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RUSH: Okay, folks, we’re going to give this a go today, but I cannot guarantee how far we’re going to get before I erupt into coughing spasms. I appreciate your patience out there. I have been bogged down with a combination of the flu and bronchitis that hit me late Saturday night, and it has not really improved much, but I was getting bored and feeling worthless not contributing or achieving anything, so here we are. We’re here and we’re going to give it a go. Telephone number today, if you want to be on the program, 800-282-2882. The e-mail address is ElRushbo@eibnet.com.

It’s been interesting. I’ve spent a lot of time in bed, but I have watched some news. I’ve always said if you pull yourself away from things for a while, look at things not as, well, I have to watch news as a business, and I’ve been watching it purely as a consumer, and it’s laughable. I don’t mean the media. I mean the things that are happening in the country. It is literally laughable to see what is happening here. Right now, these Big Three automakers, the CEOs are up there, and they’re begging for this bailout money, and the one thing that nobody is asking is, ‘What got ’em here in the first place, and what about this bailout is gonna fix what got ’em here in the first place?’ What strikes me, ladies and gentlemen, is that just as we’ve had in previous occasions, what we have here are these three automobile executives up begging the very people responsible in large measure for the problems they have, for the solution. There’s not one person that’s listening to these auto executives today in the House of Representatives or the Senate that has the slightest business sense or any idea how to run a business and yet that’s what they’ve been doing.

They have been directing the automobile companies how to build cars in this country. We’re looking at cowardice. You know, just like the big oil companies finally said, ‘You guys, you’re the ones that are causing us to have all these problems. You won’t let us drill where there’s oil.’ For the longest time, all these big, tough business CEOs have gone up to Congress and they’ve bent over and grabbed the ankles and they do it because they’re scared because of all the power government has and we already know that liberal Democrats have made big business and their CEOs their number one enemies. They’re on the target list. But it’s about time some of these guys went up there and said, ‘If you guys would get out of our world, if you would get out of our business and let us run the business as we know how to do it, we won’t be up here begging you for money.’ Don’t you find it interesting that every business in the country and every state in the country is begging for money from the US government? Isn’t it interesting? Why is this? Why is all of this happening? Is everybody in the private sector this stupid? Are all of these people that dumb that they do not know how to run a business?

I ran across something fascinating. It’s Automotive News, and it’s dated November 25th. It’s by a guy named Peter Brown, who is the editorial director, and the title of the piece is: ‘In Defense (kind of) of Detroit.’ Before I read this, let me give you the reality here, though, folks. Happy as I am to be back here with you behind the Golden EIB Microphone, I still look at this as a sad day. Today the leaders, the titular leaders of General Motors, Ford, and Chrysler show up now hat in hand before a gaggle of politicians who are posing as business leaders. We have the 105-year-old Ford Motor Company. We have the 100-year-old General Motors company, and we have the 83-year-old Chrysler corporation. They appear before TV cameras and Congress. They dance when Congress says dance. They listen attentively when politicians upchuck their wisdom. They nod positively when the focus group lines dribble out.

It would take, ladies and gentlemen, more than one monologue, more than one program, more than one week to explain how they got here. But the point today is that they are here. They have come back after their homework assignment over the Thanksgiving holiday and come up with a plan that the Congress can vote for because most of the people in this country are opposed to this bailout. Here is what today and tomorrow is all about. Now, I don’t know this for a fact. These are just my assumptions, intelligence guided by experience. Congress knows that they are going to bail out these companies. They know that 61, 63% of the public is against bailing out the companies. The automobile executives also know that Congress is going to bail them out, despite the fact that 61, 63% of the public is against it. The automobile unions, the United Auto Workers, they know that Congress is going to bail them out, the union voters. So they have to fake these tough decisions to help out, they have to fake these concessions that they are going to make. It’s like Jim Wright, the former speaker of the House in Texas. (doing impression) ‘We only want to help you. We only want to help the president.’

The car companies will give their pounds of flesh, and what’s going to happen, new mandates, new standards, new regulations, the greening of the automobile industry, the unions, after the car companies give their pounds of flesh, the unions will give their ounces of flesh with the illusions of lower labor costs. But the net-net is the US Congress will give up nothing in terms of freeing up rules and regulations, standards and restrictions, all of that. As a matter of fact, rather than give up anything, Congress will gain more control over the US auto industry, and along with Congress gaining control of the US auto industry, so does Barack Obama. I’m happy to be back, but I’m sad to report this reality. We all know this is what’s going to happen. And there’s some talk, ‘By the way, we might go along with bankruptcy if it’s prearranged and if there’s no liquidation and so forth. And we need $2 billion to survive the next two weeks and so forth.’ Now, back here to Peter Brown, Automotive News, ‘In Defense of Detroit.’

‘Whose fault is this? Imagine that your home market is a large country whose energy policy can be summed up in two words: ‘cheap gasoline.’ Would your vehicles reflect that? Then suppose that your government tried to regulate fuel economy amid this sea of cheap gasoline, and the regulations established a high fuel economy standard for one type of vehicle (say ‘cars’), and a very low standard for another (for example, ‘trucks’). Would your fleet reflect that? Then imagine that your foreign competitors received huge subsidies to build greenfield plants in America to augment their imports to the United States. They have no retirees to take care of, and you have millions in the only major country where employers have to provide health care benefits. Then imagine that your home country’s financial system collapsed under essentially a huge pyramid scheme by banks and investors, drying up credit and sending the nation into a deep recession.’ And if I might add, imagine during all this the price of gasoline doubled to four bucks in a relatively short period of time, and that caused pure havoc in your business.

‘Can we acknowledge that many of the problems of the Detroit 3 were not entirely their fault? Let’s look at one main criticism: Detroit stupidly became reliant on gas-guzzling SUVs and pickup trucks. Well, that’s true. But the Detroit 3 didn’t lead us to SUVs.’ See, this is what everybody misunderstands about how markets work. The consumer is driven by cheap gasoline. We all know Americans want big cars. The love affair with big cars, because of big families and safety, is pure Americana. And with cheap gasoline, the consumer bought the products the car companies made. The consumer led us to the SUV, not the evil car companies.

‘The consumer, driven by cheap fuel and corporate average fuel economy regulations, pulled them there. In the early 1990s, after a huge investment in mid-sized cars, General Motors scrambled to convert car plants to truck plants to catch up to the American consumer. In those days, Toyota, Nissan, Honda and other competitors found themselves with inferior or no SUVs. But they did just fine in America with cars that worked for them elsewhere around the world. Meanwhile, they developed lots of trucks themselves. Alas, Toyota and Nissan developed huge pickup trucks and SUVs just at the end of the truck party and built huge Southern plants to make lots of them. Even Japanese automakers can make mistakes. But it’s a rounding error for Toyota, not core as it was for the North American automakers. Certainly, Detroit should not have battled increases in fuel economy regulation. And GM’s creation of the Hummer brand was almost criminal in its shortsightedness.

‘So Sen. Shelby says these knuckleheads should die, die, die. Detroit’s failed companies don’t deserve any help. Remember, he’s from Alabama, a manufacturing backwater until Daimler-Benz opened a Mercedes plant there in 1997.’ Again, I’m reading here from a piece in Automotive News by Peter Brown called, ‘In Defense (kind of) of Detroit.’ There’s more to this that gets into hard economic numbers, too, and how these states profit by subsidizing the creation of jobs at these plants to make cars in places like Alabama and so forth. But the bottom line here is that General Motors and Chrysler and Ford have been told how to make cars, been told what the fuel standards ought to be, all the different types of gasoline that have to be formulated here, engines made to run those formulations of gas, all for the purposes here of environmental protection, global warming, or what have you. And some people say the government ought to bail ’em out because the government’s the one partly responsible for putting them in this position. I just think it’s getting to the point here where we’re bailing out everybody and everybody wants to be bailed out, and a lot of these entities that need to be bailed out are people that are overly regulated by a bunch of goofballs that haven’t the slightest idea how to run these businesses they’re regulating in the first place.

BREAK TRANSCRIPT

RUSH: I’ll give you some interesting numbers here about the auto industry in Alabama. I’m not jumping on Senator Shelby here. I mean, naturally Senator Shelby thinks these guys are running rotten businesses and they ought to go down the tubes. They may deserve to go down the tubes, but it’s for being cowards and not standing up to government and telling them to go to hell when they’re doing things to ruin the business. Like the Big Oil guys finally stood up and told these guys in Congress, ‘Let us drill.’ At any rate, Senator Shelby is from Alabama, and a bunch of foreign automakers went into Alabama. Why?

‘Why did the auto industry go to Alabama? Alabama recognized that a local auto industry was a huge generator of jobs, taxes and prosperity. So the state gave Daimler $253 million in incentives to build a Mercedes-Benz plant. Daimler invested $300 million and created 2,000 direct jobs. The state’s cost per automaker job: $126,500. The investment was so successful that Sen. Shelby’s Alabama has since given more than $400 million to Honda and Hyundai. Now Congress is being asked to lend $25 billion to keep the Detroit 3 and their 260,000 U.S. employees, plus their suppliers and dealers, alive. ‘It’s a road to nowhere, and it’s a big burden on the American taxpayer,’ Shelby said. Even if, after a couple of years, the companies default, the investment would be less than $100,000 per Detroit 3 employee in the United States, and much less if you amortize it over the millions of people who depend on the Detroit and would have remained employed and insured.

‘Is Shelby right that the Detroit 3 business model can’t work? Chrysler was the world’s most profitable mass-market automaker in the 1990s — until Daimler bought it and ran it into the ground. Let’s acknowledge that there are reasons that each of the Detroit 3 faces the same catastrophe. What are the odds that every Detroit 3 exec of last 35 years has been an idiot? You don’t have to forgive them all their errors to say that our government’s policies have helped lead them to where we are, and that millions of Americans workers deserve a chance. Anyway, compared to subsidies from Alabama, Tennessee and other states, the proposed bailout is a heck of a bargain. If we didn’t have a domestic industry, we’d say, gee, for $25 billion, we can earn more than that in taxes in the first year, even if they don’t live forever. It’s a pretty good deal in a pretty bad situation.’

Pardon the sniffles here, folks. Nevertheless, it’s interesting to me to ask, ‘Why are we here? How did this happen?’ And we’re running the risk here, actually, we may have passed the point of no return on this. Everybody thinks the private sector doesn’t work; everybody thinks free markets don’t work. Ignorance is the number one most expensive commodity in this country. Did you see the Saxby Chambliss runoff results? It wasn’t even close. It wasn’t even close and the Democrat down in Georgia ran on Obama’s change and hope and all that rotgut, all that platitudinous nothing. They had all the rappers out there. They had all the right people saying the right things, and guess what? Sarah Palin rolls in there and just swamps the Obama candidate. Obama, he didn’t have time to go down there, no, no, he’s too busy. I’m watching Obama and I’m beginning to wonder, ‘Does this guy want to be president, or does he want to do president?’ What I mean by that is I think he’s gonna sit up there and look at himself in a mirror every day and say, ‘Man, I got elected while all these Clinton people are out there running the Clinton third term.’

I think he’s excited about being president. I think he really believes this notion that American kids are going to feel happier about themselves and the world’s going to love us even more — except, of course, in India — after his election. I’m going back and forth. I haven’t figured it out yet. I haven’t come to a conclusion here yet on what I actually think about this.

BREAK TRANSCRIPT

RUSH: We’ll start in Brooklyn. This is Ann. Ann, great to have you here and thank you very much for waiting.

CALLER: Hey, you’re wonderful. You, in fact, are all of the top ten most fascinating people in America.

RUSH: Well, thank you very much.

CALLER: Listen, I just had a heartbreaking situation. I went to Florida to buy my kids a new big car, and I ended up buying a Honda because I didn’t know if GM and Ford were still going to be around. I’m driving an 11-year-old Ford myself because I believe in buying American.

RUSH: Right. Well, but you can buy a Honda made in America now.

CALLER: Yeah, that’s what this was.

RUSH: In Alabama.

CALLER: But you’re a hundred percent right. All we need to do to save the car companies is to tell the government to get the hell away from taxes and regulations and leave ’em alone and they’ll build a car people want to buy.

RUSH: Well, it’s a little bit more complicated than that, but we’ve lost this. I’m watching these guys testifying, and I’m reading some of the closed-captioning going by and they’re all promising to go green. Look, these guys have no recourse now. They are beggars, they are beggars, and eventually there are two words that are going to get this done. As I told you in the first hour, the bailout is going to happen, because, remember, as far as Pelosi and the Democrats are concerned, we’re bailing out the unions.

I saw a YouTube today of a Ford plant in I think Brazil where they make a car, can’t make the car here because of our own regulations, environmental regulations. They have a whole brand-new way of making the car. They have their own port down there. It’s just fascinating video.

You can go to Europe and one of the most popular American-made cars is a car made by Ford that’s not allowed to be sold here because of environmental regulations. This is a bailout of the unions. It’s just that simple. These three guys, as long as they say, ‘I’m sorry,’ because when they say I’m sorry, they’ll take the blame all on themselves, they will effectively ensure Congress from any blame. If they just say, ‘We’re sorry,’ they’re going to get bailed out, folks, and they’re going to get saddled with new regulations to build all these little putt-putts that if people wanted, they’d be buying in droves ’cause they’re out there to be bought already. It’s a sad day. This stuff will get rolled back, eventually. It’s going to be made right eventually because it’s going to be devastating down the road for the next couple years or more.

By the way, you should be aware that there are some people who have an idea — I think Charles Krauthammer originally floated this idea, I think it was originally his. See what you think of this. As a means of getting rid of all of the cafe regulations, the fuel mileage standards, make sure via taxes that the price of gasoline is always four bucks. Because we learned that the tipping point where people’s behavior will be affected by the price of gas is four dollars. So right now, let’s say that the national average of gasoline is two bucks, then the tax will be two bucks. If the price of gas goes to a buck 50, then the tax will go to two fifty so that the price of a gallon of gas always remains four dollars. The theory is that at that point you could remove the fuel standard requirements from manufacturing and let the Big Three make whatever cars they want to make, based on what people will buy at four dollars a gallon for gasoline. If the price of gasoline goes up to three bucks, then the tax ostensibly would go to one buck. But we know that wouldn’t happen, would it?

I don’t know of a tax that goes down and we’re talking the federal tax here. State tax would be calculated here another way. So let’s say that after a couple years the gasoline price national average, two dollars now, let’s say it does go to three-fifty. Okay, so the law in effect says the tax will be 50 cents because we want to keep the price at four bucks. What will have to happen, they’ll have to scale in a growth of that four dollars, after five years, four fifty, and then five dollars and so forth. And one of the theories behind this is that it locks in, forever, expensive gasoline, locks it in, and that way you could take all the regulations out of Detroit and all the manufacturing and the cars they will make will be reflected by the cost of gasoline.

Kate in Cincinnati, I’m glad you called. Welcome to the EIB Network.

CALLER: Hi, Rush. This is the happiest day of my life. My Christmas dreams have come true.

RUSH: Well, thank you very much.

CALLER: Anyway, all I called to say is they forced us into these big cars back in the eighties with the child safety seats. They eliminated the station wagon, and you cannot put three baby seats in a Honda or in a tiny car.

RUSH: Now, Kate.

CALLER: It doesn’t happen.

RUSH: Now, Kate.

CALLER: Yes.

RUSH: Need to teach you a little economics here.

CALLER: Okay.

RUSH: They didn’t force you into anything. Who forced you? Are you saying by the requirement that you had to put your little crumb cruncher in a baby seat?

CALLER: Yes.

RUSH: And that was a federal requirement?

CALLER: I think that goes state to state, but the state of Ohio, right now I think our law is —

RUSH: Okay, I thought you were blaming the automakers at first, so I misunderstand.

CALLER: No, no, I’m blaming —

RUSH: Okay, okay.

CALLER: — the government.

RUSH: Okay, so the government requires all these things which required you to get a bigger car based on the size of your family?

CALLER: Yes, and if you’ve got your, you know, standard, 1.8 children then you can fit in a tiny car, but if you have three children, there’s no way.

RUSH: Let me tell you something. You do not know how right you are.

CALLER: Thank you. I’m so happy to hear you say that.

RUSH: I can relate to this. Last Wednesday, the day before Thanksgiving, I had 28 people arrive, and not all of them could stay at my house, some are going to The Breakers. So I gathered every SUV that I had —

CALLER: And you still couldn’t fit ’em in.

RUSH: And because one of the guests is an infant that required an infant seat, it screwed up everything and I had to go out and get another SUV because I couldn’t fit as many people in the SUV with the infant seat.

CALLER: Yes.

RUSH: So, you see, I can relate to your problem.

CALLER: Yes. I have a six-foot-two 13-year-old and he just does not fit in any normal back seat so we have a Ford Expedition.

RUSH: A six-foot-two 13-year-old?

CALLER: Yes, he’ll be 14 in February.

RUSH: We don’t even to want talk about your weekly food budget.

CALLER: You know what? We went on vacation, you know, 3.99 a gallon, and drove 500 miles and, you know, it costs —

RUSH: Thank you very much.

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