Detroit — More proof that we’re reliving the 1970s. . . .
Having passed legislation flogging U.S. automakers with a mandated fleet average of 35 mpg for by 2020 (an echo of 1975’s expensive 27 mpg mandate), Congress is now rushing in with first aid. Michigan’s Congressional delegation is making a major push to bail out U.S. automakers that are suffering disproportionate losses in the U.S. auto market (as happened in the late ’70s culminating in the rescue of Chrysler in 1979).
The Detroit News reported Tuesday that Democrat John Dingell is spearheading the package which includes “$5 billion in direct loans over five years; $3 billion a year for five years to help speed the retirement of 1.5 million older, less efficient vehicles; $2 billion over five years in tax breaks for advanced vehicles (and) $800 million over three years to develop an ‘advanced battery trust fund’ to help build three domestic battery manufacturing facilities.”
Additionally, more than 70 members have signed a letter urging five-year, $25-billion loan guarantees for automakers as part of a second stimulus package.
Of course, this is not the same Democratic Party of the 1970s – a party then dominated by red-state labor interests. Today, the party is led by blue-state green zealots who see the automobile as public enemy Number One. Still, such bailout packages are likely to be the new face of the Green Era: As Congress increasingly sets industrial policy to fit a green agenda, it will come under pressure to provide golden parachutes for out-of-favor industries (and their political representatives) that get thrown over the side.
This all would be much cheaper — to both the auto industry and the taxpayer — if Congress left mpg to the marketplace. Personal transportation is seeing major shifts in driving behavior thanks — not to Congressional mandates years away — but to current market fuel prices. Thanks to $4-a-gallon gas, drivers used nearly 3 percent less fuel in the first half of 2008 — the first real decline in 17 years. Americans drove less and switched to smaller cars, with the mix of light trucks dipping from 60 percent of sales to 40 percent.
Ironically, that drop-off in fuel sales will cost the feds tax revenue making it harder to subsidize automakers, who for their part estimate that Congressional fuel mandates will cost them $85 billion — whether customer demand for fuel efficiency continues or not.
President Bush criticized this monkeywrench of public policy in a speech yesterday in Ohio, noting that “consumers have already made the decision to switch away from automobiles, like SUVs that consume a lot of gasoline, to smaller cars. Why? Because you’re smart.You know how to handle your own business.” (Of course, this is the same president who championed the passage of nanny-state mpg laws last year, and he returned to that theme yesterday, as well — saying that the “government can help by working on higher fuel efficiency standards for automobiles . . . so that as time goes on, automobiles will have better fuel efficiency.” I guess we’re not that smart after all.)
Crippled by the ‘70s fuel spike and onerous federal mandates, Chrysler was bailed out by Jimmy Carter and a Democratic Congress in 1979. The new Jimmy – Barack Obama – and a Democratic Congress are on our doorstep. Obama wants to further increase mpg standards to 50 mpg by 2026 while spending $150 billion “investing” on domestic automakers (and other industries) to help them to the new green utopia.
Taxpayers, hold on to your wallets.
– Henry Payne is a writer and editorial cartoonist for the Detroit News.