GM $38.7 Billion Loss

[Prof]

While it sounds like GM has lost 39 billion...most of that will be a tax write-off...so the real losers are............yup...you and me.

That is billions that would have gone into the general revenue fund...so without it there will be more defecit spending...

GM is also buying out 74,000 employees........that expense will also be tax deductible so once again the general revenue funds suffer.

At some point we need to get to a earn and pay situation. What our nation earns in a year becomes the budget for the next year...maybe a two or three year lag...the interest on the funds that sit, can initially be used to pay down the debt, if/when that is absolved, then it becomes funding for re-funding of programs like Medicare and Social Security.

Sure sounds simple...but my feeble accounting system requires tough decisions and pain in process...so it is just a pipe dream.

 

[OCBob]

That's a pretty interesting idea Roy. See, I knew you were a "tax and spend liberal" hehhehe (j/k).

In fact your way of tax and spend makes a lot of sense, too much sense for our government to enact of course. I don't think most folks realize just how badly a spending deficit hurts our country and our future. And no one in a position of power seems to give a damn.

 

[Prof]

I was on the board of directors of a not-for-profit organization a few years back (American Cancer Society), and we decided to move to that kind of funding/budgeting. The grants, and funds raised in one year became the budget for the next year...if we wanted to increase our spending we had to drive the revenue in the prior year. The interest on funds received through the first year and prior to the second year became reserve funds that were placed in accounts that required board approval for expenditure.

It was amazingly simple and very practical. Our government is so huge and the revenue comes in in fits and spurts....so it would probably take a lead of multiple years...and the transition away from defecit spending would be very painful for all of us...and if this is tax and spend...(very cute!) then yes that is me!

 

[OCBob]

One thing I can't figure out is how you fund the "bridge" years while this takes effect. If what we collect is going to be used for the budget 2 or 3 years down the road, what do we use for those initial 2 or 3 years?

I thought you might like that definition of tax and spend hehehe.

 

[Prof]

I think the only way is to continue our existing process and increase the debt...but in 2010 or 2011...the squeeze hits...and the pain becomes intense, but we start the long road back to being solvent.

 

[Silverback]

Looks like it's getting better.

http://news.yahoo.com/s/nm/20080212/bs_nm/gm_dc_1

 

[Prof]

General Motors is offering buyouts to 74000 employees. Not that these are excess people...those positions are to be refilled with lower payed individuals. In many instances, probably the same people just rehired at a much lower pay rate.

Those people love it, the union loves it...the rest of American people suffer...

 

[Manic]

One thing I can't figure out is how you fund the "bridge" years while this takes effect. If what we collect is going to be used for the budget 2 or 3 years down the road, what do we use for those initial 2 or 3 years?

I thought you might like that definition of tax and spend hehehe.

The answer the Canadian government had in '88 (or so) was the Government Sales Tax (GST) of 7%.

This put the Conservative government from a majority to the leading opposition for over the next decade...

Has it worked, pretty much. We have a strong surplus now and a lot of the surplus has gone reducing debt.

Is it perfect, nope... But, that is another story.

Will

 

[Prof]

The Canadian model is wonderful...yes, not perfect, but a great step in the right direction....

We have lots of options, but we don't have the political will to act on any of the alternatives. We are so political that we cannot seem to be practical.

 

[Muzzy]

General Motors is offering buyouts to 74000 employees. Not that these are excess people...those positions are to be refilled with lower payed individuals. In many instances, probably the same people just rehired at a much lower pay rate.

Those people love it, the union loves it...the rest of American people suffer...

I guess I do not understand how the rest of the American people suffer? You mean it would be better for GM to not write off their loss and fire more than 74000 employees? Companies create jobs, not the government. The quicker GM returns to profitability, the quicker they will be able to grow and add jobs back. Most of the 74000 jobs are probably high paid low skill jobs. You don't need to pay someone $20/hr or more to put a lug nut on a car. GM is trying to eliminate overhead. It is the same thing happening to Ford and Chrysler.

If the government cut spending on all the social programs that do not work but to keep people reliant on the government instead of themselves, then there would be no need for the high taxes we pay. It is funny how economics work. Everyone wants to tax the big evil corporations (that provide us with jobs and products), but who ends up paying those taxes? Not the companies, they get passed to you and me in the price of the products. Since when did Chrysler pay the gas guzzler tax for you?

If you want fix the tax problem for the government, fire two thirds of the IRS and adopt the FairTax www.fairtax.org.

-Muzzy

 

[Prof]

I guess I do not understand how the rest of the American people suffer? ...

...they (the expenses) get passed to you and me in the price of the products. Since when did Chrysler pay the gas guzzler tax for you?

If you want fix the tax problem for the government, fire two thirds of the IRS and adopt the FairTax www.fairtax.org.

-Muzzy

Exactly my point Muzzy. The expenses (like tax write off, the cost of buying out employees) get passed to us. I guess I should have said in the short term...to be clear, my error. But I have no problem with the actions of GM to move back towards a better footing...I wish they had done it years ago, and I hope they get strong as soon as possible...we will as you indicate, all benefit from their success.

Your comments about the IRS are also dead on...congress needs to reform the Tax Code in massive ways...I think I was alluding to that in my posts above, and I have read a lot about the Fair Tax proposals (at the urging of Marc). But I fear that we have elected officials without the political will to act.

 

[wesman]

I wonder how many million dollars the CEO will make in bonuses and such this year?


Reminds me of American Airlines, the unions accept a deal on behalf of the workers to cut pay and benefits to help the company get it's head above water and then the CEO and other upper mgmt gets multi-million dollar bonuses the very same year and the two years following. Meanwhile they want to re-structure the deal they agreed to with the union because they don't want to give back the things they took away and agreed upon.

--wes

 

[ChrisAZ]

IMHO...Union = overpaid employees. Unions take away market value in employment. If a company is paying a Union worker $30 an hour but could hire the exact same skill of a non-union worker for $10 an hour, how does that make sense? I feel for the automakers because they are handcuffed by unions. You want to know why that American car is a piece of crap compared to the Japanese car parked next to it that costs $5,000 less? The simple answer is Unions. It will be interesting to see what happens when push comes to shove and it is a question of Bankruptcy for GM or the Unions agreeing to lower wages and benefits.

Also, $1 million a year to the CEO may seem outrageous but that $1 million hardly makes a dent in a single quarter loss of $10 Billion. Adjusting all of the Union Workers pay by .02 cents an hour would put probably $10 million back in the coffers per year at GM. So why shouldn't the Union workers bear some of the burden instead of always pointing to the CEO? Instead, the Union workers want another $2 an hour which would put GM in the hole another $10 Billion a year. But I guess that's only fair...if you're one of the Union workers. The Lion (CEO) has always gotten the Lions share and always will. Sorry if I have offended any Union workers. I am 100% behind you. If you can make $30 an hour or whatever amount because of the Union that is good for you. And if the company you work for can stay in business while paying the Union wages then it's good for everyone. But if the company is doomed, all of the employees have to contribute to the solution or the company will fail.

 

[wesman]

IMHO...Union = overpaid employees. Unions take away market value in employment. If a company is paying a Union worker $30 an hour but could hire the exact same skill of a non-union worker for $10 an hour, how does that make sense? I feel for the automakers because they are handcuffed by unions. You want to know why that American car is a piece of crap compared to the Japanese car parked next to it that costs $5,000 less? The simple answer is Unions. It will be interesting to see what happens when push comes to shove and it is a question of Bankruptcy for GM or the Unions agreeing to lower wages and benefits.

Also, $1 million a year to the CEO may seem outrageous but that $1 million hardly makes a dent in a single quarter loss of $10 Billion. Adjusting all of the Union Workers pay by .02 cents an hour would put probably $10 million back in the coffers per year at GM. So why shouldn't the Union workers bear some of the burden instead of always pointing to the CEO? Instead, the Union workers want another $2 an hour which would put GM in the hole another $10 Billion a year. But I guess that's only fair...if you're one of the Union workers. The Lion (CEO) has always gotten the Lions share and always will. Sorry if I have offended any Union workers. I am 100% behind you. If you can make $30 an hour or whatever amount because of the Union that is good for you. And if the company you work for can stay in business while paying the Union wages then it's good for everyone. But if the company is doomed, all of the employees have to contribute to the solution or the company will fail.

I agree with you for the most part about unions. I am not a part of one, and never will be. I just find it a hard pill to swallow that the workers are asked to give up their benefits when the upper management isn't. In AA's case the workers were asked to give up vacation, benefits, money etc and then the CEO got a huge bonus (it wasn't $1M, closer to $10M) I feel that if you are to ask your employees to make sacrifices etc, then that should be across the board, including upper management. It's a slap in the face to the workers that got $5k a year taken from them as well as a week of vacation and other benefits and the CEO gets a big fat multi-million dollar bonus at year end.

In the GM example I definitely agree that some of the workers are overpaid for very menial tasks and would not be so if not for the union. It is definitely going to change, it has to for the survival of the company....this is what we are seeing now.

--wes

 

[Prof]

While I have been on the management side of the equation all of my working career...I do feel that the only reason that unions get a foot hold is because of abusive management. Informed, considerate and effective managers obviate the need for unions...when management fails in any of these areas the ground becomes a fertile field for unionization.

 

[OCBob]

When unions first started in this country they were desperately needed IMO. There were despicable working conditions and compensation. But I believe that they may have outlived their purpose.

As an outsider it appears as if they are overrun with corruption. From the mishandling of funds to what almost certainly have to be back room deals with management.

As I said, I am an outsider. Never been in a union, so I really don't know the ins & outs. But it does appear that what could be a good thing for the workers in this country has turned into just another political machine.

It would be good if we could hear from some union members here. I would love to hear what they have to say about the unions and the costs/benefits to them as members. I could be way off base, they may still serve a purpose. That's why I would like to have some firsthand reports from union members.

One thing I've always wondered about is the thinking behind striking. I have seen long strikes go on, and in the end the workers ended up with very little of what they were asking for if any of it. How long will it take to recoup the losses from the strike? It seems as if someone has to be making out from the strike, but who is it? Is it the union or the union members? I'm really curious about that and would love to hear from anyone that has been in that scenario.

 

[ChrisAZ]

My Step Father and My Uncle both worked in Detroit, one for Ford and the other for GM. Both were executives. The stories I have heard about Union workers are not good. I know damn well that is not the norm but in the example of the Big 3 automakers, the union has too much power. It is at the point where something will have to give for the Big 3 to thrive. I would also love to hear from some of the Union workers on the forum to see what their views are.

 

[fast fred]

i joined the I B E W #1245 in july 1970 and i still pay my union dues to this day...

 

[jrgnd]

I am not a Union worker but can tell you that if the employees are not organized, then they will get screwed most of the time unless they are fortunate enough to have a manager who cares about them more than profits.

Let me give you an example. A buddy of mine worked for Lockheed Martin. He spent 15 years with the company busting his butt. At his 15 year marked, he was told to take a new kid under his wing. Well, when the kid got qualified, my buddy was laid off. If he was part of Union, it would have been pretty difficult for that to happen.

I believe pressure from investors for unreasonable returns has more to do with most companies demise.

The more money that is kept for profit, the less money that goes towards improving the products or services provided. We can also add, that it also affects the efforts to reduce attrition.

One question. Research why Toyota and Honda are doing so well? Sit down and speak with their respective employees and ask about their job satisfaction or how management treat's them.