Politicians Here Don't Get It

Beginning in the 1980s, “demolished by neglect” became a popular catch phrase to explain all that was wrong with the city of Detroit's crumbling core.

Activists even stenciled it on dozens of abandoned buildings to make a point.

If the presumptive Democratic and Republican presidential candidates have their way, we might as well stencil it on the entire U.S. automotive industry, including Asian and European subsidiaries.

Every other industrialized nation and even emerging markets understand that a prosperous auto industry, with its accompanying good-paying manufacturing and engineering jobs, is the best-proven engine of economic growth of the last 100 years. But Barack Obama and John McCain want as little to do with it as possible.

It should not be a surprise. Except for a honeymoon with President Bill Clinton, who made meeting with Detroit auto executives his first priority after taking office, U.S. politicians have treated the auto industry like it is the cause of our energy woes.

Instead, they should be treating it as if cars and trucks are the solution. That's what other countries do.

There would be no Toyota or Honda hybrid-electric vehicles if the Japanese government lacked the foresight to encourage domestic auto makers to start working on the technology.

High fuel prices and traffic congestion in the mid-1990s prompted Japan's government to grant tax breaks to OEMs for fuel-efficient cars that pollute less. These incentives prodded Toyota and Honda to develop HEVs.

Europe in the 1970s decided the best answer to future oil crises was to impose high taxes on fuel in order to create demand for smaller vehicles. It encouraged consumers to opt for efficient, albeit more expensive, diesel engines by lowering taxes on diesel fuel to make it cheaper than gasoline.

Brazil did the same with its sugarcane ethanol.

In each case, straight-forward government energy and tax policies strengthened domestic auto makers and made them more globally competitive.

In January, France introduced its “bonus-malus” program that gives consumers a rebate for buying fuel-efficient cars, while imposing a progressive tax on gas guzzlers.

The U.S. response to soaring fuel prices today — as it was in the 1970s — is the cowardly unfunded mandate known as corporate average fuel economy. It is a rule that hurts auto makers and has no impact on demand, but it allows politicians to look like they are accomplishing something when they really are not.

Obama and McCain, Democrats and Republicans, should be debating the merits of various financial incentives and disincentives that encourage consumers to buy more fuel-efficient vehicles and auto makers to build and sell them.

Instead, liberals want to punish Detroit for not developing HEVs as fast as Toyota and Honda.

Conservatives say General Motors is just trying to scam its way into a government bailout when it talks about tax incentives for the Chevy Volt plug-in hybrid.

Both Obama and McCain believe states should be allowed to set their own emissions and fuel-economy rules, which could cost the Detroit Three, alone, $85 billion. Obama and McCain answer with token gestures and a $300 million prize for a miracle car battery.

So as Brazil, Russia, India, China and Western Europe move their auto industries forward with national policies aimed at improving efficiency, while still making them competitive globally, we can look forward to a future where every local politician running for office, from governor to dog catcher, tries to get elected by demanding auto makers build 100-mpg (2.4 L/100 km) pickup trucks that run on bacon grease.

Before it's too late, both candidates need to realize what is known on the U.S. campaign trail as corporate welfare, bailouts and outrageous taxation is what the rest of the world calls an energy policy.

Drew Winter is editor of WardsAuto World.