Detroit Goes From Gloom to Economic Bright Spot

DETROIT — After a dismal period of huge losses and deep cuts that culminated in the Obama administration’s bailout of General Motors and Chrysler, the gloom over the American auto industry is starting to lift.

Jobs are growing. Factory workers are anticipating their first healthy profit-sharing checks in years. Sales are rebounding, with the Commerce Department reporting Friday that automobiles were a bright spot in July’s mostly disappointing retail sales.

The nascent comeback is far from a finished product. Foreign competitors are leaner and stronger, accounting for more than half of all car sales in this country. The sputtering economic rebound is spooking investors and consumers alike, threatening to derail some of Detroit’s gains. And talks next year on a new contract with the United Automobile Workers could revive old hostilities.

Still, the improving mood here reflects real changes in how Detroit is doing business — and a growing sense that the changes are turning the Big Three around, according to industry executives and analysts tracking the recovery.

Ford made more money in the first six months of this year than in the previous five years combined. G.M. is profitable and preparing for one of the biggest public stock offerings in American history. Even Chrysler, the automaker thought least likely to survive the recession, is hiring new workers.

Many of the excesses of the past — overproduction, bloated vehicle lineups, expensive rebates — are gone. All three carmakers have shed workers, plants and brands. And a new breed of top management — the three chief executives are outsiders to Detroit, as is the newly named G.M. chief executive — says it is determined to keep the Big Three lean, agile and focused on building better cars that earn a profit.

“What we’ve come out of this with,” said Sergio Marchionne, who runs both Chrysler and its Italian owner Fiat, “are much more rational, more grounded players making moves for the long term.”

The proof is emerging in dealer showrooms, where customers are buying more of Detroit’s cars and paying higher prices. In July, G.M., Ford and Chrysler sold their vehicles at an average price of $30,400 — $1,350 more than a year ago and higher than an overall industry gain of $1,100, according to the auto research Web site Edmunds.com.

With fewer factories churning out products, inventories are smaller and sales incentives like rebates and low-interest financing are gradually declining. “They were nibbling at these issues before, a little bit here and a little bit there,” said Jeremy Anwyl, Edmund’s chief executive. “It’s just different now that they are in fighting shape.”

Detroit has vowed to change before, slimming down when sales slumped or pouring resources into vehicle quality to catch up to foreign competitors. Those efforts stalled or failed. But many auto analysts say the current makeover has a more permanent feel, largely because of the presence of the outsiders at the top and the lessons learned from the near-death experience of last year’s bankruptcies at G.M. and Chrysler.

Ford’s chief executive, Alan R. Mulally, broke the mold four years ago when he came from Boeing and set out to streamline Ford’s bureaucracy and integrate its worldwide operations. At G.M., Edward E. Whitacre Jr., a former AT&T chief, has replaced dozens of top officials with outsiders and younger executives, and driven the company to make decisions faster. Those efforts are likely to be accelerated under Daniel F. Akerson, who was named on Thursday to succeed Mr. Whitacre as chief executive in September.

And at Chrysler, Mr. Marchionne, an Italian raised in Canada who is both a lawyer and an accountant, is systematically upgrading the carmaker’s aged product lineup and revamping its plants in Fiat’s image.

“Fundamentally this thing has been reshaped, resized and rethought,” Mr. Marchionne said of Detroit. The biggest difference, he said, is that the Big Three have finally broken the habit of reflexively raising incentives to increase sales volumes.

“We’re not trying to kill each other for this month’s market share,” he said. “Those days are over. We’re not offering $7,000 checks to try to sell a car.”

Wave after wave of plant closings and worker buyouts in recent years has brought Detroit’s production more in line with the demand for its vehicles. Since 2000, the number of Big Three assembly plants in North America has dropped to 40, from 66, according to the consulting firm Oliver Wyman. In turn, overall capacity has shrunk to about eight million vehicles a year, from 13.7 million.

That still may be too much. After several years of sales topping 16 million vehicles, the industry nosedived to 10.4 million last year — the lowest since 1982. At current levels, sales are projected to edge up to about 12 million this year, with Detroit’s share running at 46 percent.

“They carved out a lot of capacity, but I’m not sure it was enough,” said Peter Morici, an economist at the University of Maryland. “There’s still an excess.”

Even under the most hopeful assumptions, a resuscitated United States auto industry in the end would account for less than 3.5 percent of the country’s economic output, economists estimate, compared to 4.6 percent in the late 1970s. But the Obama administration, which argues that the comeback is long-term and sustainable, contends that the Big Three have downsized enough to be profitable with fewer sales.

“They were just barely making money or breaking even in a market of 16 to 17 million a year,” said Brian Deese, a member of President Obama’s auto task force. “The companies are positioned now to move forward in an environment of 11 to 12 million in sales.”

http://www.nytimes.com/2010/08/14/business/14auto.html?ref=business

Filling in the Insurance Gap for Adult Children

TAMAR ZAIDENWEBER, a 24-year-old graduate student at Georgetown University, lost her insurance coverage under her father’s health plan in 2008 because she was no longer financially dependent on him. Because of the new health care law, she will be able to rejoin his policy.

But not until January. In the meantime, she will renew the student policy she had last year, even though the coverage isn’t as good and the price, $1,745 for the year, is much steeper than rejoining her father’s plan, which she will be able to do free.

“It’s extremely frustrating,” she said.

Finding a health plan for college-age children isn’t something parents have had to think much about. Most decide to keep their children on their employer’s plan, which is typically more comprehensive than coverage offered through the school or in the market for individual policies.

But many health plans limit coverage of college-age children for a variety of reasons, including age, whether they live at home and whether they are financially dependent. For families with those plans, the choices are more difficult. And the health care law has added wrinkles to an already complicated decision.

Under the new law, employers will be required to offer to cover adult offspring until they are 26, regardless of their student status or whether they are financially dependent on their parents. The provision takes effect on or after Sept. 23, whenever health plans renew coverage.

For many companies, that means January 2011, but for others it could be March or even July. So students like Ms. Zaidenweber face a gap in coverage of several months.

Because of a pre-existing condition, she does not qualify for an individual insurance policy to tide her over until January, when she will rejoin her father’s plan. But Georgetown won’t permit her to buy student coverage for just one semester, so beginning in January she will be doubly insured.

For many such students and their families, finding adequate health insurance remains a challenge. Here are strategies to consider.

EMPLOYER PLANS Employer plans generally offer more comprehensive coverage than student or individual policies. But don’t assume the company plan is the best choice.

If you haven’t done so, check with your human resources department to make sure your child will be covered in the fall. If there is going to be a gap, find out your health plan renewal date and when the enrollment period will be held to add adult children.

If your plan doesn’t renew until next year, under the federal Consolidated Omnibus Budget Reconciliation Act, Cobra, you can keep your child on your employer plan in the interim. But you will be responsible for paying the premium to cover the child.

Cost is another important question. Once the plan renews its policy, the new health care law prohibits employers from charging a higher rate for adult children who are newly eligible for coverage. Companies can charge more for all dependents, however, and many may do so.

In a recent survey by Mercer, a human resources consulting firm, one third of employers said they would strongly consider increasing the premiums for dependent coverage to offset the higher costs of covering adult offspring. If your company plans to do this, you may want to consider other options, such as individual insurance, especially if your child is healthy.

The new health care law eliminates some barriers for parents who want to keep college students on the family plan, but obstacles remain. One all-too-common difficulty: If your child is going to school out of state, your health plan may not cover most services there.

That’s the situation facing the Davis family of Malibu, Calif. Skyler Davis, 18, is heading to Drexel University this fall, but the family’s health maintenance organization will cover him only for emergency or urgent care, not routine doctor appointments, while he’s in Philadelphia.

So the Davises will probably buy Drexel’s student plan, at $1,140 a year. Elyse Davis concedes she does not like the $50,000 per condition per lifetime cap on benefits.

“You go into the hospital for two days, and that could do it,” she said.

STUDENT POLICIES A majority of colleges offer student health insurance, and some provide solid coverage — but they are the exception. “Most student plans are really bad,” said Stephen Beckley, a health care management consultant for colleges and universities in Fort Collins, Colo.

Student health plans must meet new standards under the health law, but the specific regulations have not been issued. The law is likely to have no effect this fall, since those health plans are already in place.

If you’re considering buying a college plan, look for several important elements, said Mr. Beckley and other experts. They include: catastrophic coverage of at least $1 million in lifetime benefits; no exclusions of coverage for pre-existing conditions if your child was covered immediately before signing up; first-dollar mental health coverage, not subject to a deductible; and solid prescription drug coverage.

As more parents see cuts to their generous employer health benefits or lose them entirely, some student health plans, even ones that aren’t particularly robust, are starting to look at least somewhat attractive.

Donna and Brent Funck’s daughter Brenna, 18, will attend Tulane University in New Orleans this fall. Mr. Funck owns a software business, and the family is insured through an individual policy. Brenna Funck, however, has a congenital heart defect that makes her difficult to insure. The Funcks pay $300 a month for a separate individual policy for her, with a $2,500 deductible.

Tulane’s policy isn’t ideal for someone with a medical condition that may require expensive care. The policy maxes out at $250,000 per condition per lifetime. “One event that requires surgery would wipe that out,” Ms. Funck said.

But the $1,754 annual premium is a lot less than the Funcks pay, and the deductible is just $250. Despite reservations, they said they would sign her up.

INDIVIDUAL PLANS If the parents’ insurance isn’t an option and the school policy is poor or nonexistent, students who are healthy may be able to get a good deal on an individual policy.

The average rate for an 18- to 24-year-old is $106 a month for a plan with a $2,300 deductible, said Carrie McLean, a consumer specialist with eHealthInsurance.com, which sells policies from 180 insurers through its Web site.

Individual policies are not known for being generous, but they may be a better choice for students than in years past. Under the health care law, new individual plans must meet new standards beginning Sept. 23, including no lifetime limits on coverage and free preventive care.

http://www.nytimes.com/2010/08/14/health/policy/14patient.html?ref=health

Waters Defends Herself Against Ethics Charges

WASHINGTON — Representative Maxine Waters went on the offensive Friday, holding an unusual Capitol Hill news conference for nearly 90 minutes to contest ethics charges against her, repeating that any appeals she made to Treasury officials in late 2008 were to get minority banks access to decision makers, not to protect a family investment.



Neither my staff nor I engaged in any improper behavior,” said Ms. Waters, a California Democrat, in a sometimes testy exchange with reporters. “And we did not influence anyone and we did not gain any benefit.”

She also presented a PowerPoint review of documents — essentially a preview of the defense she will offer at her ethics trial. The documents, Ms. Waters argued, proved that any federal assistance provided to OneUnited, the Massachusetts bank her husband still owns stock in, was based on the merits, not any intervention by her office.

“If someone is accused and simply goes into the back room and agrees to some violation even if they are not guilty of it, it would avoid all of the public press, it would be easy on the committee itself,” she said, referring to the House ethics committee. “That is how it normally works. But we feel very strongly we cannot do that.”

The committee has filed three charges against Ms. Waters, accusing her office of intervening on behalf of OneUnited at the height of the recession, after it had lost $50 million on an investment it held in Fannie Mae and Freddie Mac, the federal housing finance agencies. No date has been set for a trial, and that angers Ms. Waters, who has requested that her case be resolved before the November election.

Ms. Waters acknowledged Friday that she called Treasury Secretary Henry M. Paulson Jr. in early September 2008, just after Fannie and Freddie were taken over by the federal government, creating the $50 million losses for OneUnited, and asked him to arrange a meeting with minority bankers to discuss the crisis.

But she said the request was on behalf of all minority banks — not just OneUnited, even if most of the bankers that showed up for the meeting were from OneUnited. That frustrated Mr. Paulson, who later called Ms. Waters back to complain. At that meeting, OneUnited executives made an unusual request for a special $50 million bailout, ethics investigators have charged.

Ms. Waters said regardless of how the meeting turned out, her intent was to help minority banks nationwide.

“For the past 34 years I have served in elected office both at the state and national level, and I have made one of my top priorities opening doors and providing access for small, minority and women businesses,” she said.

Ms. Waters also presented her case that a conversation she had with Representative Barney Frank, Democrat of Massachusetts, about OneUnited took place in late September 2008, after her call to Mr. Paulson, rather than in early September, as ethics investigators have suggested. The ethics investigators have reported that Mr. Frank told Ms. Waters during that conversation to stay away from the matter.

Ms. Waters said that she realized she had a conflict and approached Mr. Frank only when OneUnited officials appealed to her for help in getting funds from the bank bailout program, which was first proposed by Mr. Paulson on Sept. 19.

“I realized that if they were asking for money that perhaps I should take a distance from that,” Ms. Waters told ethics investigators in a transcript of her interview that her office released Friday. “I told Barney, I can’t deal with that.”

http://www.nytimes.com/2010/08/14/us/politics/14waters.html?ref=us

Obama Strongly Backs Islam Center Near 9/11 Site

WASHINGTON — President Obama delivered a strong defense on Friday night of a proposed Muslim community center and mosque near ground zero in Manhattan, using a White House dinner celebrating Ramadan to proclaim that “as a citizen, and as president, I believe that Muslims have the same right to practice their religion as anyone else in this country.”

After weeks of avoiding the high-profile battle over the center — his press secretary, Robert Gibbs, said last week that the president did not want to “get involved in local decision-making” — Mr. Obama stepped squarely into the thorny debate.

“I understand the emotions that this issue engenders. Ground zero is, indeed, hallowed ground,” the president said in remarks prepared for the annual White House iftar, the sunset meal breaking the day’s fast.

But, he continued: “This is America, and our commitment to religious freedom must be unshakable. The principle that people of all faiths are welcome in this country, and will not be treated differently by their government, is essential to who we are.”

In hosting the iftar, Mr. Obama was following a White House tradition that, while sporadic, dates to Thomas Jefferson, who held a sunset dinner for the first Muslim ambassador to the United States. President George W. Bush hosted iftars annually.

Aides to Mr. Obama say privately that he has always felt strongly about the proposed community center and mosque, but the White House did not want to weigh in until local authorities made a decision on the proposal, planned for two blocks from the site of the Sept. 11 attack on the World Trade Center.

Last week, New York City removed the final construction hurdle for the project, and Mayor Michael R. Bloomberg spoke forcefully in favor of it.

The community center proposal has led to a national uproar over Islam, 9/11 and freedom of religion during a hotly contested midterm election season.

In New York, Rick A. Lazio, a Republican candidate for governor and a former member of the House of Representatives, issued a statement responding to Mr. Obama’s remarks, saying that the president was still “not listening to New Yorkers.”

“With over 100 mosques in New York City, this is not an issue of religion, but one of safety and security,” he said.

Sarah Palin, the former governor of Alaska and the Republican vice-presidential candidate in 2008, has called the project “an unnecessary provocation” and urged “peace-seeking Muslims” to reject it.

The Anti-Defamation League, a Jewish organization, has also opposed the center.

In his remarks, Mr. Obama distinguished between the terrorists who plotted the 9/11 attacks and Islam. “Al Qaeda’s cause is not Islam — it is a gross distortion of Islam,” the president said, adding, “In fact, Al Qaeda has killed more Muslims than people of any other religion, and that list includes innocent Muslims who were killed on 9/11.”

Noting that “Muslim Americans serve with honor in our military,” Mr. Obama said that at next week’s iftar at the Pentagon, “tribute will be paid to three soldiers who gave their lives in Iraq and now rest among the heroes of Arlington National Cemetery.”

Mr. Obama ran for office promising to improve relations with the Muslim world, by taking steps like closing the detention center at Guantánamo Bay, Cuba, and more generally reaching out. In a speech in Cairo last year, he vowed “a new beginning.”

But Ali Abunimah, an Arab-American journalist and author, said the president has since left many Muslims disappointed.

“There has been no follow-through; Guantánamo is still open and so forth, so all you have left for him to show is in the symbolic field,” Mr. Abunimah said, adding that it was imperative for Mr. Obama to “stand up to Islamophobia.”

Once Mr. Bloomberg spoke out, the president’s course seemed clear, said Steven Clemons of the New America Foundation, a public policy institution here.

“Bloomberg’s speech was, I think, the pivotal one, and set the standard for leadership on this issue,” Mr. Clemons said.

Mr. Bloomberg, in a statement, said: “This proposed mosque and community center in Lower Manhattan is as important a test of the separation of church and state as we may see in our lifetime, and I applaud President Obama’s clarion defense of the freedom of religion tonight.”

Sharif el-Gamal, the developer on the project, said, “We are deeply moved and tremendously grateful for our president’s words.”

A building on the site of the proposed center is already used for prayers, and some worshipers there on Friday night discussed the president’s remarks.

Mohamed Haroun, an intern at a mechanical engineering firm, said, “What he should have said was: ‘This is a community decision. Constitutionally, they have the right to do it, but it’s a community decision and we should see what the local community wants to do.’ ”

Anne Barnard and M. Amedeo Tumolillo contributed reporting from New York.

http://www.nytimes.com/2010/08/14/us/politics/14obama.html?ref=us

Obama Signs Border Bill to Increase Surveillance

President Obama signed into law a $600 million bill on Friday to pay for 1,500 new border agents, additional unmanned surveillance drones and new Border Patrol stations along the southwest border.

The measure sailed through Congress in little more than a week with broad bipartisan support, demonstrating the pressure on politicians to look strong on border enforcement. Introduced on Aug. 5, the bill was approved the same day by the Senate by unanimous consent, and passed again by the Senate on Thursday in a special session during the Congressional recess. The House had passed the bill in a special session on Tuesday.

Mr. Obama requested the funds in June, after he announced he would send 1,200 National Guard troops to support agents along the border.

The administration has been under pressure to strengthen border enforcement since Arizona adopted a tough law in April to crack down on illegal immigration, saying the federal government was failing to do its job. After the administration sued Arizona, a federal court stayed important parts of that law.

The two senators from Arizona, John McCain and Jon Kyl, both Republicans who have criticized the administration’s border measures as weak, surprised Democrats by signing on as sponsors of the spending bill.

Under a proposal by Senator Charles E. Schumer, Democrat of New York, the new resources will be paid for by steep increases on visa fees for high-tech workers brought to the United States by Indian companies who bring in thousands of temporary employees each year.

Some Republicans still said they wanted more resources for the border. “Right now, it seems more like an effort to receive positive press than to genuinely improve the critical border situation,” said Senator Jeff Sessions, Republican of Alabama.

Immigrant advocates said they were disappointed that the only major immigration legislation this year included no measures to grant legal status to illegal immigrants already in this country.

Senator McCain, campaigning in Arizona, also clarified his position on another immigration controversy, telling The Associated Press that he did not favor a change to the Constitution to revoke the right to citizenship for American-born children of illegal immigrants.

Asked if he would support changing the 14th Amendment, Mr. McCain said: “No. I mean, first of all we’d have to have hearings, we’d have to find out what the argument would be, but I certainly don’t at this time.”

http://www.nytimes.com/2010/08/14/us/politics/14immig.html?ref=us

Obama Signs Border Bill to Increase Surveillance