The Tuesday Roundtable (May 19, 2009)

Well, today was an exciting day in the changing landscape of the United States government. Our economy is still in the tank and the politicians feel the need to pass credit card legislation that will have a dramatic effect on the responsible credit card holders. There is also news that when GM goes into bankruptcy, the good assets will sold to a government owned entity for around $6 billion with the $15 billion in government loans being forgiven. The remaining bad assets will be sold off through the bankruptcy proceedings. Lastly, Congress is pushing legislation calling for 35 mpg on all new cars.

You have got to love those plastic credit cards. They have played a large role for the US having a negative savings rate. However, they can also be very valuable when used responsibly. I love taking advantage of the free points. I love not having an annual fee. I love paying off the balance at the end of each month without paying interest. I love having a low interest rate when I do need to carry a balance.

The new credit card legislation is aimed at curbing fees and interest rate hikes for all consumers. This essentially creates a ceiling for all credit cards. Those who are above or at the ceiling today are the card holders who have bad credit or racked up some late payments. What does this mean for me? For starters, the banks are going to have to lower rates for the card holders above the ceiling. Because of this, the banks will start to lose their profit margin. Thus, they are going to have to increase the rates, reduce free points, and add annual fees on the prime customer base to make up the lost profit. I guess I should send a letter to Congress thanking them for making me subsidize the irresponsible credit card holders.

It looks like our government will be making it official soon and turn General Motors into Government Motors with the UAW as the main stockholder. Where in the constitution does it say the government has the right to spend tax dollars to buy businesses? Congress is getting into an area where they will not only regulate the business, but also own the business. This severely handicaps the other automakers in drafting future legislation since Congress will be looking out for their own entity above the others. GM will essentially own the playbook of the other car makers and be able to stifle the competition. Best of all, this is being done with our hard earned tax dollars. I think we should ask for our $15 billion back.

If this comes to fruition, am I going to be penalized as a consumer for buying a Honda or Ford? Does this mean GM cars are going to be priced lower than the competition with tax subsidies? I cannot wait until someone files a law suit questioning the legality of this. Oh wait, I forgot that the Supreme Court will be stacked in favor of the administration.

The best for last. The combustion engine was a wonderful invention. It has gradually evolved over the years into our main source of transportation. Now, Congress expects us to be able to push it to limits that are out of this world if you like big trucks or SUV's. There is a reason big vehicles do not get high gas mileage. It is do to weight. This legislation will force automakers to produce much lighter and smaller vehicles.

Lighter and more compact cars are not feasible unless you like to park a lot. I have two young children. I need a large vehicle as the only way for me to travel and carry everything I need with them. First, you have the suit cases and cooler. Then you have the toys, blankets, and games. A small car cannot hold all of the items we need for a week long trip.

However, my biggest worry is the safety of my kids. A larger vehicle is going to withstand an accident many more times than a compact car. In order to make cars lighter, the automakers will be forced to use more composite materials and less metal.

The whole miles per gallon debate would come to a halt if Congress would put more resources into hydrogen and fuel cell technology. Yet, this administration feels the need to cut hydrogen funding. Battery powered cars need electricity which is produced mainly by coal powered plants. Does anyone realize that a hydrogen car emission is water? How much cleaner do you want it? Where is the logic when GM and Honda already have hydrogen powered test vehicles?

Don't get me wrong, I am all for credit card legislation, GM's survival, and cleaner air. It just does not need to come at the expense of the tax payers and consumers.

Well, this is my first Tuesday round table. I hope you enjoyed it. I look forward to the comments.

Help me get the word out about my blog so we can continue to have a meaningful and logical debate on the issues. Maybe one day, we will be passing the future legislation.