The official word from America’s top financial cop is that our nation is facing a very simple 50/50 proposition:  stop massive government spending or risk going broke.

While the passing of the King of Pop grabs the headlines,  something far more shocking came out of Washington last night in the form of the latest long-term budget outlook from the Congressional Budget Office.

At more than 80 pages the report is lengthy, but I’ll summarize:  Government spending is out of control and unless we rein it in or raise taxes to never before seen levels our national debt could put us on the road to economic ruin.

The report opens by stating:

‘Under current law, the federal budget is on an unsustainable path—meaning that federal debt will continue to grow  much faster than the economy over the long run. Although great uncertainty surrounds long-term fiscal projections, rising costs for health care and the aging of the U.S. population will cause federal spending to increase rapidly under any plausible scenario for current law.   Unless revenues increase just as rapidly, the rise in spending will produce growing budget deficits and accumulating debt. Keeping deficits and debt from reaching levels that would cause  substantial harm to the economy would require increasing revenues significantly as a percentage of gross domestic product (GDP), decreasing projected spending sharply, or some combination of the two.’

Spending up, revenue down.   Bad combination.

We’ve already walked through the math of the 2010 budget.   Any way you slice it, we are spending more.   While the Administration touts some $17 billion it found in cuts, that is just 0.5% of the total $3.4 trillion budget.   It’s a whopper that keeps on giving, and keeps on spending.  While all budgets tend to rise from previous levels due to inflation and a growing population, let’s not forget that the 14% increase from the previous budget is one of the largest jumps in history.   Spending as usual.

Most of this spending is on the Big 3.    Not GM, Ford and Chrysler, but rather the new “Big 3″ of Social Security, Medicare and Medicaid.

Page 9 of the report states:

‘In the future, projected growth in entitlement spending explains almost all of the projected growth in total  non-interest spending—and the two big government health care programs largely drive that increase. Medicare and Medicaid are responsible for 80 percent of the growth in spending on the three largest entitlements over the next 25 years and for 90 percent of that growth by 2080.’

Medicare and Medicaid costs are out of control.     The CBO estimates that spending on health care alone could rise from 5% of the total economic output of America to as much as 17% toward the end of this century.    By the time your kids are senior citizens, health-care entitlement programs will have more than tripled in size and cost in relation to the entire economy.   That’s clearly unsustainable, and it is why the President has made health care one of his key platforms.    Pardon me for being skeptical, but if Medicare is our biggest financial problem, how exactly would an even larger government-run health care plan help us solve our financial woes?   Most of the guests we have had on the program say it won’t, and indeed will likely only make matters worse.   Americans know the government is not exactly a model of fiscal discipline.

With these higher costs come higher debts.    Anyone with a debt knows that debts require interest payments.   The government works the same way.  We issue debt and must pay interest on it.   And as debts soar, so do our interest payments.    More from the report:

‘But CBO estimates that in fiscal years 2009 and 2010, the federal government will record its largest budget deficits as a share of GDP since shortly after World War II. As a result of those deficits, federal debt held by the public will soar from 41 percent of GDP at the end of fiscal year 2008 to 60 percent at the end of fiscal year 2010. Higher debt results in permanently higher spending to pay interest on that debt (unless the debt is later paid off ). Federal interest payments already amount to more than 1 percent of GDP; unless current law changes, that share would rise to 2.5 percent by 2020.’

A debt-to-GDP ratio in the 60% range would put us on par with the spending levels of most European nations.    Those socialist countries have high taxes to pay for all the entitlements.    As our programs begin to look more like theirs, it’s reasonable to believe our taxes will too.

The CBO directly addresses taxes and the need to raise money in its report:

‘CBO’s long-term budget projections raise fundamental questions about economic sustainability. If outlays grew as projected and revenues did not rise at a corresponding rate, annual deficits would climb and federal debt would grow significantly. Large budget deficits would reduce national saving, leading to more borrowing from abroad and less domestic investment, which in turn would depress income growth in the United States. Over time, the accumulation of debt would seriously harm the economy. Alternatively, if spending grew as projected and taxes were raised in tandem, tax rates would have to reach levels never seen in the United States.‘

Tax levels never seen in America?    History reminds us that America has in the past had an individual income tax rate as high as 91%.    That is history we will not and cannot repeat, and clearly we won’t hit those astronomical levels again.   But make no mistake, taxes are going up.   Not just on the rich, but on everyone, through charges such as higher state and local taxes, ’sin’ taxes, excise taxes, possible taxation of health-care benefits, a reduction in the amount of deductible interest on certain mortgages, small charitable donation breaks, higher tolls on roads, the carbon tax from cap & trade, and even reduced purchasing power through the devaluation of the U.S. dollar.   You name it, governments are trying it.    The $1 gallon of gas price increase since the election alone has likely more than wiped out the meager $400 tax cut the President gave many Americans.

And even those higher taxes on high earners are unlikely to help much.   As Maryland recently learned, raising taxes on the wealthy does not guarantee more money comes in.    Certainly recessions impact wealth, so income tax receipts will likely come back a bit once the economy recovers,  but on the whole the rich tend to be smart with their money and hire good financial advisers specifically to avoid paying taxes.   Additionally, as former White House spokesman Ari Fleischer wrote in an excellent piece recently in The Wall Street Journal, having a very small percentage of the population pay most of the taxes while nearly half of a voting majority pay next to nothing is damaging not only from a productivity perspective, but also it is bad for democracy.

Can we raise the cash though higher corporate taxes?    It’s being considered.  While the President hasn’t said he wants to raise the actual tax rate, he has proposed cutting breaks corporations use to lower their effective taxation.    This presents a paradox which, like Maryland, may result in the opposite intended effect.   As companies’ costs go up, they alter their balance sheet by either cutting costs, often through layoffs, or raising prices.   As the New York Times noted last year:

In fact, a corporate rate cut would help a lot of voters, though they might not know it. The most basic lesson about corporate taxes is this: A corporation is not really a taxpayer at all. It is more like a tax collector.  The ultimate payers of the corporate tax are those individuals who have some stake in the company on which the tax is levied. If you own corporate equities, if you work for a corporation or if you buy goods and services from a corporation, you pay part of the corporate income tax. The corporate tax leads to lower returns on capital, lower wages or higher prices — and, most likely, a combination of all three.

If lower corporate tax rates help voters, it is logical to assume higher effective tax rates would hurt American workers and consumers.    Not only through higher prices, but also by paying for the costs of the newly jobless.   Any additional revenue the IRS is able to squeeze out of corporate America will likely be wiped out by having to cover a variety of costs associated with those fired by the companies who now have to lay them off to protect their balance sheet.

So if higher individual and corporate taxes won’t cover the massive fiscal gap, the only other way to raise money is sell more debt or print more money.   And with alarms being sounded on what we have already done in those areas, it is dangerous to suggest more.   We cannot risk destroying the United States’ credit rating by issuing more and more debt, or further devaluing the dollar.    And since inflation is a monetary phenomenon, ask Zimbabwe or post World War I Germany how well massive money printing worked.

The bad news is that this leaves us in a financial bind.    The CBO clearly states we will not have the money to cover the promised spending, while at the same time we are coming to the realization that higher taxes, debt sales and money printing aren’t going to cover the costs.

The good news is that this leaves us with only one answer to the 50/50: we must stop spending at these unsustainable levels.   If you can’t alter one side of a balance sheet, the only alternative is to change the other.   Having a government agency question the economic sustainability of the country should open our eyes to just how important this is.  And the message is clear: the spending must slow down, even if some voters don’t get all they were promised. Leadership is not about giving everybody everything.   It is about making hard decisions.   It is about having to say no.

Ronald Reagan said the nine most frightening words in America are “I’m from the government and I’m here to help.”

Perhaps we could add a few words to that famous phrase now to: “I’m from the government and I’m here to help … solve the problems I helped create.”

Big government right now believes they are the answer to the economic problem.   While Congress itself isn’t the only party to blame, they are not blameless.  Using the public anger over bailouts, job losses and house price declines, the President and much of Congress are selling the concept that only bigger government, more regulation and massive spending can make the changes necessary to solve this crisis.   The big government plans include de facto nationalization of banks, printing trillions in new currency, regulating derivatives, forcing interest rates down to get already strapped Americans borrowing again and pushing through a budget with a deficit larger than all 43 prior presidents - including Bush II - combined.

The President seems genuinely confused at much of the public skepticism over these plans.    As a fan of history, perhaps he should look to the recent past to understand why many in America are having trouble buying into the idea that government knows best.

With the exception of a few new members, this is largely the same Congress that in the past 10 years:

1. Not only allowed the housing bubble to inflate unfettered, but encouraged it with the passage and promotion of numerous bills designed to encourage lending to those even with bad credit.   Even as late as 2006 and 2007, both parties were hard at work on laws that would eliminate a 3% down payment requirement for poor credit homebuyers even as the entire country knew the housing bubble was bursting.
2. Acted schizophrenically by pushing Fannie and Freddie to get bigger in 1999.   Then held hearings about Fannie and Freddie’s shoddy accounting and how they were too big and too out of control in 2003 and 2004.    Just four years later, Congress has flip-flopped again and wants to convince us that letting Fannie and Freddie get bigger is the only way to help housing.
3. Completely missed and/or ignored the 10 year build up of the estimated $160+ TRILLION dollar derivatives market.
4. Congress passed and Bill Clinton signed the Commodity Futures Modernization Act in 2000 that largely allowed the derivatives market to grow without regulation
5. Allowed banks such as Bear, Lehman and others to borrow 30, 40 and even 50 times their capital base for a multiyear period.
6. Vote to give hundreds of billions to failing companies, tell America they won’t give anymore, then give more when its discovered that throwing money at the problem doesn’t actually solve the problem.
7. Accepted millions in campaign contributions from many of these same companies, including more than $9 million dollars from AIG over the last 20 years.

Of course, Reagan also said:  “The government’s view of the economy could be summed up in a few short phrases: “If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”

So as Congress continues to hold hearing after hearing, desperately trying to find blame … perhaps Congress should a hold a hearing of itself and ask why - as the nation’s ultimate regulator - they failed as much as anyone, if not more.

Per the Washington Post: “A senior administration official acknowledged yesterday that the budget does not contain $2 trillion in spending cuts over the next decade. Instead, the figure represents Obama’s total efforts at deficit reduction, including tax hikes on families making over $250,000 a year. It also includes hundreds of billions of dollars ‘saved’ by not continuing to spend $170 billion a year in Iraq.”

Consider that.   We went from “saving” $2 trillion …. to finding out it is actually just the expected increase in taxes on the wealthy with some war reductions thrown in.    So much for “unprecedented transparency.”

Everyone needs to read the op/ed in today’s WSJ “The 2% Illusion.”   While many Americans may not be concerned about what happens to “the rich,” they should be:

Consider the IRS data for 2006, the most recent year that such tax data are available and a good year for the economy and “the wealthiest 2%.” Roughly 3.8 million filers had adjusted gross incomes above $200,000 in 2006. (That’s about 7% of all returns; the data aren’t broken down at the $250,000 point.) These people paid about $522 billion in income taxes, or roughly 62% of all federal individual income receipts. The richest 1% — about 1.65 million filers making above $388,806 — paid some $408 billion, or 39.9% of all income tax revenues, while earning about 22% of all reported U.S. income.

Not to belabor the point, but any argument that the wealthy don’t “pay their share” needs to be put to rest.   They not only pay their share, but pay the shares of many others as well .. and soon to be more.

The President doesn’t want to “reward failure” at banks who need to be bailed out by taxpayers and who take taxpayer money by capping executive compensation at those banks going forward.

Fine.  No doubt most in America would agree with that move (even though it will make it nearly impossible to find anyone who would want to take these jobs, now some of the most important in America).

But most Americans would also agree that regulators and Congress alinke were complicit in the housing and toxic asset bubble that built - unregulated - over a period of years.  It are the SEC and Congress who are charged to oversee Fannie Mae, Freddie Mac and the money “management” firms such as Bernie Madoff.   As Harry Markopolos said in his explosive testimony today, it took him “about five minutes” to realize Madoff’s returns were impossible year after year, yet the SEC and other agencies couldn’t over a matter of years.    Moreoever, Fannie Mae and Freddie Mac - which are overseen by the government and have special Congressionally granted tax benefits - were left to grow unchecked over the years, in part promoting the subprime housing boom and bust.    Ironically, the SEC was actually investigating Fannie and Freddie’s accounting back in 2003 and we still had years of growth of these agencies after that.

If the President is right in that we can’t “reward failure,” isn’t allowing those who were partially responsible for these bubbles and frauds to occur to keep their jobs a form of reward?  Not only keep their jobs, but in the case of Congress get a pay raise this year.

As the President likes to say, we are all in this together.  And if we truly are then we need to punish equally those in the private and public sectors who failed in their roles as regulators.

Here come the jobs.   And they rely on two big things: construction and a consumer turnaround.

This weekend President-elect Barack Obama unveiled more specifics about his proposed plan to create 3.5 million jobs over the next two years.  That is an ambitious goal and has understandably faced skepticism, especially without specifics on how this would happen.     We now have a more specific outline of the plan.  It was released this weekend.  (WSJ story has a link directly to the 14 page report in .PDF format or you can access it through Obama’s website).

The plan involves a government spending program “just over” $775 billion dollars, with the key components being outlined as:

• A package in the range that the President-Elect has discussed is expected to create
  between three and four million jobs by the end of 2010.
• Tax cuts, especially temporary ones, and fiscal relief to the states are likely to create
  fewer jobs than direct increases in government purchases. However, because there is a
  limit on how much government investment can be carried out efficiently in a short time
  frame, and because tax cuts and state relief can be implemented quickly, they are crucial
  elements of any package aimed at easing economic distress quickly.
  
• Certain industries, such as construction and manufacturing, are likely to experience
  particularly strong job growth under a recovery package that includes an emphasis on
  infrastructure, energy, and school repair. But, the more general stimulative measures,
  such as a middle class tax cut and fiscal relief to the states, as well as the feedback effects
  of greater employment in key industries, mean that jobs are likely to be created in all
  sectors of the economy.
  
• More than 90 percent of the jobs created are likely to be in the private sector. Many of
  the government jobs are likely to be professionals whose jobs are saved from state and
  local budget cuts by state fiscal relief.
  
• A package is likely to create jobs paying a range of wages. It is also likely to move many
  workers from part-time to full-time work.

The report details expected job growth by industry by the 4th quarter of 2010.   Here’s how the Obama camp breaks it down by expected job growth per sector by that time:

• Energy: 459,000
• Infrastructure: 377,000
• Health Care: 244,000
• Education: 250,000
• Protecting Vulnerable: 549,000
• State Relief: 821,000
• Making Work Pay Tax Cut: 505,000
• Business Tax Incentives: 470,0000

(Note to Obama camp: Your report has bad math.   In the report you have “direct effect” of jobs on energy at 305,000 and “indirect effect” at 153,000, totaling “459,000.”   305k + 153k = 458k.   The same is done with the ‘infrastructure’ breakdown.  Small detail, but you got to get this right).

There are a few interesting points to dig out:

1. The public outcry over fear of big(ger) government is resonating with the Obama administration.   The plan now says that “90% of the jobs are likely to be in the private sector.”   This is up from earlier estimates that only 80% would be in private sector.    Of course, the bad news is that this plan still presumes to add 244,000 government jobs (listed in the report).

2.  Consumer recovery is a major component of this plan.  The report outlines that more than 1.1 million of these jobs will come from “retail trade” and “leisure and hospitality” (604,000 & 499,000 respectively).   These are jobs that are nearly entirely reliant on the macro economy and consumer confidence.    They are less impacted by government plans than by a simple overall economic recovery.

3. The biggest jump in jobs is expected to be in construction (678,000 in the report).   Let’s hope that construction goes to projects that truly need it and will positively impact GDP and transportation instead of merely re-patching existing highways.  We have a real chance to invest in and build newer, smarter energy and transportation grids that can help define how we live in the next century.    We need it.   Not only to reduce dependency on foreign oil, but also to help shape city design and transportation.  Consider that the travel time by train from near my home in New Jersey to New York’s Penn Station hasn’t changed meaningfully in 30 years.   This while France’s national railway - SNCF - recently hit more than 350mph on a train trip from Marseille to Paris.   A(note to Obama camp: please save some money for New York City’s Penn Station, its a dump).   America is a leader in many areas but energy and transportation aren’t two of them.

So there you go.  “The plan” to create (or save) 3.5 million jobs.   Many Americans will be counting on this to work.   The Obama jobs plan is one that is sure to generate much debate.  It is greatly ambitious and depends on many things that are not in the control of the government, namely a macro economic rebound and consumer spending increase.    Still, confidence and psychology are mysterious things and perhaps a constant reminder that “things are going to be okay” will provide a lift to this sagging economy.

One positive though: I give the President-elect credit for laying out specifics in this manner.    Too few politicians these days actually give firm answers on anything, instead choosing to stammer and dance around any topic.    Now we have a guide.    And one that we can hold the soon-to-be President to.

The economy is sick and only big government has the medicine.

That was the primary message in a economy-focused speech today by Barack Obama.   It was a speech perhaps written to try and instill consumer confidence, though the message came through as one more of economic fear that will lead us to accept tax increases and bigger government.   You would’ve thought the President-elect would’ve learned from the rancor over Hank Paulson’s now infamous speeches that tended to leave the market more jittery than comforted.

In his speech today, the President-elect said the following:

It is true that we cannot depend on government alone to create jobs or long-term growth, but at this particular moment, only government can provide the short-term boost necessary to lift us from a recession this deep and severe.  Only government can break the vicious cycles that are crippling our economy - where a lack of spending leads to lost jobs which leads to even less spending; where an inability to lend and borrow stops growth and leads to even less credit.  That is why we need to act boldly and act now to reverse these cycles.

While it is easy to admire Obama’s passion and clear desire to help those that are struggling, it is difficult to understand how the Government will simply step up and solve America’s economic problems.   Aside from the change in the Executive branch, much of the current Congress is the same as it was during the bubble of the past 10 years.   Despite much reported taxpayer anger, the majority of incumbents won their respective elections and thus Congress is composed of many of the same women and men who Obama criticized in his talk today.

The speech was clearly an exercise in managing expectations.   The first half related primarily to how poorly the economy is performing, the second on how the government will mount its taxpayer-funded horse and ride to the rescue.   Detail the problems, then provide the solution.   Marketing 101.   Obama also blamed corporate America, lax financial regulation and - oddly given he was a member - Congress for many of the current problems.   There was no mention of individual responsibility.

Here is more text, given near the top of the speech:

We start 2009 in the midst of a crisis unlike any we have seen in our lifetime – a crisis that has only deepened over the last few weeks. Nearly two million jobs have now been lost, and on Friday we are likely to learn that we lost more jobs last year than at any time since World War II. Just in the past year, another 2.8 million Americans who want and need full-time work have had to settle for part-time jobs. Manufacturing has hit a twenty-eight year low. Many businesses cannot borrow or make payroll. Many families cannot pay their bills or their mortgage. Many workers are watching their life savings disappear. And many, many Americans are both anxious and uncertain of what the future will hold.

That was soon followed by this:

For if we hope to end this crisis, we must end the culture of anything goes that helped create it – and this change must begin in Washington. It is time to trade old habits for a new spirit of responsibility. It is time to finally change the ways of Washington so that we can set a new and better course for America.

Again the message is ‘the economy is dying and only the government can provide the best medicine to resuscitate it.’   It is also a contradiction to discuss a “new spirit of responsibility” while outlining a potentially trillion dollar government spending program that relies on big government rather than individual actions.

In his speech the President-elect did correctly highlight that much of the root of our economic woes is based on Americans losing their jobs or being fearful of losing them, thus rendering them unwilling or unable to buy homes and cars.   Jobs and income are the fuel to the entire American fire.   In the speech, however, Obama sticks to one of his main campaign themes; a $1,000 tax credit to most American families that would be funded by a tax increase on high income earners.   While an extra $1,000 per year may mean much to many struggling families, it is difficult to imagine how this may help create new jobs.    If it did, the government refund checks sent out last year would have created them, as many families received more than Obama is proposing.

Finally, there seems to be a contradiction between what Obama is saying and what is likely to actually happen.  Closing out the speech, he said the following:

To help Americans who have lost their jobs and can’t find new ones, we’ll continue the bipartisan extensions of unemployment insurance and health care coverage to help them through this crisis. Government at every level will have to tighten its belt, but we’ll help struggling states avoid harmful budget cuts, as long as they take responsibility and use the money to maintain essential services like police, fire, education, and health care.

How can any level of government ‘tighten its belt’ when we are discussing a potentially $1 trillion dollar stimulus plan?  To borrow one of the President-elect’s favorite phrases, ‘make no mistake:’ the government is going to get bigger.

Get ready for bigger government.   Much bigger.

President-Elect Barack Obama today give his weekly radio address.  It was primarily aimed at the economy (and strangely silent on Israel/Gaza) and again discussed the massive government growth plan that is coming down the pike.

Here is the key paragraph:

That’s why we need an American Recovery and Reinvestment Plan that not only creates jobs in the short-term but spurs economic growth and competitiveness in the long-term.  And this plan must be designed in a new way—we can’t just fall into the old Washington habit of throwing money at the problem.  We must make strategic investments that will serve as a down payment on our long-term economic future. We must demand vigorous oversight and strict accountability for achieving results. And we must restore fiscal responsibility and make the tough choices so that as the economy recovers, the deficit starts to come down. That is how we will achieve the number one goal of my plan—which is to create three million new jobs, more than eighty percent of them in the private sector.

Three million new jobs, with 80% of them in the private sector.   That means 20% of them - or 600,000 - will not be in the private sector.   600,000 more government employees.

Notice “the plan” now has a name: American Recovery and Reinvestment Plan, or ARRP for short.   Given the generous retirement benefits offered by the government, it is ironic this plan’s name is so close to the AARP, better known as the American Association of Retired Persons.

The Federal government permits retirement with benefits as early as the age of 50 for certain jobs so long as there is 25 years of service.    Generous pensions and benefits are already contributing to the fiscal crises hitting states such as California.   If the President-Elect wants to add 600,000 people to the government payroll, it would be wise to enact private-sector retirement thinking.   The American taxpayer is already frustrated by Uncle Sam’s hand in the pocket.

Scary story of the day: California may be broke in two months.

According to the AP:

California’s chief financial officer warned Monday that the state would run out of money in about two months as hopes of a Christmas budget compromise melted into political finger-pointing by the end of the day.   Republican Gov. Arnold Schwarzenegger began the day on a cheerful note, suggesting that negotiations with Democratic leaders could lead to a budget deal as early as this week to help close the $42 billion shortfall that is projected through June 2010.Let’s repeat that: $42 billion dollar budget shortfall.   That is about 2.5 times the loan just provided to GM and Chrysler.    And one wonders if the outcome - begging for a federal bailout - will be the same as with the automakers.   As much lobbying power as the automakers have, can any group have more lobbying power than the government itself?

If the Federal government has to step in to help with jobs, payroll and pensions it will be a tall and expensive task.   According to the State Controller’s Office, California has 238,816 employees on the payroll.    The monthly payroll disbursement in October was $1.595 billion dollars.   Simple math tells you that the average payroll check = $1.595 billion / 238,816, or about $80,000 per year for each California state employee.    That is the average, indicating many in the state make much more.   And the generous state pensions guarantee much of that income is going to be paid for life.

The billion dollar question then is: if California does go broke, will the U.S. taxpayer be on the hook for those salaries and pensions?

Let’s hope not, because the burden is substantial.   The Golden State has a leaden problem in payroll, especially as many of the biggest departments in terms of number of workers are those that are related to public costs and tax collection and disbursement.    Tax money being used as payroll for those who figure out how to collect and spend more tax money.   Circuitious at best, frustrating at worst.

The 11 biggest departments in the State by total number of employees are as follows, listed by number of employees as of October 2008:

• Transportation (across 12 districts & administration) 20,675
• Higway Patrol 10,805
• Motor Vehicles 9,514
• State Insurance Fund 8,068
• Employment Agency 7,772
• Franchise Tax Board 6,484
• Forestry & Fire Protection 5,750
• Corrections Administration 5,532
• Justice 5,222
• Parks & Recreation 4,730
• Board of Equalization 3,950

The oddly-named Board of Equalization is the department that collects sales and use taxes and helps disburses the money.   Taxes propogating more jobs related to taxes.

By the way, the California Alternative Energy Senior Financial Authority is a department of just one, and the Commission on Aging emplys just three persons, despite that fact that dealing with energy and demographic trends are some of our biggest challenges.

While I don’t have the link embedded, be sure to go to our video page and check out my interview this afternoon with State Controller John Chiang.

On a side note, here’s a marketing tip to the UAW: Instead of complaining that foreign automakers got “unfair” tax breaks by the U.S. southern states to build plants there as the primary response to public anger over the $17.4 billion dollar rescue loan, a better public relations move might be to discuss the pay scales of government employees.   At least the UAW is making cars.