Author Archives: Joe Oglesby

Poison

By: Joe Oglesby

The bubble has burst and now the giant ball of yarn is unraveling. The latest victim is the auto industry. Not the auto industry as a whole, however. The companies that are at capitol hill begging for a bailout of their own are what will be referred to for the remainder of this blog as the big three; Chrysler, Ford, and GM.

This past week the big three have been asking for a twenty five billion dollar lifeline that would be appropriated from the seven hundred billion dollar bailout afforded to Wall Street to aid in the credit crisis. But why is it only these three companies who are out being vocal, where are Toyota, Hyundai, and Nissan? The latter three companies do not have the financial burden that the big three do. The financial burden is coming from within a single source, the United Auto Workers union (UAW).

The UAW and the big three have a contract over a half century old that is suffocating and stunting the growth of these companies in the states. The blame is not a blanket on the whole union, but rather on one aspect; legacy costs. Legacy costs are the retirement plans and benefits defined under the current contract. Mike Rosen of 850 KOA spoke about this in the first hour on his morning radio program on Thursday the 13th of November. He cited two people Greg Lewis and Mark Perry during the segment.

Greg Lewis of the Washington Times wrote “The financial burden thus incurred weighs down their balance sheets to such a degree that, even if the industry in which they compete were thriving, it would be extremely difficult to maintain long-term profitability.” Greg continues on the article about compensation. GM currently has around 450,000 retirees; this is three times the amount of current employees. GM must provide pension plans and medical care for all of these retirees. It is estimated that the total cost comes out to around eighty billion dollars per year. Toyota, on the other hand, currently has approximately one thousand retirees and as the number of retirees grows the cost of pension plans from Toyota will be zero. The reason for this is that the employee is responsible for their retirement account and not the employer.

Mark Perry is professor of economics and finance at the School of Management at the University of Michigan. He brings up that the average labor cost of the big three is around $145,000 per year while the average labor cost at Nissan per year is only $96,000. Mark also discusses the average pay relative to other careers. The average UAW employee with a high school diploma makes 57.6 percent more compensation than the average university professor with a PhD and 52.6 percent more than average worker at Toyota, Honda, or Nissan.

Mike Rosen also briefly cites Steve Miller. Steve Miller is a turnaround specialist and was in charge of the restructuring of Del Phi after it severed from GM. Steve said “we can not continue to pay sixty five dollars an hour for someone to cut the grass and have the company remain competitive.” What Steve is referring to is that under the current contract the UAW employees that mow the grass and clean the toilets receive the same compensation, both in pay and pension, as a worker on the assembly line.

Throwing more money at the auto companies only puts the companies on life support as long as they have to throw away eighty billion dollars a year on retirees; a number that will continually grow exponentially if left unchecked. By having the companies file bankruptcy the company can be restructured to emulate the new state of the art factories that are not currently possible because of the unions. The underlying problem must be addressed in order for the companies to not only survive but prosper. The poison that is the United Auto Workers union must be flushed out of the system.

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Oil and You

By: Joe Oglesby

You may be upset at high oil prices and profits, but amendment 58 is not the way to exact revenge. The amendment will hurt the property owners, which is not the oil companies; the amendment will also hurt local governments. Currently half of the severance tax revenue (approximately $122.5 million in FY 2008-09) goes to the Local Government Severance Tax Fund. Under Amendment 58, only 22 percent of the severance tax revenue would go into the local fund. The amendment earmarks funds that would go to local governments. The earmark, however, restricts the spending of these funds to environmental protection rather than allowing the local government to spend the money as the community needs it spent.

Over the summer, with the high gas prices, people began to understand that they could get to many places by riding a bike or using public transportation rather than driving their cars. “A result of record energy costs is that Americans have drastically cut back on their driving this year, reducing their gasoline usage at the fastest pace since 1983.” The article cited above also reported that the Federal Highway Administration latest statistics showed that the number of miles driven has dropped the most since 1979.

Colorado currently has higher taxes on oil and gas than Texas, Oklahoma, and Kansas. In oil producing states it has the third highest taxes. The graphs below are from a study that compares oil and gas tax burdens on nine producing states.

In gas producing states it has the fourth highest tax collections.

Under amendment 58 Colorado will move up to the second highest and nearly the highest tax collection. Amendment 58 and initiative 113 are the same; the only difference is that amendment 58 became the official title when it was added to the ballot.

Since Colorado’s taxes on oil and gas are progressive, the taxes will continually grow, as prices for these goods increase. These costs will be passed onto consumers. The temperature is forecasted to be almost 3% colder this winter, across the lower 48 states. Colder temperatures mean higher energy bills. These bills will also be compounded by an increase in taxes directly passed onto the consumer. These increases will not only be in personal energy consumption. Higher energy prices will mean that food transportation costs will go up. All of the higher prices will always fall to the consumer.

Amendment 58 is a tax increase and will directly affect the citizens unlike political ads may lead the people to believe. Removing a subsidy is a tax increase. Colorado, with the subsidy, pays some of the highest taxes. Oil and gas is a business. These businesses will recoup their losses. You will pay more for the oil and gas you need.

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R.I.P

By: Joe Oglesby

Generally, when people make comments about the left wing media bias these comments are dismissed or brushed over. People laugh at and insult commentators such as Sean Hannity and Rush Limbaugh when they speak about the conspiracy in the media. Yet when an “anchor” such as Jon Stewart berates the right in his news coverage it is thought of as the truth being presented in a light-hearted manner. Sean Hannity has said it best on many occasions on his radio show and on television that we will look back at 2008 as the year journalism died.

It is not just recently that the media has been behind Barack Obama. During the primaries Hillary Clinton was also attacked by the media. Hillary was attacked relentlessly while Obama received a free pass by the major networks, excluding Fox. On CNN prior to the Texas and Ohio primaries Jack Cafferty portrays Hillary as the evil politician by proceeding to read off a laundry list of scandals Hillary was involved with; he concludes the list by stating “to name a few.” A “few” would have been two or three not the seven that he rattled off.

Hillary Clinton’s former campaign spokesman Howard Wolfson appeared on Hannity and Colmes on Fox News to discuss media bias. Wolfson who had complained about unfair coverage by the media now defends the media while Sean Hannity points out the hypocrisy shown by the media in the coverage of the two candidates. During Obama’s trip to Europe all three major news network anchors followed Obama; McCain has never been followed by the media in the same fashion.

This obvious bias is not just constrained to the television however. After Sarah Palin was announced as John McCain’s VP pick US Magazine released a cover story on her. The front page reads “John McCain’s Vice President Sarah Palin Babies, Lies, and Scandals.” This publication being a gossip magazine wouldn’t really be a problem, expect that another cover story of theirs about the Obamas portrayed them in a completely different light. The cover for this issue reads “Michele Obama Why Barack Loves Her.” US Magazine is not alone in the literary love fest. The Atlantic Monthly recently had a photo shoot for a story on John McCain. The pictures speak for themselves. The actions taken by the Atlantic Monthly are not excused by them making an apology. The Atlantic Monthly should have upon seeing the pictures known that they would need to reshoot the senator for a fair portrayal.

Studies have been done on media bias including a study out of UCLA. Keith Olberman has admitted the media is in the tank for Obama. Yet in the face of all this evidence those who claim media bias towards the left are still ridiculed. O’Reily may be the number one show on cable television. And Rush Limbaugh’s commentary does command the radio waves, but these two represent a whispered truth that magazines, periodicals, newspapers and the television networks refuse to cover. May journalism rest in peace.

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Do Not Panic

Written by:

Joe Oglesby

The economy for many American’s is the number one issue this political season, as indicated by polls in a previous blog post of mine. The unemployment rate is at a five year high of 6.1%. There is a mortgage crisis that is resulting in large companies and banks going belly up. Gas prices, although having dropped recently, are very high and many people have changed their ways because of it. Right now the two candidates are polar opposites on the issue of where the economy stands now.

Senator Barack Obama recently made the comment that we are currently in the worst economic crisis since the Great Depression. Comparing the great depression to the crisis now is the same as comparing apples to oranges, and negates the drop in the fall of 1987, which in terms of percentage was much worse. In an interview on the Fox Business Network Amity Schlaes compared the depression to now. She brings up that the depression grew because the tax rates were increased from about 25% up to 30%. Raising taxes is what Obama plans on doing. Amity also brings up that she believes the depression could have ended earlier than it did, but there was too much regulation by the government because of the New Deal. The Obama camp is criticizing McCain and the republicans for a lack of regulation. So, inversely, this would mean the Obama camp wants more regulation and in the above interview it is even stated that we need more regulation.

Senator John McCain has stated many times that he believes even though we are in tough times that the fundamentals of our economy are still strong. Neil Cavuto points out why the economy is still strong and that it is the housing market that is weak, not the overall economy. Cavuto points out that consumers are buying much more than analysts expected. The housing market is collapsing because in the nineties the federal government pushed for banks to give loans so people could buy homes. The problem is that these loans should not have been given out to many of the people that these loans were given to because they were not financially stable enough to be able to pay back the loans to the banks. When the loan is defaulted on the bank takes the home, which has been driving down property values for other homeowners. Neil points out that the banks took a huge gamble on the housing market with these loans and have lost. Neil believes the economy is strong and it is not time to run and hide as the Obama camp may like us to believe. The price of oil has also dropped significantly.

Oil is down more than 30% since hitting a high of $147.27 on July 11.” Oil is now below $100 a barrel. This occurred because of the basic economic idea of supply and demand. Over the summer many people used alternative forms of transportation such as riding a bike, walking, or using public transportation. Because of the cutback on consumption of fuel this past summer the overall supply ratio has gone up since demand was down and that is why we are seeing oil go below $100 a barrel. This drop in gas prices in the coming months will finally provide some relief from high gas prices which will trickle down to lower the food prices.

People are short on cash as it is, yet Obama wants to initiate a “progressive tax” increase. Obama seems to think that he can pull from only one side of the bucket by taxing only the rich. This crisis is not the end of days; we are not in a modern day Great Depression. In fact, the economy is stable according to the Federal Reserve which just sent across the wire that interest rates will remain unchanged, had the economy been in trouble the interest rates would have risen. As Neil Cavuto pointed out “we’ll be fine.”

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The Great Slip

McCain now leads Obama by 5 points in the polls. Rather than sweeping up the floor with McCain, Obama and McCain have remained close in the polls with McCain gradually closing the gap. This election is the Democrat’s to lose. An unpopular President, high gas prices, and a mortgage crisis should give an overwhelming advantage to a candidate who preaches change. So why has McCain been keeping up and now even surpassing Obama in the polls?

Obama has been a celebrity during this race, but as the graph below shows his numbers have been steadily declining, with many polls currently showing a deadlock between the two candidates. What has happened to the Obama who brought out crowds in the hundreds of thousands? Why aren’t people fainting at the sight of Obama anymore?

The longer the campaign goes on the more it hurts Obama. Gas prices continue to rise and now consumers are beginning to support more drilling because they realize that their survival trumps any reason for not drilling if it will provide relief from high prices; even if only temporarily. The war is not as strong a platform as it was a year ago because the surge that Obama was opposed to has worked as reported by the London Times. A new deal has also just occurred that would have American troops pulling out of cities next summer. His speech in Berlin was received well by the European’s, but not as well by the American electorate.

Obama’s performance in the saddleback forum has not helped him either. He never really answered at what time he felt life began, unlike McCain who answered right away without any hesitation or stuttering. Obama also almost criticized Supreme Court Justice Clarence Thomas for a lack of experience, but caught himself. Had he claimed a lack of experience on the part of the Clarence Thomas then it would have likely raised questions in the minds of the electorate as to whether Obama, who has significantly less experience than Thomas, had enough experience to be President.

Obama is not able to run simply on the platitudes of hope and change anymore, now voters want details about the change. Obama was able to get away with saying a lot without saying anything for a while because of his charisma, his supporters, and a teleprompter, but now he has to step up and show that there is fire and not just smoke.

Once the electorate began to see Obama was nothing but a charismatic empty suit they began to turn away. If Obama does not fill the empty suit and reclaim the celebrity status he held that drew out hundreds of thousands of supporters, had people fainting, and brought in the young vote in record numbers then we may very well witness one of the greatest upsets in the race for the White House.

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