- The Foundry: Conservative Policy News from The Heritage Foundation - http://blog.heritage.org -

President Obama Doesn’t Want to Run the Auto Industry - But He Continues To Do It

Posted By Nicolas Loris On September 15, 2009 @ 5:12 pm In Economics | Comments Disabled

At a speech at a General Motors Assembly plant in Lordstown, Ohio, President Obama restated his regret for government interference in the auto industry claiming the decision was out of necessity rather than choice. In what many called a campaign-like speech, the President asserted [1]:

As I’ve said before, I didn’t run for president to manage auto companies. It wasn’t something on my to-do list. It wasn’t even something on my want-to-do list. I like driving cars — sometimes, you know, I can change a spark plug or change a tire, but I don’t know so much about cars that I wanted to be deeply involved in the car industry.”

As long as we’re restating things, let’s take another look at the government’s involvement in the auto industry. There was the $81 billion in government aid that won’t be repaid according to a Congressional Oversight Panel report that was critical [2]“of the way the program was (and is) run. Among these: a failure to define the goals or criteria for the bailout, lack of transparency, and a lack of an exit strategy — leaving the question of when (if ever) the government will be selling its ownership stakes in GM and Chrysler. The report also questioned the government’s ability — as part-owner of these firms in a competitively-neutral hands-off manner, recommending that ownership be transferred to an independent trust.”

 

Then there was the ‘successful’ cash for clunkers subsidy that destroyed perfectly good cars, distorted the used car market, affected charities relying on cars as donations, and provided dubious environmental benefits.

And just after he said he didn’t want to be “deeply involved in the car industry, Obama and his administration unveiled new clean air and fuel-economy standards that will certainly affect how American companies operate and lead us to more command and control driven agendas that restrict choice as opposed to letting the auto companies adjust on their own to meet consumer demand. The new standards, starting with 2012 models, would [3]“push corporate average fuel economy, or CAFE, standards to a fleetwide average of 35.5 miles per gallon by 2016, four years ahead of the schedule Congress laid out in a 2007 energy law.”

There’s a simple reason we have so many models of cars in the market today. Consumers have different preferences and it’s the auto industries job to meet those preferences. Some prefer more miles to the gallon. Others prefer safety. These new government regulations certainly do a good job of restricting consumer choice and at the same time they raise the production costs for automakers. Fortunately for them, (unfortunately for the taxpayer), the Waxman-Markey cap and trade bill includes provisions allowances to subsidize cost of requipping, retooling and expanding manufacturers’ facilities to produce “advanced technology vehicles.”

It’s been one handout after the next couple with costly regulations that could very well make more handouts necessary to keep the automakers alive. For someone who doesn’t know too much about cars, that’s a lot of planning the industry.


Article printed from The Foundry: Conservative Policy News from The Heritage Foundation: http://blog.heritage.org

URL to article: http://blog.heritage.org/2009/09/15/president-obama-doesn%e2%80%99t-want-to-run-the-auto-industry-but-he-continues-to-do-it/

URLs in this post:

[1] asserted: http://www.google.com/hostednews/afp/article/ALeqM5iFz6B1vaAJlQf9t8m_Y_vGhm8aTg

[2] that was critical : http://www.foundry.org/2009/09/14/auto-bailout-funds-wont-be-repaid-and-thats-not-the-worst-news/

[3] would : http://www.nytimes.com/gwire/2009/09/15/15greenwire-white-house-rolls-out-details-of-auto-fuel-eco-13342.html

Copyright © 2011 The Heritage Foundation. All rights reserved.