corresponding increase in wealth

What a standard paycheck looks like

This is what a standard paycheck looks like (in California).  Those who claim that half of Americans pay no taxes are really just referring to the item 1 (federal withholding).

Who doesn’t pay federal income tax?  Lower income households and senior citizens

That “half of America who pays no federal income taxes” are senior citizens receiving social security (because their social security checks aren’t subject to federal income taxes), students, people with disabilities and people who have seen their real income drop.

Those who pay no federal income taxes are exempt because they are in the bottom tax brackets.  These are people who’ve seen their wages drop as the majority of the country’s increased wealth has gone overwhelmingly to the top 1%.

Payroll taxes – Highly regressive

Everyone earning a standard income paycheck is subject to the payroll tax.  However, the social security portion of the payroll tax only taxes the first $106,000 of income, making it highly regressive.  What this means is that someone earning $500,000 is still only taxed that 6.2% on the first %106,000, which will amount to just over 1% of their total paycheck.  On the other hand, someone earning $50,000/year pays that 6.2%.  What’s more is that the burden for the payroll tax is likely carried full by these workers.  Technically, an employee’s paycheck is subject to 6.2% for social security and 1.45% for Medicare.  His/her employer is on the hook to match that, meaning these tax rates are actually 12.4% and 2.9% respectively, with the employee and employer each covering half.  However, there is good reason to believe that employers shift this cost onto their employees by paying less in order to offset their portion, meaning that the employee is actually covering that 12.4% and 2.9%.

How significant is the payroll tax?  As corporate taxes have been cut, payroll taxes have carried more and more of the burden as a whole.  What this means is that the tax burden as a percentage of the whole has shifted more and more to middle and lower income earners.  Remember, a person with an income of half a million dollars pays not one dime more on the social security portion of taxes than a person making just over $106,000, because that’s where the SS tax cuts off.

 Further Reading

• Why do half of Americans pay no federal income tax?
• Misconceptions and Misconceptions and Realities About Who Pays TaxesRealities About Who Pays Taxes
• It’s A Myth That 47% Of Americans Pay No Taxes, In Truth 86% Pay Taxes
• Michele Bachmann says top 1 percent pay 40 percent of all federal taxes 
• The Regressive Tax That Does the Work

As the CCBP noted in 2010 when the debate on allowing the Bush tax cuts to expire on the wealthiest Americans was in full swing:

 In reality, however, extending the tax cuts would do little for small business because only the top 3 percent of people with any business income, let alone income from a small business, would benefit. [1] Over the long term, an extension would likely harm the economy — and thus small business — by adding about $1 trillion to deficits and debt over the next decade and even larger amounts in subsequent decades. [2]

http://www.cbpp.org/cms/index.cfm?fa=view&id=3251

But facts are never a problem for people like Paul Ryan.  His goal isn’t really to help economic recovery so much as keeping true to his small government ideology and keeping his pledge to Grover Norquist.

This was Mitt Romney’s response to a question regarding making sure the wealthy pay their fair share of the social security tax (more on that below).

What time in this country is Mitt referring to? Is it when the top marginal tax rates were more than double what they are now and there didn’t exist such a huge divide between the rich and everyone else?

Was it back when capital gains taxes were higher than the 15% that Romney now pays in taxes?

Credit:Jared Bernstein / Sources: NIPA, CTJ

What is this America Mitt Romney misses that sorely contradicts his tax and economic policy and contradict his attacks on Obama as “wanting to fundamentally change America into something else” (when in fact Obama’s America closer reflects the America Mitt claims to long for).  Mitt Romney’s America looks more like this.

The social security tax issue the person in the audience was referring to.

Currently, only the first $106,000 of income earned is subject to social security (12%).  After this, nothing is taxed.  What this means is that someone earning $106 million in income pays 1.2% on social security, while someone earning $53,000 is still paying 12%.  In sheer dollars, this means that the person making that $106 million income paid about $12,720 while the person earning $53,000 paid $6,360 (half of what the millionaire paid).  What’s more; there is no social security tax on capital gains (where the super wealthy like Romney really make their money).  One more thing; because a higher and higher percentage of the nation’s wealth is earned at the top (because of our growing wealth disparity), less and less and of the country’s revenue is subject to social security taxes.

These are important to keep in mind when Republicans falsely claim that:

• Social security can’t be fixed by taxing the wealthy (because it’s “class warfare” or “punishing success” or some other overused pejorative).
• The bottom 50% “pay no taxes.  They are ignoring payroll, state, and sales taxes and hoping no one realizes they are only referring to federal income taxes .  They are also hoping that no one makes the connection that these people pay no federal income taxes because their real earnings have fallen into the lowest tax bracket as more of the wealth has coagulated at the top.

Looking back now with a far better handle on economic policy, I see why this notion is so prevalent.  Democrats are accused of very tangible activities: imposing higher taxes and regulations.  It’s easy to see an increased tax rate or point to a regulation which, at face value, appears to serve no purpose other than to hamper business.  What’s not tangible is an economy with increased demand due to a strong infrastructure and rules than ensure fair play that everyone abides by.  The stronger economy is simply assumed to exist on their own and democratic policies receive little recognition.  Sure, every business owner wants lower taxes.  But low taxes are hardly an asset in a business environment where there is little/no profit to enjoy those low taxes on.

Recently, in a Q&A session with the head of Boeing Obama claimed that “we’ve” been lazy about attracting foreign investment.  It’s clear from watching the actual interview that Obama is either referring to the government or business.  The full quote is here:

“But, you know, we’ve been a little bit lazy, I think, over the last couple of decades. We’ve kind of taken for granted — well, people will want to come here — and we aren’t out there hungry, selling America and trying to attract new business into America.”

In this MSNBC segment, Lawrence O’Donnell compares Obama’s full statement to the ensuing hatchet jobs from Mitt Romney and Rick Perry.

What Obama is saying here is clearly in line with what Republicans generally claim: that American regulations and taxes make it difficult to do business here and this persuades investors to invest outside of the United States.  That doesn’t stop Mitt Romney and Rick Perry (who are certainly proponents of this notion) from falsely claiming that Obama is claiming that Americans are lazy.

It’s no secret that political campaigning has long-since abandoned any notion of honest discourse and has certainly trampled on everything I ever learned in my Ethics of Journalism course back in my college years.  But the level at which the GOP Presidential candidates trample this is simply beyond reproach.

The Republican presidential candidates have been trying to outdo each other in attacking Obama, and these attacks certainly fit the mold.  Mitt Romney is likely trying to break through to a solid #1 spot instead of being constantly overtaken by a different “GOP flavor of the month.” Rick perry (who rose and fell from his status as the “flavor of the month” some time ago) is in desperate straits (especially after what appears to be a drunken speech and an embarrassing moment when he forgets the 3rd federal government agency he’d get rid of).

In Perry’s case, a desperate attack like this is almost understandable.  At this point it would seem he has little to lose since his campaign appears to be falling to the wayside and his chances of winning the GOP nomination are pretty much done for barring a miracle.  Romney is a different story however.  Surrounded by GOP candidates whose statements and actions often border on satire, Mitt Romney has maintained a more dignified and disciplined campaign.   So while it’s not too surprising to see Perry stoop to this level, it is a shocker to see Romney do so.  This may be yet another attempt from Romney to court the GOP base.  After switching from an acceptance of human caused climate change to one of borderline climate change denial, and taking on a more imperialistic tone, it may very well be that the Romney campaign is trying to court the GOP base by partaking in the satire.

Further Reading:

• Did President Obama call Americans lazy?
• Lazy Rhetoric
• Perry’s Latest Attacks Distort Obama’s Words and Past
• Rick Perry Doubles Down on ‘Lazy’ Ad; Slams Obama as a ‘Socialist’

American Jobs Act (Democratic Party)

• Popular support among the public
• Popular among private sector economic forecasters Moody’s and Macroeconomic Advisers who say it would crate over a million jobs
• The CBO says it would not only pay for itself, but lower the deficit
• This is paid for through increased revenue and the popular millionaire tax

Series of Environmental Deregulations  (Republican Party)

• Popular among big oil and free market/anti-government “think tanks”
• Unpopular among private sector economic forecasters Moody’s and Macroeconomic Advisers who say it could lead us back into recession
• Unpopular among health and environmental organizations
• “Paid” for by pollution, dirty water and deregulating Wall Street further.

Here is a partial list of these bills on OpenCongress.com, which lists organizations both supporting and opposing these bills.

• The Reducing Regulatory Burdens Act (H.R. 872)
• The Energy Tax Prevention Act (H.R. 910)
• Disapproval of FCC’s Net Neutrality Regulations (H.J.Res. 37)
• The Clean Water Cooperative Federalism Act (H.R. 2018)
• Consumer Financial Protection & Soundness Improvement Act (H.R. 1315)
• Protecting Jobs From Government Interference Act (H.R. 2587)
• Transparency In Regulatory Analysis Of Impacts On The Nation (H.R. 2401)
• Cement Sector Regulatory Relief Act (H.R. 2681)
• EPA Regulatory Relief Act (H.R. 2250)
• Coal Residuals Reuse and Management Act (H.R. 2273)

I am no fan of Pat Buchanan…Despite my opinions of Pat Buchanan, he is clearly a man of accomplishment who does very intelligently express the sentiments of parts of the conservative movement.  It is no shock that the left is going after him….

So in short, Phillips disassociates himself with Pat Buchanan’s views while attacking “the left.” He continues:

Let’s be blunt.  The racist in this story is the group, the Color of Change.  They are a very anti-American, far left group.

Read the entire letter here.

This brings us to the question, who (if anyone) is the racist between Color of Change and The Political Cesspool?

Let’s take a look at who they are.  It is clear that Color of Change is a more inclusive group, looking to empower undeserved individuals (and not just Black Americans) while Cesspool is an exclusive group whose agenda is specific to its own single ethnicity and takes a clear stance against individuals/groups with different ideas.

The point is, Tea Party Nation founder Justin Phillips is wrong and simply helping to enable this sort of bigotry (huge surprise) by attempting to muddle the issue.

Color of Change (About Page):

ColorOfChange.org exists to strengthen Black America’s political voice. Our goal is to empower our members – Black Americans and our allies – to make government more responsive to the concerns of Black Americans and to bring about positive political and social change for everyone.

We were heart-broken and outraged by the catastrophe that followed Hurricane Katrina. And we were devastated to realize that no African-American organization or coalition had the capacity to respond on the necessary scale.

Hurricane Katrina made it clear that our lack of a political voice has life-and-death consequences. With no one to speak for them, hundreds of thousands of people – largely Black, poor, and elderly – were left behind to die. But it wasn’t just Black folks. Poor, sick, and elderly people of every color were abandoned too. We are not alone, and when we work to protect Black lives and interests, we do the same for all who have been left behind in political silence.

ColorOfChange.org is comprised of Black folks from every economic class, as well as those of every color who seek to help our voices be heard. Our members are united behind a simple, powerful pledge: we will do all we can to make sure all Americans are represented, served, and protected – regardless of race or class.

The Political Cesspool (Statement of Principles)

The Political Cesspool Radio Program stands for the The Dispossessed Majority. We represent a philosophy that is pro-White and are against political centralization. You can trust The Political Cesspool to give you the “other side of the news” – to report on events which are vital to your welfare but which would otherwise be hushed up or distorted by the controlled press.

1. The United States government should be independent of any international organization of governments and American law should not be imposed by organizations such as the United Nations.
2. America would not be as prosperous, ruggedly individualistic, and a land of opportunity if the founding stock were not Europeans.
3. Since family is the foundation of any strong society, we are against feminism, abortion, and primitivism.
4. Private property rights are inviolable. They come from our God-given right to life.
5. We wish to revive the White birthrate above replacement level fertility and beyond to grow the percentage of Whites in the world relative to other races.
6. Issues such as education, environmental law, and police should be decentralized down to the lowest level to insure natural rights and efficiency.
7. Secession is a right of all people and individuals. It was successful in 1776 and this show honors those who tried to make it successful in 1865.
8. We are cultural conservatives because we have certain morals to which we adhere. We are against homosexuality, vulgarity, loveless sex, and masochism.
9. We wish for American government to stop interfering politically, militarily, and socially outside of the borders of the United States of America. We want non-interventionism.

Further Reading:

• Republican/Tea Party Racism
• Tea Party Shamed By Founder Judson Phillips
• Why Is The Media Treating Judson Phillips Like A Serious Tea Party Spokesman?