Be thankful for the tax cut you’ll never enjoy

January 23, 2006

The dreadful news about job losses and plant closings from Ford is the latest in a series of discouraging developments for the nation’s auto manufacturers. Reports today note that Ford will close 14 plants in North America and cut as many as 30,000 jobs over the next six years.

During this morning’s gaggle, a reporter asked Scott McClellan about the White House’s reaction to the announcement and whether it’s indicative of a problem with the economy. McClellan said:

“Well, anytime someone loses a job we’re concerned about it, and we’re concerned about the community. And that’s why we’ve got to continue to act to build on the pro-growth policies that we have put in place. We want to make sure that working families can keep more of their hard-earned money. And that’s what — we put policies in place to do that. The last thing we need to be doing at this point is raising taxes.”

Yes, those 30,000 Americans who are losing their jobs will no doubt take solace in the fact that the White House is standing up for the tax cuts these workers were never wealthy enough to enjoy in the first place.

It just reeks of “compassionate conservatism.” Or, on second thought, maybe it just reeks.

How many Democrats will attack Ford for this?

  • More evidence of the plundering of America. Where will the mfg plants go? Where will future vehicles be built? China, Vietnam, etc. never again in the USA. Understand corporations pay no taxes on products built overseas. If they were to move mfg back here, they would have to pay some taxes.

    Of course, they will blame it on unions (only 8% of American workers belong to unions these days), health care ( most countries have universal health plans), and litigation costs such as Workers Compensation.
    They prefer sweatshops and child labor.

    The entire Washington crew needs to be replaced ASAP! We have taxation for the workers only, and no representation. People need to wake up.

  • Maybe he was refering to their concern for Bill Ford and the 14 plant managers and execuitives that will have to weather the cut back.

    Obviously the best wat to handle the 30,000 unemployment claims that will be filed by Ford workers is to reduce the Federal government’s revenue through tax cuts. Right? No brainer.

    The insanity of it all is hard to fathom. If I own a business and make $200,000 per year and they lower my taxes by 5% how on earth will I turn that 5% cut into a job for someone who was making UAW labor wages and benefits? I keep what, an extra $5,000 per year? If I’m making that amount of money I would be more likely to but Ford stock than hire an employee at my company.

    To Ed’s comment I would think several. I don’t know if I agree they should. The unions are a drag on companies. Of course if the companies paid a living wage in teh first place there would be no need for unions. If Ford rebounds and we hear about increasing capacity in Mexico or Canada to meet demand then it is time to scream.

  • Helloooooooooooo, you dont see Toyota and Nissan having any profitability problems do you??? Where do you think they make their cars? If you dont know, I suppose you look it up. If managed correctly, a company can build cars profitably in this country. It just so happens that the people who know how to do it make cars that they dont have to force onto people. They make money on them because they dont have to discount the hell out of them. They also make money because they dont have the burden of retirement costs that are a legacy of the way we used to think this country could work, back in the pre-globalization days. As much as I hate what is going on in this country, there isnt much of an issue here that is like any of the other things we talk about. The political part of this isnt as significant as the historical part of the industry itself. Industry bailouts and CAFE regulations aside, the main point is that the stuff these companies make is mostly crap.

  • Let’s not forget that Ford isn’t the only company closing plants and stores across the country, throwing yet more thousands of people out of work. Even Toys ‘R Us is closing 75 stores, which is really sad.

    When Bush touts how well the economy is doing, he means only how many millions the CEO’s are taking in. If you asked him about the plight of the workers, he wouldn’t even know what you’re talking about since they don’t even appear on his radar. And that’s sadder yet.

    Who says a country is limited to overthrowing only one despotic dictator in its lifetime?

  • Actually, as was recently in the news, the biggest costs which non-US auto companies generally do not need to pick up is health care costs for their employees. Most are able to take advantage of government provided health care. Without that big cost, those companies are at a distinct cost advantage. I think it was toyota who last year turned down something like a $100 million incentive from Alabama, I think, and instead chose to go to Canada, where government health care made the big difference. And, G2000, the retirement costs would not really be a big deal at this point in time had these companies properly and adequately funded their pension plans when they were doing better (and when the US stock market was valued higher) instead of doing minimal fundings that were darn near fraudulent through plays on the funding laws. The big companies can always choose to freeze the pensions, thereby limiting their exposure to future contributions costs while switching over to other types of pension schemes, the costs of which are not born primarily by the employer, while still allowing them to meet their past obligations (remember, it was these same companies who put these plans into place to lure the best qualified employees into their employ). And the stuff these companies make, for the longest time and a lot still today, is mostly crap.

  • What G2000 & bubba said.

    If we were genuinely a free market (where businesses felt the need to take consumers into account in their reckonings), Ford might well have survived. Instead, it wanted to dictate to customers what they could buy and so manufactured crap cars thinking that people, looking at the Japanese and German cars, would do the stupid thing. I don’t know the history of Ford, but I guess that its complacency toward customers was abetted by the Feds through bailouts and giveaways. But there is only so much the Feds can do to prop up a business going that ignores the customer and only considers margins.

    We do have socialism alive and well in the US–at the corporate level.

  • One small addenda on the Toyota story. The news stories of the time, which I noted in the Carpetbagger back then, said the main reason they chose Canada instead of Alabama was that the U.S. workers there were so rock stupid that they had to be taught with cartoon drawings to do their jobs and that the company had had major problems in that regard with other ventures.

    The articles said it nicer than that but the upshot was that Canadian workers are so much smarter that the reduced cost of training made it more economical to go up there, even with the massive cash incentives Alabama was offering. And isn’t that just the saddest thing you’ve ever heard?

    Other than “President Bush”, I mean.

  • As bubba mentioned, one reason Toyota is building its new, $800 million RAV-4 manufacturing plant in Woodstock, Ontario, is with the national health-care system in Canada, the cost of health care is a lot less.

    Another more embarrassing reason (for the US at least) is that Canadian workers are, uhhh, “easier and cheaper to train”:

    “‘The level of the workforce in general is so high that the training program you need for people, even for people who have not worked in a Toyota plant before, is minimal compared to what you have to go through in the southeastern United States,’ said Gerry Fedchun, president of the Automotive Parts Manufacturers’ Association, whose members will see increased business with the new plant.”

    Yeah. Great. And what does Congress do? If you said “cut federal aid to education for the first time in a decade”, why you’d be absolutely correct.

  • Curmudgeon,

    That is an interesting point about Alabama vs. Canada. Interesting because I live in Alabama, near Huntsville, where there IS ALREADY a Toyota plant. I guess maybe Alabamians got a lot stupider since that plant opened a couple of years ago? Or maybe back then, Toyota didn’t realize we were all dumb as rocks here, but now…once bitten, twice shy.

    Actually, nevermind…I just realized that being from Alabama, I’m not even smart enough to use this here metal computing thingy. 😉

  • I think the point that MNProgressive brought up about where the wealthy will be putting their tax cuts is important. Remember that the tax rate on dividends has been cut, it’s somewhere in the neighborhood of 15% if I remember correctly. Not only is there a chance that the income gained from the tax cut won’t be reinvested in the U.S. economy, they’ll be rewarded for it too.

  • Addison, I apologize most sincerely for my bad temper up there. My actual intent was to pour scorn on the administration for happily spending hundreds of billions of dollars on a useless war while ignoring the needs of Americans at home, but the words that came out were way too harsh on the people of Alabama and for that I am truly sorry.

  • Curmudgeon,

    Oh, no worries. Sarcasm was aimed at the author of the article, not you! 😉 (I’m much harder to offend than that)

  • its really easy all the demorats losing jobs should have joined the gop a long time ago and enjoy all the wealth that comes with it and not have to worry about jobs

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