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Obama Bails Out California



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Detroit, Mich. — California already has the ability to set stricter auto-emissions standards without asking for a waiver from federal clean-air rules. It’s called the gas tax.

Yet, even in extreme-green California, gas tax hikes are deeply unpopular with the public. Ira Ruskin, a leading advocate in Sacramento (along with the Governator) for the federal waiver, admits that “a gas tax is not feasible,” even though gas prices have proven to be the most effective way to effect the purchase of fuel-efficient cars. “I have to work in the Legislature, and I have to do what is viable,” he says.

So chicken-heart California pols have demanded that automakers bear the burden.

With the White House in the pocket of the Green lobby and Californians dominating key energy positions in Congress, the late Bush administration’s decision not to grant the waiver is likely to be overturned. Though Obama’s EPA only announced to review the request this morning, the action is widely viewed as a formality on the way to reversing what California regulator (and Obama ally) Mary Nichols calls “one of the worst decisions of the Bush Administration.”

Indeed, Obama all but telegraphed his administration’s decision by saying that California has tried to address global warming with tougher emissions standards but “Washington stood in their way.”

The president has long attacked Detroit for fighting the waiver as part of a head-in-the-sand resistance to building the fuel-sipping cars consumers want. But the three largest Japanese companies have also opposed California’s rules because they are simply unworkable.

Incredibly, this action comes at the same time Washington is providing taxpayer loans ($17 billion and counting) to keep Detroit automakers alive. Granting California’s waiver will only make the automakers less profitable as they will be forced to sell cars according to government rules rather than consumer need.

Detroit automakers estimate that meeting California’s edict would cost them $30.5 billion alone. With Detroit now on the federal dole, this expense will likely form the basis of further federal subsidies. For even though GM can only return to profitability (and repay its federal loans) by selling high-volume, gas-fueled vehicles like the Chevy Malibu and Chevy Tahoe, it will have to make more money-losing, electric plug-ins like the Chevy Volt (anticipated EPA rating of 100 mpg when it comes to market in 2010) to meet Golden State rules.

In Europe, meanwhile, tax-goosed $6-a-gallon gas has driven the average mpg of cars sold to 40 mpg. That’s about where California pols say mpg should be in 2020–but with someone else paying the price.



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