Michigan Republicans May Fill Dingell Void as GM, Ford Friends in Congress
Angela Greiling Keane, Jeff Green and Craig Trudell – BloombergGeneral Motors Co., Ford Motor Co. and Chrysler Group LLC may get relief from regulations such as higher fuel-economy standards as Michigan Republicans seek posts leading two U.S. House committees.Representative Fred Upton of Kalamazoo is among candidates to become chairman of the House Energy and Commerce Committee, which oversees legislation on vehicle-safety and emissions, and Republican David Camp from Midland is in line to head the House Ways and Means Committee, which sets policy on tax issues.“The election was a piece of luck for Detroit,” Sean McAlinden, chief economist at the Center for Automotive Research in Ann Arbor, Michigan, said in an interview. “When they needed a Democrat to bail them out with a bankruptcy, they got Obama. Now they need Republicans to fight these fuel mandates, and maybe even slow them down.”Leadership positions for Upton and Camp would return the Michigan-based companies to the influence they had when Representative John Dingell from the state led the Energy and Commerce Committee, according to McAlinden, who advised President Barack Obama’s auto task force. Dingell was ousted two years ago as chairman by fellow Democrat Henry Waxman of California. Waxman and Dingell will remain on the committee when Republicans take control of Congress next year.Upton has support from Camp and Michigan Representative Mike Rogers of Lansing for the Energy and Commerce Committee chairmanship in a contest with Representative Joe Barton of Texas, a former chairman and currently the senior Republican on the panel.“Fred fully understands the regulatory and tax burdens being placed not only on manufacturers and automakers, but our entire economy,” Camp said Nov. 10 in an e-mail.The Republican “lineup clearly will be more supportive” of the auto industry on issues such as fuel economy, said Dave McCurdy, a former Democratic representative from Oklahoma who heads the Alliance of Automobile Manufacturers, a Washington- based trade group.“I don’t think that’s just Michigan-based and it doesn’t just apply to domestic manufacturers,” McCurdy said in an interview.Tea Party-backed candidates who won seats in the House by campaigning against federal regulation and spending, including the GM and Chrysler bailouts, may lead opposition to increasing fuel-economy standards, said Russ Harding, senior environmental policy analyst at the Mackinac Center for Public Policy and director of the Michigan Department of Environmental Quality from 1995 to 2002.“This stuff that Obama and some of the Democrats are talking about on the fuel standards is fantasyland,” Harding said. “You’re not going to achieve those numbers with technology we know about in this day and age.”I don’t understand why analysts would suggest that hiring Upton and Camp is a step forward or a ‘piece of luck’ in today’s energy environment. More rapid consumption of fuel accelerates the worldwide deflation, bankrupting the auto industry’s customers. An energy shortage would bring the current form of the auto business to an end. The billion$ of taxpayer funds invested in ‘high fuel consumption’ vehicles will be lost. This is on top of capital already sunk into the industry rathole. What Upton and Camp seek to legislate is the recent appearance of prosperity while undermining any hope of its actuality.
At least the two aren’t quoting the bible or speaking in tongues.
Meanwhile, here is the Bowles/Simpson budget proposal:
Panel Seeks Social Security Cuts and Higher TaxesStephen Crowley The New York Times
WASHINGTON — The chairmen of President Obama’s bipartisan commission on reducing the national debt outlined a politically provocative and economically ambitious package of spending cuts and tax increases on Wednesday, igniting a debate that is likely to grip the country for years.The plan calls for deep cuts in domestic and military spending, a gradual 15-cents-a-gallon increase in the federal gasoline tax, limiting or eliminating popular tax breaks in return for lower rates, and benefit cuts and an increased retirement age for Social Security.That’s some boldness right there. Fifteen whole cents. Good grief!
There is no courage in Washington, DC. How about a $5 a gallon tax in year one followed by another $5 a gallon tax the following year with others as necessary to cut gasoline consumption and get Americans from behind the wheel?
What these nincompoops don’t realize is that events are going to cut gasoline consumption and likely take all American drivers off the highway. If we are lucky: if not there will be food shortages as well. Reality sez the establishment needs to step away from the private automobile.
What is happening world- wide is the ‘Reality Effect’ which is unpleasant and while being difficult to perceive.
Then again, most economists and analyst suggest that excess debt is the cause of our economic malaise while ignoring the effects of energy prices on businesses. Right now businesses are screaming about rising input costs that cannot be passed along to customers in the form of higher prices. Here’s Mike Shedlock:
For all the brouhaha from inflationists regarding soaring commodity prices and how it means wild-ass inflation, I calmly point out five things.1. Inflation is about credit and the demand for it, not prices. (sez Mike Shedlock)2. Pricing power is nonexistent. Similar small business surveys show the same thing. Businesses have not been able to pass along input price increases, and that’s a fact Jack.3. A business pricing squeeze is on, as consumers demand bargains.4. Inflation is rampant IN CHINA, not in the US. Commodity prices have far more to do with overheating in China, than anything regarding inflation in the US.5. Money supply and more importantly credit, is soaring in China. Credit is contracting in the US.Thus, the rah-rah inflation talk by inflationists cherry picking commodity prices and pretending those prices are a measure of inflation in the US, is complete nonsense, for more reasons than one.If inflationists want to scream about inflation they should be screaming about China. Instead they run around like chickens with no heads, unable to find any country except the US on a global map.The price squeeze on businesses has been a characteristic of the entire period both in the US and abroad since 2004. Higher input prices were noted by the FOMC beginning at that time. The Fed called it ‘inflation’ and raised Greenspan’s super- low discount rate. That raise in rates was the beginning of the end of the mortgage lending bubble.
Keep in mind that higher prices by themselves do not represent inflation. High input prices amplify deflation because a company or individual purchaser must choose between particular inputs or classes of inputs. The goods not purchased represent a cost to the frustrated non- seller. They also represent a large and increasing risk to the purchaser whose cost may then be unrecoverable. Vulnerable companies/individuals are soon left out of the economy where they themselves morph into costs.
With inflation/growth, higher input prices are met by higher business returns or wages as inflation raises all boats with some rising higher and faster than the others. The customers can purchase the inputs without having to make the draconian choices. The Fed and other analysts miss this important point about the allocation aspect of deflation.
Higher input costs — which reflect higher embedded energy costs in all these other inputs — can only be met by cuts elsewhere. So far in our Grand Recession the cuts have fallen on employees. Perhaps another mechanism has been uncovered to convert assets swaps and the accompanying nonsense into falling employment. That is, QE presses in input prices particularly food and energy. As these input costs rise, businesses axe jobs.
You can see how the short term AND long term trends are down for the euro. Part of this is because of poor European crisis management. Part is because of the ongoing hardening of the dollar against crude oil prices. This is both the blessing and curse of the dollar as reserve currency.
As a blessing, there is no ‘shortage’ of dollars as the Fed can always make some more dollars — if doing so does not ricochet against another aspect of the economy somewhere else in the world.
As a curse, there are more dollars overseas in the hands of US competitors than there are here in this country. This also amplifies deflation and the vicious cycle makes dollars more valuable still. That is, dollar scarcity here causes more issuance which sends dollars overseas leading to dollar scarcity here and on and on. The overseas dollars cause inflation there as is the case now in China, India, SE Asia and other places where dollars flee looking for a home …