Bailouts for All? Oh - Not you!

Now that we should all be aware that the housing bailout ended up bailing out mostly Banks and Corporate America (there is even a provision in there specifically directed at Chrysler, but you have to read it to figure out who they are refrring to), we now have this coming down the tracks?

Bailouts For US Automakers

Lobbyists for the U.S. automakers -- General Motors Corp (NYSE:GM - News), Ford Motor Co (NYSE:F - News) and Chrysler LLC -- briefed White House officials, as well as U.S. Rep. John Dingell and other Michigan Democrats, on a possible bailout and plan to unveil the proposal after Labor Day, according to the report.

The plan is for the government to lend some $25 billion to the automakers in the first year at an interest rate of 4.5 percent, or about one-third what the companies are currently paying to borrow, the report said.

Under the proposal, the government would have the option of deferring any payment at all for up to five years, the article said.

What do you want to bet they get it? But once again it begs the question, where is the money coming from? Freddie & Fannie are toast (down graded to junk ratings on their preferred securities today) and they are still standing there with their hands out. We can't keep bailing out everyone who screwed up.

Where is this going to end? What will this ending have for our place in the Global Economy? How much longer can the US keep this up (giving out hand outs when the coffers are dry)?

Can the US meltdown without it impacting the Global community? Our debacles are already spreading (the housing crisis we caused/allowed to happen, the bank failures we caused/allowed to happen). Is this going to stop it?

No one supported the Housing Bailout, but our elected officials, yet it happened. Now are we going to sit back and watch one industry after another ask for a bailout?

There is no more money. I swear if they get what they want -25M each at rates we can't get to save our homes, and 5 years to repay a dime, they darn well better give something back. I am not buying their sob stories, they created their own problems, waited till it was too late and now want money to finally work on more fuel efficient vehicles, with no recourse......

At the very least they should have to hire back all the people they laid off at living wages, and their executives should all be placed on living wages too. I'm so sick of this (in case you hadn't noticed).

[edit on 8/22/2008 by Relentless]

Well one of the big three has already had a little help snuck in the Housing bill.

H.R.3221
Housing and Economic Recovery Act of 2008 (Enrolled as Agreed to or Passed by Both House and Senate)
Subtitle A
Section b

b) Application to Certain Automotive Partnerships -

(1) IN GENERAL- If an applicable partnership elects the application of this subsection--

(A) the partnership shall be treated as having made a payment against the tax imposed by chapter 1 of the Internal Revenue Code of 1986 for any applicable taxable year of the partnership in the amount determined under paragraph (3),

(B) in the case of any eligible qualified property placed in service by the partnership during any applicable taxable year--

(i) section 168(k) of such Code shall not apply in determining the amount of the deduction allowable with respect to such property under section 168 of such Code,

(ii) the applicable depreciation method used with respect to such property shall be the straight line method, and

(C) the amount of the credit determined under section 41 of such Code for any applicable taxable year with respect to the partnership shall be reduced by the amount of the deemed payment under subparagraph (A) for the taxable year.

(2) TREATMENT OF DEEMED PAYMENT-

(A) IN GENERAL- Notwithstanding any other provision of the Internal Revenue Code of 1986, the Secretary of the Treasury or his delegate shall not use the payment of tax described in paragraph (1) as an offset or credit against any tax liability of the applicable partnership or any partner but shall refund such payment to the applicable partnership.

(B) NO INTEREST- The payment described in paragraph (1) shall not be taken into account in determining any amount of interest under such Code.

(3) AMOUNT OF DEEMED PAYMENT- The amount determined under this paragraph for any applicable taxable year shall be the least of the following:

(A) The amount which would be determined for the taxable year under section 168(k)(4)(C)(i) of the Internal Revenue Code of 1986 (as added by the amendments made by this section) if an election under section 168(k)(4) of such Code were in effect with respect to the partnership.

(B) The amount of the credit determined under section 41 of such Code for the taxable year with respect to the partnership.

(C) $30,000,000, reduced by the amount of any payment under this subsection for any preceding taxable year.

(4) DEFINITIONS- For purposes of this subsection--

(A) APPLICABLE PARTNERSHIP- The term `applicable partnership' means a domestic partnership that--

(i) was formed effective on August 3, 2007, and

(ii) will produce in excess of 675,000 automobiles during the period beginning on January 1, 2008, and ending on June 30, 2008.

(B) APPLICABLE TAXABLE YEAR- The term `applicable taxable year' means any taxable year during which eligible qualified property is placed in service.

(C) ELIGIBLE QUALIFIED PROPERTY- The term `eligible qualified property' has the meaning given such term by section 168(k)(4)(D) of the Internal Revenue Code of 1986 (as added by the amendments made by this section).

(c) Conforming Amendment- Section 1324(b)(2) of title 31, United States Code, as amended by this Act, is amended--

(1) by inserting `168(k)(4)(F),' after `36,', and

(2) by inserting `, or due under section 3081(b)(2) of the Housing Assistance Tax Act of 2008' before the period at the end.

(d) Effective Date- The amendments made by this section shall apply to taxable years ending after March 31, 2008.

Library of Congress

By the definition of Applicable partnership it can only mean Chrysler. Chrysler unlike Ford and GM is no longer a publicly traded company and is owned by Cerebus Capital Management. So it looks like Ford and GM are saying "where's ours?".

(Sorry about the long quote but it was written in Legalese and I couldn't figure out a way to edit it and retain the jist of it).


[edit on 22-8-2008 by jefwane]

Originally posted by jefwane

By the definition of Applicable partnership it can only mean Chrysler. Chrysler unlike Ford and GM is no longer a publicly traded company and is owned by Cerebus Capital Management. So it looks like Ford and GM are saying "where's ours?".

You are correct. Except that Chrysler is in line for this new bailout request with their hands out again.

reply to post by Relentless

It looks like the initial draft didn't address any automakers. The bill was revised to include Ford & GM, including the special provision for Chrysler.

Also....

Tacked-on to the end of HR. 3221 is Title X: Clean Energy Tax Stimulus - Clean Energy Tax Stimulus Act of 2008. Tax incentives for clean energy production in a housing bill

If Obama is elected, the lttle people may get second round of rebate checks...already being referred to as another electronic breadline.

Was the Bush rebate a successful, cost effective method for stimulating economic activity?

Recent government statistics show that only between 10 percent and 20 percent of the rebate dollars were spent.

The rebates added nearly $80 billion to the permanent national debt but less than $20 billion to consumer spending.

Housing bill offers potential GM, Ford tax breaks

Automakers may reap $30 million credit under new tax rule

I think that it begs the question, with all of these bail-outs going on, who will bail-out the government when the countries who loaned them money want their debts repaid?

reply to post by Alora


I am in the growing *WORLD* camp that suggests all shareholders should be wiped out, and the Board should fire management. Shareholders took the risk and they lost. Management F*'d up so they sould be fired - WITHOUT COMPENSATION.

End of story.

Socialist style bailouts never work in the long run - trust me, I'm from BC. Every one of the commie bailout fgrom the 90's has failed - it just took a little longer for your Chrysler to do so.


[edit on 23-8-2008 by leo123]

[edit on 23-8-2008 by leo123]