The U.S. government has pumped more than $100 billion into Detroit over the past year to keep automakers General Motors and Chrysler alive. But some of the sector’s remaining capitalists are having a hard time stomaching a $25 billion Department of Energy loan program intended to spark new developments in electric cars. 

Start-ups Fisker Automotive and Tesla Motors have won about $1 billion in combined funding, while longtime players Ford and Nissan have received substantially larger loans from Washington to work on vehicle electrification — a technology the White House and many in the industry hope will reduce the United States’ dependence on imported oil and lower emissions of carbon dioxide, a leading greenhouse gas. 

Funneling federal money to new entrants to the automaking world does not sit right with Tim Leuliette, chief executive of parts supplier Dura Automotive. 

“If there’s a real market for electric vehicles, the OEMs will do it,” Leuliette said, using industry jargon for automakers. “We don’t need to have people who have never built a car in their life take $1 billion of our tax money and say ‘I can do it too.’” 

Government funding muddles market signals, Leuliette argued at the Reuters Autos Summit in Detroit.

“When government writes a check, it says the smart money investors are hesitant to fund it,” Leuliette said. “When markets say it’s now wise enough … there’s more than enough money.” 

For his part, the founder of Fisker Automotive — which aims to build plug-in hybrid cars at a former GM plant in Wilmington, Delaware — said government funding is a logical way to kick start a technology that private U.S. companies have been slow to focus on. 

“Do we just sit and wait for the Chinese and the Japanese or Europeans to develop this and then we join later? Or do we actually this time around, try to take the lead?” said Henrik Fisker, whose plug-in hybrids would be able to travel for short distances on just the electricity stored in their batteries, which can be charged off the electric grid. 

“This is a moment in time, we cannot let this pass. We already let the hybrid pass - Toyota in the consumer’s mind, invented the hybrid and owns the hybrid - the average consumer doesn’t know that GM has more hybrids than Toyota,” Fisker said. “If an American company comes first with a plug-in hybrid, and we will be followed closely by the Chevy Volt in another segment, I think that is where America then has a chance in the consumer’s mind to take the lead, and not only in the U.S., but worldwide.”

The Republican Party is in search of a message to attract voters who are angry with just about everything — healthcare, the U.S. deficit, Wall Street bonuses, increased unemployment and home foreclosures to mention a few.

“There’s a lot of anger out there and there’s a lot of frustration,” said Republican Senator John McCain, who was defeated by Democrat Barack Obama for president last year.

Thousands of people are turning up at townhall meetings and “tea party” protests against government policies, he noted.

“So there’s something going on out there. And I’d love to sit here and tell you that we Republicans are attracting all of those unhappy people but we’re not, we’re not,” McCain said at a Reuters Washington Summit.

“They’re out there kind of in the middle and they haven’t found a home. And in fact they haven’t even channeled their anger yet,” he said.

Many have swung into the Independent category — “They’re leaving the Democrats but they’re not coming home to Republicans” — because of the deficit increases during the previous 8 years of a Republican (George W. Bush) White House, McCain said.

“So they are not finding a message from the Republican Party that resonates with them, and so I think we’re in one of the most interesting times politically in Amercia,” he said.

One possible answer would be a return to a formula that worked when Republicans took control of the House and Senate for the first time in 40 years — “Something like the Contract with America that we gave them in 1994, portray a far more positive agenda for America,” McCain said.

Photo credit: Reuters/Jonathan Ernst (Senator McCain at Reuters Washington Summit)

A war of words over U.S. policy on Afghanistan is heating up between Democrats and Republicans on Capitol Hill as they await President Barack Obama’s new strategy.

“This kind of partisanship in the middle of a war I find to be really out of place,” Senate Armed Services Committee Chairman Carl Levin, a Democrat, said.

He was responding to House of Representatives Republican leader John Boehner’s statement that “the current political uncertainty should not be used as a pretext for the White House to back away from the counter-insurgency strategy the president announced in March.”

Levin, at the Reuters Washington Summit, said former Republican President George W. Bush took three months to decide on the troop surge in Iraq — “Nobody was saying that President Bush is jeopardizing anything by taking three months to deliberate on a new strategy.”

Levin said he agrees with much of what General Stanley McChrystal, the top U.S. commander in Afghanistan, says.

“One of the things he (McChrystal) says is the deliberative process is useful and healthy. So, I wish Boehner would listen to McChrystal,” Levin said.

For more news from the Reuters Washington Summit, click here.

Photo credit: Reuters/Jonathan Ernst (Senator Carl Levin at Reuters Washington Summit)

We asked Senator Charles Grassley to grade President Barack Obama’s performance (close your ears Sasha and Malia) and the top Republican on the Senate Finance Committee was a bit of a tough schoolmaster.

“He’s still learning an awful lot,” Grassley said at a Reuters Washington Summit.

But Obama gets a D on foreign policy, a C on domestic policy, and an F on trade (ouch!)

We asked him to explain the grading.

“If you go to class, college, and you don’t do anything you get an F,” Grassley said on trade. He noted that Obama has put a 35 percent duty on tires from China, which the senator believed was not a good idea, but he would have been willing to overlook that if the president was pushing forward on trade agreements.

And why the D on foreign policy?

“He’s taken a month to decide whether to send more troops to Afghanistan,” Grassley said.

“And what sort of a signal is that sending around the world when the commander-in-chief of the biggest economy and the biggest military in the world, the policeman for the world, is wondering whether or not he wants to back up the general he appointed to study it, and something that worked in Iraq, and he’s not making up his mind,” Grassley said.

http://www.reuters.com/summit/Washington09

Photo credit: Reuters/Johnathan Ernst (Grassley at Reuters Washington Summit)

Washington insiders say that not since the 1890’s have the people that represent the U.S. been so divided. From Gay rights to Afghanistan lawmakers are at polar opposites on issues that are on the Obama administration’s agenda. What’s next? And, what’s likely to get the green light or the stop sign?

Are you worried about the rash of high-profile and often deadly tainted-food scandals involving everything from peanut butter and chili peppers to spinach and baby formula?

You are not alone.

"When I heard peanut products were being contaminated earlier this year, I immediately thought of my 7-year-old daughter, Sasha, who has peanut butter sandwiches for lunch probably three times a week," U.S. President Barack Obama said recently, referring to a salmonella outbreak that has made 683 people in 46 states sick, killed as many as nine and forced the recall of more than 3,000 products. 

"No parent should have to worry that their child is going to get sick from their lunch," said Obama, who is leading a charge to improve the U.S. food safety system. 

Parties ranging from the CEO of cereal maker Kellogg to Rosa DeLauro, chairwoman of a House of Representatives Appropriations subcommittee that oversees the FDA, have joined the call for stricter oversight.

China will enact a new food-safety law on June 1aimed at preventing another massive health threat like last year's melamine-tainted milk formula that killed at least six toddlers and made almost 300,000 sick.

But in a chilling reminder of the troubles in an increasingly global food chain, China's Ministry of Health said in a document: "At present, China's food-security situation remains grim with high risks and contradictions."

World Bank Managing Director Ngozi Okonjo-Iweala is on the food safety bandwagon, but cautions that it could be misused by anti-trade advocates.

"If we're asking for more open trade and less protectionism on food, I think the safety issue is absolutely crucial. Countries will run away from trading if they believe you are going to export food to them that is not safe," she told the Reuters Food and Agriculture Summit, referring to health threats like melamine contamination and mad cow disease. 

On the other hand, she said, "some countries use the food safety issue artifically ... as a barrier, if you will, from getting in imports from other countries."

(Photos\Reuters)

By Tim Hepher 

Las Vegas casino legend Sheldon Adelson launched a quest for America’s most boring city on Tuesday in a comeback to President Barack Obama’s criticism of bankers who hold meetings in the famous gaming capital.
    
Obama last month warned companies that get bailout cash against spending it on activities potentially seen as perks — sparking a row with hotel and resort operators who say they are already struggling to fill rooms and may have to cut jobs.
    
“The good news is that Las Vegas has become a synonym for a good time for adults. Let me not say adults, I’ll say grown-ups, I don’t want to give the wrong impression,” Adelson, majority owner of casino operator Las Vegas Sands, said.
    
“The bad news is that because it is a place for a good time, President Obama says that he doesn’t want taxpayer’s money to go there,” Adelson told the Reuters Travel and Leisure Summit. 
    
“But I’m going to conduct a survey and I’m going to provide a prize for people who will submit the name of the worst city in the country to go to, where people can enjoy it the least. Because that’s the alternative. The alternative is you go to a place where you enjoy, or you go to to a place you don’t enjoy.”
    
The self-made billionaire, who tore down the original Sands to build the Venetian Resort complete with canals, and brought business conventions to Las Vegas, declined to nominate places for his ‘dive prize’ but took a swipe at Obama’s home town.
    
“Look, Chicago has got nine casinos. Now, God forbid if they hold a convention there someone should go to one of those casinos and enjoy themselves. God forbid. And then they’d say ‘Oh I can’t go there’,” he said.

A scandal over perks erupted in October after insurer AIG flew top brokers and executives to a Southern California resort at a cost of $440,000 shortly after it received an $85 billion government bailout.
     
“You can’t take a trip to Las Vegas or down to the Super Bowl on the taxpayers’ dime,” Obama commented last month.

The U.S. government is spending a LOT of money these days.

We generally don’t go for the all-CAPS version of words, but in this case, it seemed appropriate. Every day we’re seeing new multibillion-dollar programs being rolled out of Washington, D.C. for everything from bank bailouts to auto companies programs.

But, according to Wick Moorman, chief executive of Norfolk Southern Corp, much more infrastructure spending still needs to be done for the nation’s railroads.

Moorman said the major companies will do their share, but the Obama Administration will still need to spend more on rails, Moorman said. If it doesn’t, Morman

Moorman was one of our featured guests at Monday’s session of the Reuters Manufacturing and Transportation Summit in Chicago. The summit runs through Thursday in our Chicago offices and includes guests from throughout the sector.

Wars have numerous costs and most of those are unimaginable for most of us not in the middle of one.

But, aside from the tragic cost of death or injury, wars also cost a lot of money to finance and President-elect Barack Obama will be facing some of those costs (as well as a whole mess of other stuff) when he takes office in January.

As the United States grapples with a severely struggling economy, a number of federal bailouts and questions about our overall financial shape, Obama will also have to decide rather quickly how he will prosecute the wars in Iraq and Afghanistan and the staffing of the military.

On Monday, Loren Thompson of the Lexington Institute and Richard Aboulafia of the Teal Group spoke at the Reuters Aerospace and Defense Summit about the kinds of challenges Obama will face and just how much this is all going to cost.

Thompson (who you hear speaking first in the audio clip) and Aboulafia have been at our summits before and are always highly engaging and well-informed guests. But this year, maybe more than we’ve ever seen, the two warned that the problems facing the country and the defense sector were as serious as they have seen.

Staffing the military is an expensive proposition and it’s getting more so, the two concurred. And a government with a lot on its plate might be forced to take a second look at staffing committments. They think Obama will.

The Aero and Defense Summit is the final one of the year. In 2008, Reuters has had 33 summits around the globe and have as many or more planned for 2009. Our previous gathering, Reuters Investment Outlook Summit, provided clients with an excellent look at how to manage through what will certainly be a challenging 2009.

The world is a more dangerous place because of the global economic meltdown, according to Northrop Grumman Chief Executive Ronald Sugar, whose company provides specialized aircraft, radar and other electronics to meet that threat.

Sugar was the kick-off speaker at the annual Reuters Aerospace and Defense Summit on Monday in Washington, D.C.

Sugar acknowledged that hunger and thirst could not be solved with his company’s products but  argued that diplomats dealing with the world’s woes would be more likely to be successful if diplomats followed President Teddy Roosevelt’s famous dictum.

“You only talk if you have a big stick,” he said.

The Aero and Defense Summit is the final one of the year. In 2008, Reuters has had 33 summits around the globe and have as many or more planned for 2009. Our previous gathering, Reuters Investment Outlook Summit, provided clients with an excellent look at how to manage through what will certainly be a challenging 2009.

– Additional reporting by Diane Bartz in Washington