Obama’s Interesting Proposal for the Automobile Sector

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obama 1.jpg
Barack Obama‘s policy shop is kicking out some good stuff.
I find this proposal reported by Bloomberg of his to help American automobile manufacturers offset retiree health care costs for gains in cutting carbon emissions intriguing. Of course, there are flaws like in most great ideas, but it’s an interesting and commendable gesture that gets away from the nasty, destructive battles in the past between automakers and progressive environmentalists.
Obama is linking progress on two major social problems so that one leverages gains in the other.
The flaw in Obama’s plan is that he may not need to offset the auto sector’s health care burden for retiree because the auto sector has decided to heavily lean green.
mccurdy.dave.jpgDave McCurdy — a former Democratic Congressman from Oklahoma and almost presidential candidate who nominated Bill Clinton at the 1992 Democratic convention — is the new president of the Alliance of Automobile Manufacturers. He is getting the leadership and staff of the organization as well as the lobbying shops of the key auto government affairs offices to realize that the auto sector just can’t be against progress on the environment. They have to be for something. And he’s got everyone learning about cap and trade systems, the science of global warming, the realities and challenges of carbon sequestration.
He’s made the entire shop at the Automobile Manufacturers Alliance essentially go to school to learn about this debate — and what they need to achieve to help shore up the needs and interests of the auto manufacturing sector in ways that will benefit the environment.
So, Obama may not need to dole out incentives to the auto sector to do what the manufacturers already feel is in its interest.
The other flaw in the Obama proposal is that changing the behavior of the auto sector alone just doesn’t get us very far with a comprehensive approach that improves our energy and climate change circumstances. Where are the public utilities in the plan? Where are the other energy and water consumers in the system?
And what about the cow problem? During the lifetime of a car that goes for 150,000 miles — that car generates 57 metric tons of carbon emissions. A cow, in its lifetime generates 6 metric tons. There are no quick fixes here — but one quickly sees that a single sector alone — autos or any other — is not enough to really dent the energy and climate change realities we are facing.
But all in all, the kind of thinking Obama is doing is exactly the sort of creative and pragmatic policy work that we need more of.
But think “comprehensively.” It’s the only way America will change it’s energy use patterns.
— Steve Clemons

Comments

22 comments on “Obama’s Interesting Proposal for the Automobile Sector

  1. serial catowner says:

    For years we were told that American industry couldn’t compete if we had to pay the taxes to support socialized medicine.
    Now we’re being told we can’t compete because we failed to pay the taxes to support socialized medicine.
    Sounds to me like the education we get in economics is about as low-mileage as the cars we buy.

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  2. Carroll says:

    While share your disdain and distrust of corporate America, – I would challenge you to examine this proposal in earnest, sans the disdaiin and distrust, and come back to us with a less cynical approach.
    I for one, believe Obama is genuine in his desire to give voice to the voiceless, and promote and advance policies and solutions that benefit a larger, much more diverse population of Americans.
    That said I agree with you that some people will not get what they want from this or any proposal.
    Posted by TonyForesta at May 9, 2007 12:37 AM
    >>>>>>>>>>>>
    I agree with the other poster…why give any corp incentives…..is that free market capitalism?….if a company can’t survive on it’s own wits… let it fail, don’t reward it.
    Obama proposes incentives for corps to cure their health cost problem and jobs problem….why should taxpayers fund this when no one is attacking the health cost problem at it’s roots?
    Why let politicans continue to cater to the insurance and drug industry and then take taxpayers money to give to another corp who can’t afford the increased cost the politicans have allowed and ignored? They create the problem and then instead of fixing it they want us to pay the damages. No thank you.
    If he wants to offer something along the lines of goverment “loans” for R&D for companies, fine…as long as the loans carry some %requirements on the corps entire budget, including CEO pay and employee wages, benefits and etc.
    Like the war on terriers..the enviromental and jobs war will be another feast for every pork politican and profiteer at the taxpayer’s expense…they will throw our money at it and call it “doing something”.
    Corps can get an incentive at the “back end”..not the front end..and only if they accomplish the objective….that’s how it’s always worked for most of us in business. Unless of course you are a job hopping CEO collecting one 400 million payout after another per failure while the corps you squated on circle the drain and employees get laid off. The corp trend of increasing profits thru labor cuts and squeezing employees and goverment welfare while CEO’s and BOD’s loot the company instead of innovating and planning needs to be stopped dead in it’s tracks.
    I see nothing in anything Obama has said that addresses the core…and if he said anything that gives anything more than “just a voice” to the voiceless I must have missed it. Giving the voiceless a “voice’ doesn’t mean jack shit unless it produces something real.

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  3. Jon Stopa says:

    “Look in the sky. How many “contrails” do you see? Thats exhaust. The crap we are putting into our air doesn’t just come from Joe Citizen. Huge volumes of shit is generated by big business, but the focus continues to be dad’s thirty minute commute, and mom’s run to the grocery store. You might drive to the airport tomorrow on electricity, but you’re still gonna fly to Hawaii on jet fuel.
    Posted by: Pissed Off American at May 8, 2007 10:14 AM”
    The contrails you write about are more than other gases that somehow are mixed and blended in the greater atmosphere. They contain water. These contrails create low-lying clouds that retain heat near the surface, heat that would be radiated into outer space without them. Scientests tell us that the atmosphere is warming near the surface and cooling above. In my employment, over 40 years, I have experienced a difference of as much as 15 or 20 degrees f during winter nights when low-lying clouds broke up.
    The only experiment that might prove this theory occurred in 9/11. All airtravel was halted, and the average tempreture drop for the lower 48 state was one degree C.
    Gee. As air travel increases, so does the world’s trempreture. Better take your flying vacation before anyone figures this out.
    Don’t even get me started about increasing sunspot activity and the surface of Mars which has been warming on a scale of decades!

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  4. MarkE says:

    Cows generates a lot of carbon emmissons (I’m not sure about ratio of C02/CH4, CH4 being much worse as a greenhouse gas) by consuming large quantities of “green” feedstock (grass and corn). This feedstock consumed probably larger amounts of available C02 before it was consumed by cows.
    The carbon emissions that a car produces from fossil fuel consumption come from long sequestered carbon.
    The effect of carbon emmisions from Cows is probably much less than the effect of fossil fuel consumption during the production (and consumption) of said cow and its feed.

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  5. parrot says:

    Everyone,
    Very interesting stuff…inspired by Sen. Obama’s proposal no less. I’d say the fact that there is this discussion going on here is a point for his candidacy, whether he is ultimately elected President or not.

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  6. TonyForesta says:

    While I respect your criticisms Carroll,- there is no such plan. You are hoping, or waiting for something that is a mathmatical impossibility.
    There is no possibility that everyone will get something in the contexts of economics. Every item designed, marketed, and sold, is paid for. Those doing the paying offer up their hard earned wage for some perceived benefit or gain. Nothing is free. It is a closed loop system. Every stock that is purchased at a devalued or bargain price is sold, and every sale of any highly valued commodity is purchased. One party gives, the other receives. One party gains, the other terminates potential gains.
    While share your disdain and distrust of corporate America, – I would challenge you to examine this proposal in earnest, sans the disdaiin and distrust, and come back to us with a less cynical approach.
    I for one, believe Obama is genuine in his desire to give voice to the voiceless, and promote and advance policies and solutions that benefit a larger, much more diverse population of Americans.
    That said I agree with you that some people will not get what they want from this or any proposal.

    Reply

  7. Carroll says:

    Correct me if I am wrong but didn’t I read an article in the FT a year or more ago about Ford Motor in FRANCE…being much more profitable than in the states despite the liberal French work hours and vacations because they didn’t have to factor in health care to employees..since the FRENCH have universal health care?
    Better to go to that than start the “incentives game with all the corps…that is a never ending trip down the drain.
    The Obama plan reminds me of the drug coverage game where they gave corps a “incentive” to provide or maintain their drug coverage…as long they were ‘equal” to medicare coverage cost…at least one corp I know of took the incentive millions and then raised their drug coverage co=pay becuase they were originaly lower than the medicare cost…and to get the “incentive” all they had to do was “be equal”…so they raised their charge.
    I think most corporate employees would rather have the corp drop the matching contribution to their retirements plan, fund their own retirement and keep their health care benefit. As the laws are now corps can re-do, backtrack and back out of their retirement obligations anyway.
    Frankly I can’t believe anyone would fall for this. I have to disagree with Steve, the more I hear from Obama the clearer it becomes that he is just being fed policy by or pitching policy for his backers or would be backers…so much for wonder boy…he’s another one thinks we are all idiots…maybe he is a idiot.
    Show me a plan where EVERYONE gets something for their money and I will get excited.

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  8. TonyForesta says:

    One of the many benefits of great idea’s is that other wise minds can analyze and enhance those idea’s. Criticize Obama’s proposal to your cold hard hearts content, but no one can deny, or subtract or in anyway besmirch the factbasedreality that Obama is proposing inventive creative solutions. The solutions, may not be perfect, but they are legitimate and deserving our best efforts in debating and analyzing the viability of these solutions.
    Also, – many of the problems confronting America, – and global warming, health care, and faltering manufacturering base are only a few – will require that we all – left and right – rich and poor – sacrifice and comprimise.
    Bravo Barak Obama!!!

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  9. oldtree says:

    submitting to anything less than universal health care will destroy this country sooner than anything else can. I am surprised people are willing to have conversations ignoring the conclusion that GM and other companies have realized. They can’t afford their employees. personal and corporate bankruptcies are going to cripple the economy as committees discuss the matter and procrastinate until they become more meaningless than they are now.
    to pretend there is a reasonable compromise is not furthering the health, safety and future of the people, and a candidate that thinks this is an option is not really capable of winning this election. they have exhibited a defeatist philosophy that will poison voters.
    it seems plain that no one in the beltway actually pays their own way. americans that work for a living know both how much the bread costs, and how to make the paper it is printed on.

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  10. markg8 says:

    BTW greenhouse gases from cows or other ag sources make up about 23% of these emissions. Most of that comes from rice paddies remaining flooded in SE Asia after the growing season. Draining those fields would greatly diminish that problem but rice farmers
    don’t want to do it because it’s expensive. You learn a lot listening to NPR.

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  11. markg8 says:

    In order for Detroit to compete with the rest of the
    car manufacturing world they have to get out from underneath the legacy costs. Each GM car reportedly built has $1500 worth of pension and medical costs built into it. That’s 1500 bucks the Japanese and German manufacturers can put into engineering and materials in each car. Obama is killing two birds with one stone with this proposal. As long as his healthcare proposal is sound he’s got a winner here.

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  12. Jim Walsh says:

    A comprehensive plan is, by necessity, made up of multiple steps. This is a good, meaningful, and creative step that should have been done a long time ago that can make a big difference in our importation of oil. Generating power has nothing to do gasoline usage, almost all of the oil is used for transportation. The next step, after we improve energy efficiency will have to be nuclear power.

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  13. Chris E says:

    To add some perspective on why the car issue is so important, compare the number of cars in the US(243 million, according to 2004 government numbers) to the number of cows in the US (97 million according to the USDA’s semi-annual cattle report from January 1, 2007).
    Then, to get a sense of the size of the carbon emissions put out by each group at Steve’s estimates, the US Car fleet emits 13,851 tons of carbon over its lifetime, while the Cow Population emits only 582 tons. That would make the emissions from cars about 24 times the emissions from cows.
    Add in the fact that the car fleet is growing while the cow population is actually shrinking, and cars become a relatively larger problem.
    In this consideration of the problem, you also have to consider what you can do something about. You can’t do much about cows emitting carbon. But you can do (MUCH) more about cars emitting carbon…
    Not that cow emissions aren’t something that shouldn’t be thought about–just that they should probably be thought about after car emissions. Or airplane emissions, given that global air traffic is likely to grow at 5% over the long term…which is why the environmental movement has actually got quite a bit of momentum within the aerospace industry at the moment…

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  14. fiat lux says:

    Switching away from employer-based healthcare would also remove the need to link the two proposals, of course.
    That said, at least it’s creative.

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  15. ExBrit says:

    Why would we reward automobile manufacturers for something they ought to be doing anyway? What’s preventing American car manufacturers from designing cars the American consumer wants – fuel efficient, light vehicles made from carbon fibers, etc? What’s the incentive NOT to design fuel efficient cars? More car sales? Less pollution? Yeah, that sounds bad.
    If the argument is – they can’t afford to redesign because all r&d money is eaten up by entitlements, then we need to change the entitlements – healthcare reform – not reward the corporations who fed off the self same system for years.

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  16. Daniel Ethier says:

    I don’t think Obama’s point is that fixing cars solves the entire problem. But if you don’t solve cars, you can’t solve the problem. Transportation is a large part of our oil use and our greenhouse gas emissions. So transportation has to be part of the solution. That means cars, trucks, trains, and airplanes.
    Part of the problem with our automakers is their expenses for retirees, and yes, years of not doing more efficient cars.
    Doing more efficient cars does cost more, but all the makes, including Honda and Toyota, will have to bear some of that cost. But they’re far ahead on the technology which gives them an advantage.
    I like Amory Lovin’s proposal for a feebate based on mpg. For each car they sell that beats the CAFE standard, they get a certain rebate based on how much they beat it by. For each car they sell that is below the standard, they get charged a fee for each mpg below.
    This penalizes the poor mileage and rewards the good mileage. It would shape their marketing, so they push the higher mileage cars as much as the big SUVs.
    Combine that with some sort of universal solution to health care, since that penalizes ALL companies that provide it, versus our foreign competition that gets that covered by the government, and we might get somewhere.

    Reply

  17. Carroll says:

    Maybe it’s just me but I am a little bit tired of the “let’s subsidize corporations” so we can cure the problems they and congress created…o.k….so the “taxpayers” are going to save health care for auto workers and pay the corps “incentives’..??
    It is what it is…more taxpayer funded capitalism. Instead of attacking the problem at the core we are going to throw taxpayer money at them so they and the politicans feel no pain for their future planning incompetence and political corruption.
    Citizens are asked to drive less and use less and pay more for energy and corps are given taxpayer money for their failures and lack of vision…they get carrots, we get sticks. And the CEO’s in charge of “vision” get billion dollar paychecks?
    This “greymail” of sticking the public with the bill for keeping jobs and health care in idustries that they have allowed to shipp jobs abroad and kissing up to the insurance and drug industry in health care matters is getting old.
    Wake me when and if anyone ever gets to the bottom line in what is wrong with this.
    If this is Obama’s idea of how to cure the jobs and health care situtation ..then he is just another political shill..not impressed…same old, same old.

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  18. Pissed Off American says:

    “Is Steve really suggesting “the cow problem” ought to be on the policy agenda? That’s a new one.”
    Actually, its not a “new one” at all. In California’s Central Valley, the dairy farms are a huge contributor to the pollution, and it is a giant political issue. You have milk in your house, Zathras? Cheese? You think the dairy industry is small potatoes? Or that five thousand 1200 pound animals, in a three square mile area, can’t create one hell of a pollution problem? Now, multiply it a few thousand times.
    I doubt they’ll engineer a cow that doesn’t shit.
    Got milk?

    Reply

  19. Zathras says:

    Is Steve really suggesting “the cow problem” ought to be on the policy agenda? That’s a new one.
    Let me raise here the awkward point that a potent source of creativity in the design of campaign platforms is the desire to avoid any suggestion that the candidate is interested in things known to be unpopular with large numbers of voters. At the core of both America’s vulnerability to disruption in the world petroleum market and of this country’s vast and growing output of greenhouse gasses is the price of energy. If you’re determined to avoid blame for increasing the price of energy, or commentary to the effect that you favor increasing the price of energy, you can find yourself being awfully damned creative. That won’t make you right.

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  20. Pissed Off American says:

    Look in the sky. How many “contrails” do you see? Thats exhaust. The crap we are putting into our air doesn’t just come from Joe Citizen. Huge volumes of shit is generated by big business, but the focus continues to be dad’s thirty minute commute, and mom’s run to the grocery store. You might drive to the airport tomorrow on electricity, but you’re still gonna fly to Hawaii on jet fuel.

    Reply

  21. Steve Clemons says:

    Thanks for your thoughts Ross. I know that this is not the only Obama proposal on global warming — but I haven’t seen the pkg. And I’m a fan — I just wanted to raise the point of creating incentives for behaviors that might not need them might not be the best approach.
    I don’t believe McCurdy is just about rent-seeking. I may have mischaracterized what he is having his staff learn…but what I mention is part of a comprehensive in house training exercies that his association never engaged in before. I consider that progress.
    But thanks for the note in any case.
    best,
    Steve Clemons

    Reply

  22. Ross Smith says:

    Flaws in the proposal? Flaws in your reasoning.
    1) You assume this is Obama’s only policy proposal on global warming. He does favor cap and trade for point source emitters. And he supports other elements (R&D crdeits, etc.) of a comprehensive policy. The auto sector piece is not flawed by some presumed lack of coverage of other sources/sectors.
    2) You also assume that the AAM and McCurdy are not just (or primarily) rent seeking (or doing there best to minimize regulatory impact on their sector). Cap and trade and sequestration, which you say McCurdy wants his folks to learn about (and lobby for), are aimed primarily at coal fired power plants, cement manufacturers, and other large point source emitters.
    Obama’s auto/health deal can be criticized, but not on the grounds you assert.
    Awesome blog you have, btw. Foreign policy is your strength, eh?

    Reply

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