• Sep 28, 2010
The federal government is keeping up its effort to stimulate the economy, while the economy is keeping up its resistance to those efforts. The latest effort to prod spending comes in a bill that, among other things, increases the federal guarantee for small dealer floorplan loans from the Small Business Administration from $2 million to $5 million. Part of the bill would also reinstate fee waivers that ran out in May, meaning loan applicants could save more than $50,000 in fess alone on a $2 million loan.
Federal floorplan assistance has been around for a year, but banks haven't been receptive and some believe that raising the limit won't change that. It is customers who are needed to provide the real relief, and in the words of a former Federal Reserve vice chairman, "If the economy grows at one and a half percent, we're spitting in the wind because there's no demand."

The bill passed the House and Senate along party lines and President Obama signed it into law yesterday afternoon. This is expected to be the last jobs bill to leave Congress before the midterm elections in November.

[Source: Automotive News, sub. req. | Image: AP Photo/J. Scott Applewhite]


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  • 35 Comments
      • 4 Years Ago
      ragtopdodge says...

      "Economics 101. If you have a job, thank the Prez for saving it and the economy from going down the toilet."


      Are you for real?
      • 4 Years Ago
      "The federal government is keeping up its effort to stimulate the economy, while the economy is keeping up its resistance to those efforts."

      Would it be too much to ask Mr. Ramsey to keep his political inclinations out of AutoBlog? Especially if it involves making illogical statements like the one above? Somehow "the economy" is resisting efforts to stimulate it? The economy is not a person or simple object but a complex system. Why do you think corporations are sitting on billions of dollars in cash and not investing it? Taxes are slated to go up and political uncertainty is causing individuals and corporations to hold on to their money until they know what is going to happen.
        • 4 Years Ago
        I bailed on Jalopnik when politics became a regular feature. I pray to all that is good an right with Automobiles that politics doesn't invade here.
        • 4 Years Ago
        Taxes have increased substantially this year and last year. Obama has done nothing but cut taxes thus far, but state and local governments have increased them by 24 billion this year. So most of his cuts are offset by property, sales and other taxes on local level.

        But clearly the first federal tax increase will be here come January 1st.

        http://online.wsj.com/article/SB10001424052748703384204575510681446981968.html?mod=WSJ_WSJ_US_News_3
        • 4 Years Ago
        Exactly. If the (political) prodding was directed in all directions, then no problem. In this case, it clearly shows a bias and preferential ideology. Autoblog should not be and cannot be his personal soapbox.
      • 4 Years Ago
      "It is customers who are needed to provide the real relief....."

      I got nuthin else.
      • 4 Years Ago
      Why don't they just lower taxes on small business and the middle class already?
      They say we can't afford that while they go about spending billions a day on these "jobs bills" which have done little if nothing to help get us out of this recession.
        • 4 Years Ago
        They can't lower taxes without cutting spending.

        They needed to cut spending 15 years ago, and it has only gotten far worse since.

        They need to cut spending by a huge amount. The enumerated powers of the US Constitution lay out exactly the roles in which the federal government has a role to play, and limits the government to that role. The government MUST be on a balanced budget.

        Then, they need to cut taxes. A LOT. Capital gains taxes should be low, to facilitate re-investment.

        Corporate income taxes should be ZERO. It is a shell game that builds taxes into the prices of goods and services. Corporations don't pay taxes, they EXPENSE them, and their CUSTOMERS pay them.

        Personal taxes should be a flat rate. The tax policy should fit on one 8.5x11 sheet of paper. If you make X, you pay X times 0.17, or whatever the appropriate percentage is for the previously mentioned enumerated roles of government.

        I wouldn't argue so much with an income tax, but I would RATHER have a sales tax at a set percentage.

        Sales taxes would be easier to collect, and every tax payer would see the percentage and the amount of taxes they pay on each and every receipt. And they would hold the government accountable for the numbers they see on those receipts every-day, rather than just counting the money that the government lets you keep, after they pre-extract it from your pay.

        Taxes at the point of sale, rather than the point of earning would encourage earning and responsibly saving money, instead of dis-incentivizing it. A tax is a dis-incentive on any activity it is applied to.

        Buying the things you need is a necessity. Taxes are also a necessity. Earning and being responsible should be an encouragement. Spending on discretionary items pays more in taxes, at that flat and consistent rate, and can be budgeted for, and counted on.

        If earning and prosperity increase, people will increase discretionary spending, even if taxes are associated with that, as long as they are not onerous, nor inconsistent.
        • 4 Years Ago
        Warren, stay in the EU or whatever other socialist leaning country you come from. With all it's ups and downs, Capitalism is the best system of government ever produced, period, and many will fight to the bitter end not to become the EU "west" like Obama wants to make us.
        • 4 Years Ago
        Where did Clinton's Budget Surplus, from the 90s go?

        Reagan's deficit spending was temporary, and releived the horrible situation from Carter. The Reagan years brought about the boom throughout the 80s and 90s, minus one or two very small recessions. It also bankrupted our soviet adversaries, and ended the cold war.

        But I don't want to go back to the government spending of the 1980s. I'd rather it goes back to the self-government of the 1780s, when the constitution was ratified, and understood, and it left the PEOPLE to their business. Maybe the 1880s, before the Income tax ran amok.

        Not that America was perfect then, but the social issues have since been worked out, at high cost. The federal government's role, especially the fiscal role was much better understood at the founding, than it is now, though.

        Imagine the US with today's better social climate, and astronomcal strides in technology, but still holding to a true federalist and republican (not party, but the definition of a representative republic) ideal of government, and freedom for all people to flourish without onerous government.
        • 4 Years Ago
        They needed to cut spending 15 years ago? No, try 25 years ago. It was Reagan and his ilk that started the deficit spending. Be honest.
        • 4 Years Ago
        I dislike oil companies, but why not open up new areas for development with an understanding (under the table if you want to call it that) that they will start the development of those fields now with American made equipment, rigs, tools, and drills (which cost BILLIONS)

        This will create thousands of jobs. Oil spill moratorium killed about 40,000 jobs they say, how many of these people could have bought a car if they worked now.
        • 4 Years Ago
        Obama actually cut taxes to their lowest level in decades and has just passed a small business tax ut.
        • 4 Years Ago
        @ BoxerFanatic i gave up on that whole cutting spending thing. I say let's just freeze the budget at 2006 levels ( 6 years of Bush administration saw HUGE gains in spending) and not increase it at all. Programs can be cut, money can be moved but the overall figure should not move.
        • 4 Years Ago
        @ Coupefan actually the President under whom entitlement spending exploded was Nixon.
        • 4 Years Ago
        Americans are collectively in over their heads by trillions of dollars. This didn't happen because of high business taxes -- this happened because the so-called "free market" worked hard to screw people over by outright lying to them about things like their creditworthiness and their job security. People were convinced they could afford things they couldn't realistically afford. There are shady operators everywhere! You can't trust insurance companies to give you a fair deal; you can't trust supermarkets to sell you food that won't make you sick; you can't trust banks to not screw you on service fees; you can't trust gas stations or ATMs because someone might be skimming your card info. On and on and on.

        Do you really think people who five years ago were buying houses and cars -- having been lied to and coerced into unsustainable financing -- and are today going through foreclosures and repossessions, are sitting around going, "If only my taxes were 2% lower, I'd be just fine"?

        • 4 Years Ago
        Do you not watch/read the news? The democrats want to keep bush tax cuts for the middle class, small businesses, and poor but forgo the tax cuts for the rich (the 2%). The republicans want to make Bush tax cuts permanent for everyone. Which is not fiscal responsible since someone have to flip the bill for those government programs, and saying cutting programs should help is just some fairy tale. Even Reagan & Bush sr had to increase tax after all those tax cuts because in reality tax cuts add to the deficit. Reagan added gas tax and some stuff and Bush jr lost to clinton with his, "Read lip no more taxes" because he added taxes. Bush jr ignore all that and just pretty much killed the economy. We did very damn well under Clinton and that was without Bush Jr tax cuts or Reaganomic.
      • 4 Years Ago
      We have a consumption based economy. If we reach saturation based on our individual wealth - what then? Instead we introduce credit into the market. Now we can buy with money that we don't have. Continuing the cycle of spending. This isn't a bad thing, except when people are irresponsible with their debt and have all repercussions removed by federal programs of debt forgiveness.

      My tax dollars are paid to help your bank offset your 8 months of unpaid mortgage payments.

      The "you don't have good credit" is a fine line. People have life crisis that may cause foreclosure. They get back on their feet, but now can't qualify for anything. Its tough to save up $30,000 for a new car, let alone $300,000 for a new house.

      What we have to do is reduce some of the spending IN Washington and not just from Washington. Meaning - Dep of Ed - Gone, Labor - slashed in half, HUD - ...no idea where to start there.

      • 4 Years Ago
      It's not credit dealers want or need, it's customers.

      If BO really wanted to help out, he'd take a 4 year vacation and ask congress to join him.
      • 4 Years Ago
      By having a capital gains tax that is lower than the earned income tax rate, we make it more profitable to gamble with money than to work for money - encouraging investment bubbles, fraud, and vastly increasing the advantage of existing wealth over those working to become wealthy. It takes capitol to gamble with capitol, and those with it now have around a 20% tax advantage over those without (I am referring to the working middle class not the subsidized poor). This advantage increases geometrically with the amount of capitol available. The incomes of very rich rapidly pull away from the merely rich, who slowly pull away from the upper middle class. This effect creates a middle class now owns less of the countries wealth and in effect becomes larger and considerably poorer. Since broad based demand drives the economy, the country itself becomes less economically viable.

      Supply side economics is ultimately stupidity.
      • 4 Years Ago
      Only if this was the case for Lenny Woods maybe we could have avoided a tragedy.

      http://www.autonews.com/article/20100923/BLOG14/100929935/-1

      And I hate the fact I have to post a link to another blog site

      Long Live Stone Woods and Cook Racing!!!
      • 4 Years Ago
      UGH, all you O supporters go play on Huff-Po or DailyKos or something and drop the politics.

      Unless Obama puts on some Nomex, straps on a HANS and heads for the test rack to lap a Shelby, I don't want to hear about him.
      • 4 Years Ago
      YoungTurk...the facts get in the way, doesn't it?

      You prefer the Fed. Gov't do NOTHING like Herbert Hoover?

      Worst recession since the 1930s and you just want to sit back and watch the economy crumble?

      Private industry created the bubble and bust; it ain't gonna bail itself out, so we need the gov't sometimes to bail out the economy by driving demand by increased spending and loan guarantees.

      Economics 101. If you have a job, thank the Prez for saving it and the economy from going down the toilet.
        • 4 Years Ago
        A paulinatorr66:

        "Private industry created the bubble and bust..." This is only partially true. Let's not forget the problem began with gov't meddling in the housing industry, i.e.; encouraging/rewarding/coercing banks to make loans to people who could not otherwise afford to buy a house.

        That one-sided, politically motivated analysis is simply not true. I'm sure ideologically slanted historians will be trying to push it for years as fact. But as they say, straight from the horses mouth:

        http://www.federalreserve.gov/newsevents/speech/kroszner20081203a.htm

        I'll keep it short, scroll down to paragraph seven. If the report is good enough to for Congress, the GAO and other interested parties, it should be good enough for the Fox news conspiracy crowd.
        • 4 Years Ago
        Ragtopdodge, I take issue with a couple of your unfactual comments.

        "Private industry created the bubble and bust..." This is only partially true. Let's not forget the problem began with gov't meddling in the housing industry, i.e.; encouraging/rewarding/coercing banks to make loans to people who could not otherwise afford to buy a house. It's only when that house of cards started to crumble that banks began finding creative ways to repackage the risky loans as "Derivatives" and others because they knew they would get no gov't help since the problem was their idea in the first place.

        "If you have a job, thank the Prez for saving it" How does one quantify how many jobs were were "saved" since their situation never changed? The numbers attached to that argument have been fabricated from outset and inflated from there. Simply put, there is no accurate way to count how many jobs were saved and anyone saying otherwise is promoting an agenda. Instead of bailouts, both Presidents should have allowed the companies enter bankruptcy, which we know they ended up doing anyway, and after they re-emerged the country would be farther through this whole mess than it is now. The government's intervention largely just prolonged or postponed the inevitable.

        • 4 Years Ago
        @Paulinator66

        You are right on the money with that post. It was Clinton and the other bleeding hearts that deregulated the banking industry and allowed any malcontent to get credit. It was McCain and other Republicans in 2006 who tried to but the genie back in the bottle but were blocked by the Democratically controlled congress and they would not change it.

        Trillions of dollars in defaulted loans was the result.
        • 4 Years Ago
        Government guarantee of Fanniue/Freddie/FHA/FDIC created the financial mess and moral hazards. With contribution from the banking lobby, Congress passing new law permitting structured-investment-vehicles(toxic investment papers), derivatives, hedgefunds, and default-swap. Over leveraged and over bought with government guarantees, these caused the collapse of the US economy in 2007. In 1913, the banking lobby bought the Federal Reserve Act that gave the bankers control of the American monetary policy. Since 1913, the Federal Reserve have manipulated the economy, creating severe boom-bust cycle, benefiting the WallSt money changers. Because of the greedy Federal Reserve, a private corporation, your 2010 dollar is worth 5 cents in 1913. Finally, the Federal Reserve and Congress caused US to abandoned the gold standard in 1972 permitting the Federal Reserve to print fiat money 24/7 stealing money from Americans thru inflation.

        The free market did not cause the Great Recession. Big government and the Federal Reserve did. The Great Recession is the free market trying to restructure the imbalance in the economy caused by the Federal Reserve and Big Government while government TARP, "Stimulus," mortgage modification program, unemployment extension, bailouts, nationalization of corporation, and equity stakes in insolvent private corporations are interferring with the free market forces.

        Finally, government propaganda always claim government is the good-doer savior so as to justify its seizing more power from the people.
        • 4 Years Ago
        Great posts Boxer. If the govt would stick to enforcing current law equally, Fairly, and Blindfolded, Like Lady Justice famously depicts, rather than how they currently do based on political favoritism, cronyism, or with downright disregard, things would be so much better.

        The free market doesn't create these bubbles by itself. It's govt. meddling and manipulation of markets through regulation and law based not on basic econonomics, but on winning the next election, that create the biggest, most hard to recover from bubbles. Govt definitely has a role in the free market, that is to catch those breaking the law so those who are not breaking any, feel as if there is a level playing field. Competition is good and keeps prices down, but corruption, aided by govt. is the worst kind of bad. Reagan once famously said "Govt doesn't solve problems, it subsidizes them." So True!!!
      • 4 Years Ago
      Politics and automobiles are so intertwined these days.
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