Obama Promises To Put Final Nail In US Auto Makers' Coffins

The sickly condition of US automakers is well known. In fact it looks like GM will be out of money by the 1st quarter of next year.

One would think the last thing the government should do is impose expensive new mandates on failing manufacturers. Except that's exactly what might happen if President Hope and Change has his way. He's promised to reverse a Bush Executive Order and allow California to regulate carbon dioxide emissions for automobiles.

What would that mean? Nothing good.

Since twenty-one percent of new cars are sold in California, this means that the auto makers would need to spend billions of dollars to comply. According to the WSJ, “The auto industry is the nation’s largest manufacturing sector, accounting for almost 4% of U.S. gross domestic product. It employs about 2.5 million people directly or indirectly, and spends tens of billions of dollars a year in research and development.” Yet granting California’s waiver would certainly significantly harm if not sink this industry, since actions to increase the CAFE standard in the past have caused many of the problems Detroit is now having.

It's almost like they don't understand economics or something.

Remember Michigan, which has more than a passing interest in the health of the auto industry, overwhelmingly voted for this. I eagerly await Thomas Frank's next book, "What's the Matter with Michigan?".

posted by DrewM. at 01:36 PM

| Access Comments