Letter to Senator Mark Warner

I just received a letter from Senator Mark Warner. This is a reply.

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Thank you for your email.

Thank you for letting me know that you strongly support additional bailouts for favored businesses.

I realize that the small business package includes some things that will be positive, like allowing those who choose to invest in capital to write off the balance more quickly. However, allowing the current tax rates to expire on most of these businesses (taxes on the "rich" who own these businesses and file personal returns that reflect the business income) will cost far more than this plan could ever save.

Moreover, the majority of the cost (which will have to be paid for, despite the claim that it doesn't cost anything) is for direct bailouts (loans) for favored businesses. The loan industry has no shortage of funds available. The $1.5b is minor compared to the $300b already available. This money will go to companies, like those you indicated, which are politically favored, and some of whom do not have a sound business model which would be required to otherwise get loans. And which will be required to actually succeed and to pay back the loans.

In addition, while the deductions on capital investment may reduce the short-term cost of business growth, the new healthcare regulations will greatly increase the cost of employees. In other words, recent regulations still create an environment that is strongly negative for jobs growth.

It is laws like these that have overseen the increase in unemployment from 7.2% under Bush to over 10% under Obama. These laws with more regulation and higher taxes have made things so bad that some experts do not expect unemployment to ever return to the low rates that President Obama inherited.

(Originally posted at http://warner.senate.gov/public/index.cfm?p=NewsletterReply)

Government running our businesses

The government is insistent on taking over the banks. They started by loaning the TARP/bailout money to the banks. They they changed that to preferred stocks - some more risk than bonded loans, but still higher in the food chain. Now the government wants to change it to common stock. You know, the stuff that becomes worthless in bankruptcy? Why? Because common stock is VOTING stock! The government wants to tell the banks exactly what to do! (They also get four of nine directors of Chrysler. with the UAW getting one and Canada getting one, totalling six of the nine directors.)

Since when has the government been any good at running a business? Just look at the Postal Service. They keep raising rates all the time. They are slow, and they lose a lot of mail. They don't guarantee their service unless you get the highest (most expensive) options. The major competitors at least guarantee they won't lose your stuff - and they offer tracking included at no extra charge. But they AREN'T ALLOWED to handle non-priority letters! The government knows it's doing such a bad job that it won't let others compete!

Keep the government's hands off of businesses!

FYI on a label I used.

Fascism: One of the major components is the government telling businesses what to do even while those businesses maintain the fascade of being private. Communism includes when those businesses are directly government-owned. Look it up.

Transparency?

You may wonder, where's all the "transparency" we were promised? We just found out with Chrysler that we lost $4.3 billion from TARP. Wasn't "every last dime" supposed to be accounted for?

It turns out that they aren't going to give us any information on this until next year.

Chrysler bankruptcy

The company Cerberus owned 81% of the company, was owed $500M, and owned the Chrysler Building. They lose everything in the bankruptcy. They get repaid zero. They even lose the building.

The company Daimler that used to own Chrysler is owed another $1.5B. They get repaid zero.

Banks are owed $6.9B. They get $2B, 29 cents on the dollar.

The US government has put in $4.3B from the TARP bailout. They are also owed $300M in fees. This was supposed to be a great investment Chrysler would repay with interest. What do we get on our investment? Zero. No, worse than zero. We will give them another $3.2B in the restructuring and another $4.7B later.

The United Auto Workers has $10.6B in Chrysler debt. Remember from my last note that this is unsecured debt; they are only supposed to get what's left over after the secured debt is FULLY repaid. So, what do they get? A note for $4.6B (at 9% interest!), or 43 cents on the dollar, more than anybody else. Plus - and a big plus - they get 55% of the equity of the company. They went from not actually owning anything, and being last in line for repayment, to owning 55% of the company. Oh, and they also get $600M in "legacy costs", for stuff like pension and healthcare benefits, from Daimler.

Guess what? The "Car Czar", Steve Rattner, was Finance Chair for the Democratic National Committee. And guess what else? The UAW gives 99% of their political contributions to the DNC. Makes things clearer, doesn't it?

The Federal Governmemnt Is Clueless

OK, the Air Force One flight that served to terrify people in NYC cost closer to $350,000. And the trip to Missouri yesterday was about $20 million. Your tax dollars at work.

Our government over the past year - yes, with both parties and both administrations - are using crisis after crisis to get more power. The government and the unions now control GM and the major banks (and a large portion of Chrysler). They have pushed through cabinet secretaries without proper review, and any objections were overruled in the name of the crisis. We got a tax cheat AS THE HEAD OF THE IRS because we had a crisis. He has since proven worthless; CitiBank and Bank of America are now (based on the "stress test") seen as less stable and more likely to fail AFTER the bailout than before. Now we have someone with a strongly racist beliefs as head of Health and Human Services because of a crisis. It's just a bad flu, at least for now, and all they really need to do is close the border from Mexico to keep sick illegals out.

When I say HHS secretary Sebelius is racist, I mean as in wanting to eliminate all black people. She's scary - check it out, just not with the major news sources since they love everything Obama does. Oh, and as a reminder, Obama's only 1/16 black. With 7/16 Arab and 1/2 white. This is common knowledge, but generally ignored. I don't care what race/heritage someone is, but don't try to convince me of something that's not true. Planned Parenthood was started by Margaret Sanger explicitly to eliminate blacks by aborting all black babies. They try to play that down now, but it's still true.