Politics & Policy

The Rolls-Royce Affair

The candidate isn't up to speed in Detroit.

Massachusetts Senator John Kerry made a telling faux pas during a recent campaign stop in Detroit. The press credential he handed out to reporters who had traveled to the Motor City to cover his speech before the National Urban League was emblazoned with the picture of a Rolls-Royce, an ultra-luxury vehicle owned by BMW, a German manufacturer

While it is astounding that a United Auto Worker (UAW)-endorsed presidential candidate would make such an insensitive move in the heart of car country, especially when he’s trying to court autoworkers anxious about losing their jobs to foreign competition, the Rolls-Royce flap is just the latest example of Kerry being tone deaf to Michigan’s most important industry.

By any objective measure, Senator Kerry is one of the Big Three’s most hostile opponents in Washington, D.C. In 2002, he introduced legislation that would have increased corporate average fuel-economy standards (CAFE) from 24 to 36 miles-per-gallon. The Energy Information Administration estimated that Kerry’s proposal would have eliminated 450,000 jobs in the United States and resulted in lost economic input of $170 billion. Kerry’s CAFE increase would have hit Michigan’s economy especially hard because GM, Ford, and Chrysler are more dependent on the profits from low-mileage SUVS, pickups, and minivans (light trucks) than their foreign competitors. This reliance on light trucks is directly tied to the enormous labor costs associated with paying UAW negotiated wages, health benefits, and pensions. Detroit can’t cover its labor and legacy costs by selling sedans. It needs the profits from light trucks to compete with foreign nameplates that employ non-union workers.

Recognizing the economic pain Senator Kerry’s proposal would have brought to Michigan, the UAW and Democratic senators Carl Levin and Debbie Stabenow fought to kill it on the Senate floor. In arguing against Kerry’s bill, Levin correctly noted that the CAFE increase would benefit foreign carmakers at the expense of the Big Three. Levin’s case was bolstered by a study conducted by the Competitive Enterprise Institute that found Kerry’s proposal would have reduced GM’s annual profits by $3.8 billion, Ford’s by $3.4 billion, and Chrysler’s by $1.9 billion, while increasing foreign manufacturers’ annual profits by a combined $4.4 billion. Clearly, losses of this magnitude would have accelerated the push of the foreign nameplates to grab more U.S. market share and hindered the ability of the Big Three to honor obligations to UAW workers and retirees.

In contrast, President George W. Bush has proposed CAFE reforms based on recommendations of the National Academy of Sciences, which would increase fuel efficiency without a negative impact on the U.S. automobile industry. In addition, the president has proposed a temporary income-tax credit for the purchase of new hybrid or fuel-cell vehicles; this tax credit, which is included in the president’s comprehensive energy legislation, has been repeatedly blocked by Kerry and the Democratic leadership in the Senate. Most importantly, unlike Senator Kerry, President Bush opposes the Kyoto Protocol mandating substantial reductions in greenhouse-gas emission because it would exempt 80 percent of the world, significantly raise energy prices, and cost 2.4 million American jobs, according to Wharton Econometrics Forecasting Associates.

John Kerry’s record on auto issues directly contradicts his campaign’s efforts to convince blue-collar America that he will stop the hemorrhaging of manufacturing jobs in the industrial Midwest. But the UAW and Michigan’s senior Democrats are now providing him with political cover as he fights for the state’s 17 electoral votes. When pressed by the Michigan media to explain their support of Kerry, the state’s Democrats respond that they have received assurances that he will take a less aggressive stance on CAFE as president. Kerry’s campaign staff, however, has refused to denounce his position and is standing firmly behind his goal of increasing CAFE by 50 percent.

The duplicity at play here is remarkable. Kerry has been criticized for trying to have it both ways on critical issues like national security, and the trend is playing itself out on the issue of CAFE standards. The New York Times reported on March 26, 2004, that “environmental groups say they believe that bolstering fuel regulations would be Topic A, or close to it, in a Kerry presidency.” If Kerry carries Michigan and wins the presidency, the environmental left will push him hard to move forward on CAFE. They will point to his success in Michigan to argue that there is no political price to be paid for pursuing job-killing auto regulations and that he should move forward with his heart’s desire to dramatically reshape the face of the auto industry through environmental regulations.

His backroom promises to Michigan Democrats aside, John Kerry’s record in the Senate is the best testament to where his allegiance lies and it’s clearly not with the men and women whose livelihoods depend on a vibrant Big Three. Michigan voters have an opportunity to send a message to the political class in Washington D.C. that you can’t dump on the auto industry and expect to win in Michigan. With the environmental left on the cusp of having their most powerful ally lodged in the White House, this is a message that needs to be heard loud and clear.

Cesar Conda, formerly an adviser to Vice President Cheney and former Michigan Senator Spence Abraham, is a principal of Navigators, LLC, a public-affairs consulting firm in Washington, D.C. Trent Wisecup, formerly an adviser to both Abraham and Michigan Congressman Joe Knollenberg, is vice president of Navigators LLC and heads up the firm’s Detroit office.


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