C
Captain Compassion
Guest
THE DRIVE-A-TOYOTA ACT
The Wall Street Journal, 2 July 2007
http://online.wsj.com/article/SB118333897536154838.html?mod=opinion_main-_review_and_outlooks
The next time Democratic leaders lament the decline of American
industry, please refer them to the current Congressional brawl over
auto fuel-efficiency standards. Nancy Pelosi, Harry Reid and most of
their colleagues are siding with upscale environmental lobbies over
American carmakers and workers. Call it their Drive-a-Toyota Act.
Foreign automakers were cheering in June when Senate Democrats muscled
through energy legislation to raise Corporate Average Fuel Economy
(CAFE) standards, requiring that automaker fleets hit an average of 35
miles per gallon by 2020 (up from today's 27.5 mpg). GM, Ford and
Chrysler all warned Congress that this would add to their financial
burdens, making their vehicles even less competitive with those made
by Toyota, Honda and otherautomakers. The United Auto Workers warned
that even a small mileage increase could cost more than 65,000 jobs.
Yet Senate Majority Leader Reid's response was to scold Detroit for
opposing him, and to assert that if the U.S. carmakers had only signed
onto CAFE sooner they wouldn't be in their current predicament. Had
they "joined us instead of fighting us these last 20 years [over CAFE
standards], they might nnot be in the financial mess they're in
today," he said. His apparent point is that if only GM and Ford had
invested in new technology and smaller cars the way Toyota and Honda
have, they wouldn't be losing market share. This is a bizarre reading
of recent automobile history.
Detroit has made its share of mistakes, but refusing to compete with
smaller, more fuel-efficient cars isn't one of them. GM tried and
failed with its Saturn project. And one reason for that failure is
that the main competitive reality facing Detroit for a generation has
been the burden of its worker pension and health care costs. The
consensus is that those costs add about $1,500 per vehicle compared to
Japanese or Korean competitors. The best way to recoup those costs is
by making larger vehicles that earn more profit per sale than smaller
cars do. Making trucks (protected by a 25% U.S. tariff) and SUVs was
entirely rational, and failing to do so would have meant more
financial trouble earlier.
Mr. Reid also forgets that, until this decade's surging gasoline
prices, those larger, U.S.-made cars were what Americans wanted to
buy. The Ford Explorer SUV was a huge consumer hit. With gas prices as
low as 90 cents a gallon during the 1990s, U.S. drivers preferred the
safety and power of SUVs, pickups and large sedans. We don't recall
Bill Clinton proposing a 50-cent-a-gallon gas tax to spur gas
conservation, or for that matter lecturing Detroit to stop making
those vehicles.
Amid today's much higher gas prices, more Americans are choosing more
fuel-efficient cars -- a market phenomenon that will do far more to
reduce fuel consumption than any Washington mandate. As most
economists understand, mileage mandates are an inefficient way to
limit fuel use. They don't reduce the number of cars on the road, and
owning a car that gets more miles to the gallon often encourages
people to drive more miles.
If Mr. Reid truly cared about cutting gas consumption, he and his
party would increase the gas tax. But voters are already steamed about
$3-a-gallon gas, and Mr. Reid's commitment to lower carbon consumption
doesn't go as far as the personal sacrifice of losing Democratic
Senate seats.
CAFE is a way to appease the green lobby immediately, while taxing
Detroit, its workers and American consumers indirectly but
significantly over time. Technology exists to further increase fuel
efficiency, but that technology costs money. The Big Three will have
to pass those costs along to consumers, which will make their products
less competitive, while yielding a smaller profit margin on those they
do sell. Ford lost $12.7 billion last year as it is.
One Democrat who understands all this is Michigan's John Dingell, the
House Energy and Commerce Chairman who has so far refused to include
sweeping new fuel-efficiency standards in his energy bill. He prefers
the more modest, flexible standards favored by the Bush Administration
and U.S. carmakers. Ms. Pelosi has refused to budge from her plan to
pass standards like the
Senate's, however. And so the House CAFE showdown has been postponed
until the fall -- or until enough Democrats and wealthy Sierra Club
donors can beat Mr. Dingell into submission.
Journalists and greens are starting to highlight this debate as a test
of Ms. Pelosi's political manhood, saying she needs to show the
venerable Mr. Dingell who's boss. But it's more accurate to say this
debate is a test of who has more clout in today's Democratic Congress
-- the men and women who work in American factories, or the affluent
greens on both coasts who can afford to pay a premium to own a Prius
to indulge their concern about global warming.
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
daranc@NOSPAMcharter.net
The Wall Street Journal, 2 July 2007
http://online.wsj.com/article/SB118333897536154838.html?mod=opinion_main-_review_and_outlooks
The next time Democratic leaders lament the decline of American
industry, please refer them to the current Congressional brawl over
auto fuel-efficiency standards. Nancy Pelosi, Harry Reid and most of
their colleagues are siding with upscale environmental lobbies over
American carmakers and workers. Call it their Drive-a-Toyota Act.
Foreign automakers were cheering in June when Senate Democrats muscled
through energy legislation to raise Corporate Average Fuel Economy
(CAFE) standards, requiring that automaker fleets hit an average of 35
miles per gallon by 2020 (up from today's 27.5 mpg). GM, Ford and
Chrysler all warned Congress that this would add to their financial
burdens, making their vehicles even less competitive with those made
by Toyota, Honda and otherautomakers. The United Auto Workers warned
that even a small mileage increase could cost more than 65,000 jobs.
Yet Senate Majority Leader Reid's response was to scold Detroit for
opposing him, and to assert that if the U.S. carmakers had only signed
onto CAFE sooner they wouldn't be in their current predicament. Had
they "joined us instead of fighting us these last 20 years [over CAFE
standards], they might nnot be in the financial mess they're in
today," he said. His apparent point is that if only GM and Ford had
invested in new technology and smaller cars the way Toyota and Honda
have, they wouldn't be losing market share. This is a bizarre reading
of recent automobile history.
Detroit has made its share of mistakes, but refusing to compete with
smaller, more fuel-efficient cars isn't one of them. GM tried and
failed with its Saturn project. And one reason for that failure is
that the main competitive reality facing Detroit for a generation has
been the burden of its worker pension and health care costs. The
consensus is that those costs add about $1,500 per vehicle compared to
Japanese or Korean competitors. The best way to recoup those costs is
by making larger vehicles that earn more profit per sale than smaller
cars do. Making trucks (protected by a 25% U.S. tariff) and SUVs was
entirely rational, and failing to do so would have meant more
financial trouble earlier.
Mr. Reid also forgets that, until this decade's surging gasoline
prices, those larger, U.S.-made cars were what Americans wanted to
buy. The Ford Explorer SUV was a huge consumer hit. With gas prices as
low as 90 cents a gallon during the 1990s, U.S. drivers preferred the
safety and power of SUVs, pickups and large sedans. We don't recall
Bill Clinton proposing a 50-cent-a-gallon gas tax to spur gas
conservation, or for that matter lecturing Detroit to stop making
those vehicles.
Amid today's much higher gas prices, more Americans are choosing more
fuel-efficient cars -- a market phenomenon that will do far more to
reduce fuel consumption than any Washington mandate. As most
economists understand, mileage mandates are an inefficient way to
limit fuel use. They don't reduce the number of cars on the road, and
owning a car that gets more miles to the gallon often encourages
people to drive more miles.
If Mr. Reid truly cared about cutting gas consumption, he and his
party would increase the gas tax. But voters are already steamed about
$3-a-gallon gas, and Mr. Reid's commitment to lower carbon consumption
doesn't go as far as the personal sacrifice of losing Democratic
Senate seats.
CAFE is a way to appease the green lobby immediately, while taxing
Detroit, its workers and American consumers indirectly but
significantly over time. Technology exists to further increase fuel
efficiency, but that technology costs money. The Big Three will have
to pass those costs along to consumers, which will make their products
less competitive, while yielding a smaller profit margin on those they
do sell. Ford lost $12.7 billion last year as it is.
One Democrat who understands all this is Michigan's John Dingell, the
House Energy and Commerce Chairman who has so far refused to include
sweeping new fuel-efficiency standards in his energy bill. He prefers
the more modest, flexible standards favored by the Bush Administration
and U.S. carmakers. Ms. Pelosi has refused to budge from her plan to
pass standards like the
Senate's, however. And so the House CAFE showdown has been postponed
until the fall -- or until enough Democrats and wealthy Sierra Club
donors can beat Mr. Dingell into submission.
Journalists and greens are starting to highlight this debate as a test
of Ms. Pelosi's political manhood, saying she needs to show the
venerable Mr. Dingell who's boss. But it's more accurate to say this
debate is a test of who has more clout in today's Democratic Congress
-- the men and women who work in American factories, or the affluent
greens on both coasts who can afford to pay a premium to own a Prius
to indulge their concern about global warming.
--
There may come a time when the CO2 police will wander the earth telling
the poor and the dispossed how many dung chips they can put on their
cook fires. -- Captain Compassion.
Wherever I go it will be well with me, for it was well with me here, not
on account of the place, but of my judgments which I shall carry away
with me, for no one can deprive me of these; on the contrary, they alone
are my property, and cannot be taken away, and to possess them suffices
me wherever I am or whatever I do. -- EPICTETUS
Celibacy in healthy human beings is a form of
insanity. -- Captain Compassion
"Civilization is the interval between Ice Ages." -- Will Durant.
Joseph R. Darancette
daranc@NOSPAMcharter.net