By Nicholas Johnston
July 8 (Bloomberg) -- President Barack Obama said a $32 million government grant to a maker of battery-driven trucks is an example of how government funding can help businesses generate jobs as the nation recovers from a “brutal recession.”
I'm wondering what $32 Million worth of trucks no one has expressed a desire for can do for the economy
“Government doesn’t have all the answers,” Obama said today after touring the Smith Electric Vehicles factory in Kansas City, Missouri. “But what government can do is lay the foundation for small businesses to expand and thrive.”
Government doesn't have ANY of the answers. Tax breaks would help profitable companies retain earnings and hire workers for lasting jobs that the market will support. But why bother when you can just distribute tax dollars at will to keep up the illusion of growth?
Obama is on a two-day trip to Missouri and Nevada to stump for his economic policies and raise money for Democratic Senate candidates. Tomorrow he’ll also give a speech on the economy in Las Vegas.
After all the Vegas-bashing that Obama did last year, maybe he's bringing a bag of money with him?
The economy, jobs and the deficit are likely to be top issues in the November elections that will decide control of Congress. Obama today defended the $862 billion economic stimulus measure Congress passed soon after he took office, which Republicans have criticized as wasteful. And as he has stepped up his defense of his own policies, he has increased his attacks on Republicans.
$862 Billion dollars... dare I say that precious little of this huge transfer of wealth saw its way into the pockets of workers?
‘Naysayers’
“There are some people who argue that we should abandon our efforts,” Obama said. “The naysayers, they ought to travel across America and meet the people I’ve met” at factories that are hiring, he said.
The people he's met have make-work jobs and jobs producing items the market has no need or desire for... maybe he should meet some people who aren't making subsidized products that the administration sees as politically advantageous to support?
The U.S. economy is struggling to recover from the worst recession since the 1930s, with 83,000 private jobs added in June and unemployment at 9.5 percent.
Closer to 20% if you count all the people who've just stopped looking for work...
“This has been a difficult period for America: two years of brutal recession; a decade of economic insecurity,” Obama said. “And there are going to be some hard days ahead.”
Translation: "I'm doing all I can to destroy free enterprise in the market, so don't expect anything to get better any time soon."
He said he expects energy investments alone to generate 700,000 jobs over the next few years nationwide. “And these are investments that will not only boost our economy in the short term, this is going to lay a platform for the future.”
Since when is a government grant an "investment"? If these were such good investments, why won't any of the banks, still flush with $800+ Billion of taxpayer money, take any risk on these ventures? Why on earth do we need government to do what the free market has done so well for so long - create jobs? Oh yeah... because private industry is under attack.
The administration has highlighted government’s investment at Smith Electric, which was matched by $36 million of the company’s money, as an example of how the government can help the private sector create jobs.
The Smith Electric factory will eventually employ about 70 people and build about 500 battery-powered commercial trucks per year, Matt Rogers, an adviser to Energy Secretary Steven Chu, told reporters yesterday.
Let's see... $32 Million and $36 Million is $68 Million invested to create 70 jobs.... sounds like it's almost $1 million per job. Could be a while before we see any return on that. But they're making 500 trucks a year. Hmm... at $50,000 per truck, that would come out to $25 Million a year. Assuming that the manufacturer has about a 20% gross margin (pretty healthy), that would mean they'll make back their money in about 14 years. That's assuming you know anyone who wants to buy a battery-powered truck. Even with a proven product, that's an awful long investment horizon.
Purchase Capital
“The intent of the funding here is to enable Smith to purchase the capital equipment necessary to get this manufacturing assembly line operational,” he said.
The company plans to build as many as 20 factories around the country.
“This is a microcosm of precisely what needs to keep happening,” said Jared Bernstein, Vice President Joe Biden’s top economic adviser.
Historically, financing capital improvements and purchase capital has been the job of banks. Now that government is taking the risk, we can expect manufacturers to build all kinds of stupid crap for which there is no viable market... because the government has minimized the risk. Risk tends to force manufacturers to make useful products that they can later sell. Glad we're done with that stupid model.
Translation: "If we keep this up we'll bankrupt the country with plenty of time to spare for the 2012 election. "
Later today in Kansas City, Obama will attend fundraisers for Missouri Democratic Senate candidate Robin Carnahan in Kansas City.
Tonight he’ll raise money in Las Vegas for Harry Reid of Nevada, the top Democrat in the Senate.
--With assistance from Julianna Goldman in Washington. Editors: Robin Meszoly, Don Frederick
To contact the reporters on this story: Nicholas Johnston in Kansas City, Missouri, at njohnston3@bloomberg.net;
To contact the editor responsible for this story: Mark Silva at msilva@bloomberg.net
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