Republican presidential candidate and U.S. Rep. Michele Bachmann (R-Minn.) says Michigan’s economic woes are rooted in socialist policies, and she blames labor unions, taxes and regulations for the tough economic climate in the state.

Bachmann made the comments on the Steve Deace Show in Iowa before the Nov. 9 debate in the Wolverine State. Deace had asked Bachmann about the “pro-active, positive solution that is the alternative to socialism” in Michigan.

“It’s the fruition of all of the policies of the left which really have their origin in socialism,” Bachmann said of Michigan’s struggling economy. “If there’s anything we should have learned by now it’s that socialism doesn’t work and it’s principles don’t work.”

She also attacked other GOP presidential candidates for supporting the auto bailout, calling it the latest example of socialism in the state and saying “you won’t find any surprises with me.”

“You will find in me a core conviction,” she said, providing a nod to the title of her new book. “I’ve been the only consistent conservative in this race.”

The solution to Michigan’s unemployment problem is reducing union influence by making it a right to work state, which would allow companies to cut back on wages and benefits and be more competitive, she said.

She praised Iowa, which has a law prohibiting union membership or payment of union dues as a condition of employment. About half the states in the U.S. have a similar law; Michigan does not.

“When you have a right to work state then you can have companies adjust wages so they can open up shops to more and more hires and more employees,” Bachmann said.

She said then as more companies opened up, shop wages would eventually increase as businesses work to attract the best talent, especially if taxes and regulations are slashed at the same time.

“If we can have the tax burden lower and if we can have the regulatory burden lower then employers can afford to pay more to bid up wages and bid up benefits and then everybody succeeds,” she said.

The actual wage disparities between right to work states and those that aren’t has been a hotly contested topic for decades — or at least since most of the nation’s 22 right to work states passed their laws in the 1940s and 1950s following the Taft-Hartley Act of 1947, which was enacted as a response to (and amended) the Wagner Act of 1935. The latter lays out the rights of workers to unionize, while the former addressed what was then described as too much power by the unions.

Right to work essentially allows all workers at a business where a union has organized to be represented by the union, bound by the union-negotiated contract and use the union as a bargaining agent without ever having to pay union due or join the union.

In 2001 by Lawrence Mishel of the Economic Policy Institute found that “the most important aspect of right-to-work law is its effect on wages.”

… On average, men in RTW states earn 7.8 percent less than their counterparts in non-RTW states; women in RTW states earn 6.8 percent less. … [W]e find that, even after controlling for regional costs of living, workers in right-to-work states earn less per hour. Particularly interesting is the affect on workers living in cities that are stretch across state line, placing it in both a right-to-work state and a non-RTW state. Seventeen out of 433 metropolitan areas in our sample (nearly 4 percent) spill over from a right-to-work state to a non-RTW state. Our analysis indicates that, in areas where a pure RTW state effect exists (i.e., no spill-over effect), the right-to-work penalty is larger. In fact, we find that living near a non-RTW state helps raise workers’ wages. …

But instead of focusing on individual wages, those that support right-to-work laws often point to a state’s overall economic situation — a similar argument to the one Bachmann made. For instance, the conservative Public Institute at Iowa Wesleyan College (now known as the Public Interest Institute), in a 2000 paper defending Iowa’s right-to-work law, noted a 1998 study that “Iowa outperformed most of its neighboring closed-shop states.”

… Four closed shop states border Iowa: Missouri, Wisconsin, Minnesota and Illinois. From 1947-1992, Iowa’s rate of manufacturing growth was equal to that of Missouri, slightly ahead of Wisconsin, 1.5 times higher than Minnesota, and over 5.5 times higher than Illinois. This is strong evidence that Iowa has done much better economically since enacting its right-to-work law. …

With the Republican presidential hopefuls participating in a debate about jobs and the economy just a few miles from the city of Detroit, it was inevitable that the candidates would be asked about the federal bailout that saved GM and Chrysler — and Mitt Romney in particular.

Romney’s father was a former auto company CEO and former governor of Michigan, so when he wrote a Wall Street Journal column in early 2009 with the headline “Let Detroit Go Bankrupt” and argued against federal money being used to restructure those companies, it drew a good deal of criticism from business, labor and politicians of both parties from Michigan who supported the bailout.

During Wednesday’s debate, Romney tried not to back away from that position:

He said: “My view with regard to the bailout was that whether it was President Bush or whether it was President Obama (approving financial relief), it was the wrong way to go.”

But one of his most prominent Michigan supporters illustrates the fine line Romney is trying to walk on the issue:

Saul Anuzis, Michigan’s Republican National Committeeman and a Romney backer, said the challenge for Romney and other Republicans who advocated for a managed bankruptcy is explaining what they mean by bankruptcy.
“If you ask the average voter today … they assume the company is going to be closed,” Anuzis said. “And that’s what the Democrats are saying, which is really a blatant lie. … Bankruptcy traditionally is a form of reorganization.”

But in fact, that is exactly what the Obama administration did — used a managed bankruptcy to restructure GM and Chrysler, after which they have emerged once again as profitable and growing companies. So the difficult task for Romney is to argue in favor of a managed bankruptcy and still argue that Obama was wrong for guiding the companies through a managed bankruptcy.

We said that American autoworkers could once again build the best cars in the world. So we stood by the auto industry. And we made some tough choices that were necessary to make it succeed. And now, the Big Three are turning a profit and hiring new workers, and building the best cars in the world right here in Detroit, right here in the Midwest, right here in the United States of America.

I know it. I’ve seen it. I’ve been to GM’s Hamtramck plant. I’ve been to Chrysler’s Jefferson North Plant. I’ve seen Detroit prove the cynics and the naysayers wrong.

And he called for a new program of federal spending on infrastructure projects, foreshadowing the speech he will give to a joint session of Congress on Thursday:

We’ve got roads and bridges across this country that need rebuilding. We’ve got private companies with the equipment and the manpower to do the building. We’ve got more than 1 million unemployed construction workers ready to get dirty right now. There is work to be done and there are workers ready to do it. Labor is on board. Business is on board. We just need Congress to get on board. Let’s put America back to work.

He also hinted that he will call for an extension of the payroll tax cut that was passed last year and is set to expire in a few months.

In a statement prior to CEO Sergio Marchionne hosting a visit from U.S. Treasury Secretary Timothy Geithner later today, Chrysler said it plans to repay its government loans with a new term loan facility and newly issued debt securities that will be sold to institutional investors in a private offering.

The private debt offering is exempt from registration under the U.S. Securities Act and allows Chrysler to forego filing a formal prospectus publicly or seek SEC approval.

Chrysler will also use some of the $1.27 billion that it will receive from partner Fiat SpA to purchase an additional 16 percent stake in Chrysler to pay the loans in full as well as any related fees and expenses.

The Treasury Department has already received a sizable percentage of its loans to General Motors back as well, mostly through the sale of stock used as collateral when the company went public again late last year.

“If we don’t get the $2 billion from the Senate … we would have to suspend the program next week,” LaHood told C-SPAN’s “Newsmakers” show. He said the administration “will continue the program until we see what the Senate does and I believe the Senate will pass this.”

A number of Senate lawmakers are lining up to oppose the extra funding — some because of the cost, some because the funding steals from a renewable energy program, and some because they say the program’s current rules don’t go far enough to promote better fuel efficiency.

Yet LaHood’s warning that the funds could dry up by Monday — not to mention his insistence that any trades made early this week will be honored — puts these senators in a tough spot: If they deny the funds then the auto-dealers are stuck with the bill, and if they change the terms then they’ll need another vote from the House, which is out of town on a five-week vacation.

Indeed, they may have no choice but to pass the extension, with plenty of grumbling.

The tremendous number of sales in the first week of this program demonstrates that the CARS Act has succeeded in increasing new vehicle sales, but Congress needs this data in order to determine if the fleet modernization program delivered significant fuel economy gains and oil savings.

They have an ulterior motive. Even as Detroit’s defenders successfully pushed through legislation encouraging sales of new gus-guzzlers, Feinstein and Collins were among the critics urging that the purchased vehicles get better gas mileage in order to qualify for the thousands of dollars in cash vouchers. Along with Sen. Charles Schumer (D-N.Y.), they have sponsored of a more environmentally minded cash for clunkers program.

They lost that fight, but considering the popularity of the program, they might have more leverage the second time around. Indeed, the defenders of the existing program can no longer fall back on the argument that lax eligibility is needed to encourage participation.

Earlier in the year, Detroit’s powerful defenders on Capitol Hill pushed through legislation that effectively allowed consumers to trade clunkers for new clunkers — a boon to the automakers and dealers who were having trouble selling larger vehicles, but hardly a recipe to reduce emissions in any meaningful way.

At least one member of the Michigan delegation, Sen. Carl Levin (D), is already urging additional funding for the program.

“We have been told by the White House that people can keep buying cars under the program until further notice,” Levin said in a statement Friday. “We don’t know how long it will last, so people should go to their car dealers now if they want to take advantage of the program.  We’re also going to seek additional funding to hopefully make the program last longer.”

But others are vowing that, if the program is to be extended, the eligible vehicles should get better gas mileage. Sens. Dianne Feinstein (D-Calif.) and Susan Collins (R-Maine), who had pushed legislation hinging the cash subsidies on better fuel efficiencies, issued a statement yesterday vowing to fight additional funding unless some changes are made.

We believe that any extension of the ‘Cash for Clunkers’ program must go further in advancing the goals of better fuel efficiency and greater emissions reductions. We will not support any bill that does not meet these goals.

They have this in their favor: Levin and the other automaker defenders can no longer claim that eligibility thresholds have to be kept low to encourage participation.

But consumers, it seems, are on the edge of their seats awaiting the program’s launch. At least that’s the word from Transportation Secretary Ray LaHood, who told Bloomberg yesterday that the government’s cash-for-clunkers Website received 400,000 hits in one week alone.

Consumers will be able to visit auto dealer showrooms as early as July 24 for credits of as much as $4,500 to purchase or lease new vehicles under federal rules now being crafted, LaHood said in a telephone interview yesterday.

“There are going to be thousands of cars sold that would’ve never been sold,” LaHood said. “This is the strongest incentive I have ever seen offered by car manufacturers. If this doesn’t work, I don’t know what will.”

LaHood’s comments came one day after the Environmental Protection Agency approved a long-standing California request to adopt stricter emission standards for the state’s vehicles — a move that will effectively force automakers to offer more fuel-efficient cars and trucks.

Yet cash-for-clunkers doesn’t exactly encourage any swift move to vastly better fuel efficiencies. Under the program, for example, drivers of 1996 4WD Ford F150 pickups (fuel efficiency of 14 mpg) could trade them in for 2009 4WD Ford F150 pickups (15 mpg) and receive $3,500 in taxpayer cash. The owner of a 1994 2WD Jeep Grand Cherokee (16 mpg) would be eligible for $3,500 with a trade-in for the 2009 version of the same vehicle (18 mpg). And consumers could trade their 1995 4WD Dodge Ram pickups (13 mpg) for $4,500 toward brand new 4WD Hummer HT3s (16 mpg).

At least Washington’s policymakers are finally coming to grips with what the program actually represents: An automaker bailout with a slight environmental component, not an environmental program that would also sell cars.

Under the program, owners of cars rated at 18 mpg or less in combined highway and city mileage could turn them in for a cash voucher. Buying a new car rated at least 4 mpg higher would earn a $3,500 voucher; a 10 mpg improvement would earn a $4,500 voucher.

Pickups would be eligible as long as the new vehicle has a mileage rating of at least 18 mpg and is at least 2 mpg higher than the old vehicle. A new truck rated at least 5 mpg higher than the turned-in vehicle would earn a $4,500 voucher.

For even larger trucks, the fuel efficiencies of the new purchases must show even less improvement over the trade-in.

The program is expected to cost $4 billion, meaning the $1 billion approved yesterday is just the start. Some Senate Democrats, notably Sen. Dianne Feinstein (D-Calif.), are pushing for stronger fuel efficiency standards for new purchases as a condition of receiving the cash gift. She’ll have her shot the next time the program comes up for a vote, likely at the end of the summer.

[W]hen the federal General Services Administration announced this week that it had spent $287 million in stimulus money to buy 17,205 new cars, it turned out that the biggest beneficiary was the Ford Motor Company, the only one of Detroit’s Big Three automakers that has not received a government bailout.

The General Services Administration, which manages a fleet of 213,000 vehicles for some 75 federal agencies, said it spent $129 million to buy 7,924 Fords; $105 million on 6,348 General Motors vehicles; and $53 million on 2,993 Chryslers.

Like buying Verizon stock, then grabbing an iPhone.