Barack Obama’s Really Bad Plans For The Auto Industry

President-Elect Obama has already signaled his support for a Federal bailout for the automobile industry, but that only seems to be the beginning of what seems to be a plan to involve the Federal Government in the automobile industry to an unprecedented extent.

For example, he seems to like the idea of appointing a single individual with the authority to remake an entire industry:

The troubles of the ailing auto industry are quickly becoming a major focus for President-Elect Barack Obama’s young administration. As Congress and President Bush debate an industry bailout, sources indicate that Obama may favor creating a White House office, headed by an “auto industry czar,” to oversee reforming the troubled American auto industry.

The Detroit News reports that both “Bush and Obama are signaling they may favor appointment of an auto czar to oversee the government’s efforts to funnel emergency assistance to automakers.” Congressional leaders and members of both the outgoing and incoming administrations have all said that automakers might receive federal aid only on certain dictions, including efforts “to further improve fuel efficiency and show that they have a plan to return to profitability. Automakers could also be required to give the government preferred stock in the companies and accept government representatives as board members. As in the 1979-80 Chrysler bailout, workers may have to make wage concessions.”

As if that wasn’t enough, Obama’s transition team is apparently talking about implementing congestion charges on American highways:

The Manchester Evening News reports that President-elect Barack Obama’s transition team has contacted Jack Opiola, a transportation principal for the firm Booz, Allen and Hamilton. Opiola the brains behind a program to tax drivers £5 (US $8) when entering the city of Manchester during peak hours. “I was ‘noticed’ by key people in the Obama campaign and I have been providing input to his strategy team in Chicago, including information about Greater Manchester’s bid,” Opiola said. Previously, Senator Obama’s most specific transportation proposal was a proposal to create a $60b toll road bank. In March, Obama endorsed New York City Mayor Michael Bloomberg’s scheme to charge a $9 toll on cars and a $22 toll for trucks that enter downtown Manhattan during working hours. Hoping to fill the gap with specifics, the American Association of State Highway and Transportation Officials (AASHTO) last month submitted a detailed $544 billion transportation re-authorization proposal designed to encourage the new administration to shore-up the domestic economy with heavy spending on infrastructure projects.

The new programs would be paid for with massive new tax hikes, including a per-mile driving tax that would begin with “proof of concept” trials as early as 2010. The tax would initially be one cent per mile to generate an estimated $32.4b a year. An extra one cent per gallon in the federal gasoline tax would generate another $1.8b, and a national sales tax on cars of one percent would generate $7.6b.

If that happens, then any idea that taxes would go down for most Americans, which Obama promised during the campaign, would be nothing but a lie.

Finally, Andrew Sullivan points to this old article that Obama wrote a few years back:

[W]e should then ensure that, within a decade, every new car sold in America can run on flexible fuel. We can advance this goal by offering manufacturers a $100 tax credit for every flexible-fuel tank they install before the decade is up.

As my friend Tom Daschle details in this report, millions of people driving flexible-fuel vehicles don’t even know it. The auto companies shouldn’t get CAFE credit for making these cars if they don’t let buyers know about them, so the entire auto industry should follow GM’s lead and put a yellow gas cap on all flexible fuel vehicles, and notify consumers in writing as well.

These may be admirable goals, but as Sullivan points out, accomplishing them, or trying to, via government fiat and state ownership of the auto companies isn’t the way to do it.

As Sully goes on to note, this is a test for Obama:

This is a real test for Obama: is he a market-friendly pragmatist or a knee-jerk socialist?

During the campaign and since the election, more than a few people told me that Obama was a indeed a market-friendly pragmatist. How he handles this will go a long way toward determining if they were right or not.

Originally posted at Below The Beltway

  • trumpetbob15

    As a Michigan resident, it does me no good to contact my Congressmen. It would be nice to let them know that there are still successful car makers operating in the United States; they just don’t have plants in the Workers’ Paradise of Michigan. The idea that we have to save these incompetent bozos really makes me mad.

    By the way, I would guarantee that any tax on miles driven would create the biggest underground economy since Prohibition. The government thinks so-called illegal drug traffic is bad, wait until they try to screw over ALL Americans, not just the ones who enjoy certain substances.