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Bailout Nation: Ford on the Federal Dole, Too

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The idea that Washington has successfully rescued the auto industry is nothing but propaganda.

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So Ford was drowning in red ink from both the plant and vehicle line, but when the Feds came to the rescue, they gussied up their corporate welfare in pure green. In addition to the hollow claim that the wholly unremarkable fuel economy of the new Explorer was a blow against global warming, Ford and its government minders trumpet the fact that the vehicle is made from 85% recycled material. Let's see. The metal stampings are made from scrap steel -- just like more than 50% of all the steel made in America because the electric arc furnace mini-mills that manufacture it can't even use virgin ores. Likewise, the floor carpets, seat cushions, acoustics barriers, and such are made from "shoddy" -- industry lingo for the recycled rags that have been used for these purposes for decades. In short, Uncle Sam's $400 million went to bailing out a dying auto factory and product line, not to purifying the planet.

In making his brief campaign stop at the Ford South Side plant, the President highlighted that $650 million of corporate welfare is being showered on Ford for no discernible public purpose whatsoever. This puts the lie to the repeated claim of Ford's boy-scout-in-chief, Alan Mulally, that Ford never took a stinking dime from the taxpayers. But Mulally's blatant hypocrisy isn't the real point of the story. What this episode actually spotlights is the incorrigible, destructive grip of crony capitalism on the nation's economic and fiscal policies, and the preposterous propaganda campaign now in full swing claiming that Washington has successfully rescued the auto industry.

First, consider how this incident underscores the extent to which the CEOs of America's big companies have been intellectually corrupted by corporate welfare. Apparently, Mulally thought there was marketing mileage to be made by Ford's refusal to take a TARP bailout. Good for him. But in his years at the ultimate corporate ward of the state -- Boeing Company (BA) -- Mulally was so thoroughly trained in the art of passing the tin cup in Washington that he doesn't seem to have the common sense to see that a few million dollars of Ex-Im Bank interest subsidy is both irrelevant to Ford's results and an embarrassment to Ford's noisy claim that it's "subsidy free."

In fact, like Mulally, most of the big company CEOs have an organized strategy to milk the Federal cow. When General Electric's (GE) CEO, Jeff Immelt, was publicly shilling for the Obama Administration's $800 billion stimulus boondoggle, he was also lashing his troops internally to capture a modest $90 billion share of this lucre for GE! Indeed, much of the US economy is now propped up by direct subsidies, tax-breaks, cheap credit, and regulatory preferences. In addition to the traditional wards of the state in banking, the medical industry, housing, defense-aerospace, and agriculture, we now have the auto industry and a growing part of the energy business, too.

The point isn't merely that the hundreds of billions spent annually on corporate welfare are inherently inconsistent with free enterprise, economically wasteful, and fiscally unaffordable. The larger point is that there's no conceivable way to stop the Mulally's, Immelt's and all the rest of the corporate raiders from plundering the public treasury because the Washington playing field is inherently not level. When corporations gear up their lobbyists, campaign contributions, canned communications campaigns, and hired expert witnesses, the public interest is readily lost in the stampede, and silliness like subsidized loans to retool car plants and to export vehicles to the very markets for which they were produced in the first place goes unchecked.

Yet, if corporate welfare cannot be stopped, how is spending for presumptively more legitimate purposes like the safety net, social security, or education going to be curtailed? The answer is obviously that it won't be, and that our current trillion-plus deficits are so thoroughly baked into the cake, that the eventual result will be national insolvency and default.

In this respect, consider the role of President Obama in last week's spectacle at Ford's Chicago plant. Notwithstanding his statute as the most left-wing President we've ever had (and hopefully ever will have), he not only embraced what is on its face a pure Export-Import Bank boondoggle for Ford, but gave his imprimatur to a program which for decades has been a poster child for rank corporate welfare and which has provided most of its $20 billion in annual funding to the truly needy like Boeing, General Electric, and now the big car companies, too.
No positions in stocks mentioned.

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