Democratic Platform Says: We (Re)built This Auto Industry Page 2

September 4, 2012

Michelle Obama at a soundcheck before the 2012 Democratic National Convention

Environmental regulations and CAFE standards

The Obama administration and the EPA have been working for some time on new corporate average fuel economy regulations (aka CAFE standards), and last week, those regulations were officially confirmed. The Democrats tout this in their platform:

President Obama forged an agreement with American carmakers to nearly double fuel efficiency standards in the coming years, changes that will save a typical car owner more than $8,000 in fuel costs over the life of their vehicle and reduce American consumers’ fuel costs by almost $2 trillion.

Grade: A-. The new CAFE standards will push fleet-wide fuel economy to 54.5 mpg by the year 2025, and the $8,000/$2 trillion savings figures are consistent with those previously used. It's also true that U.S. automakers played a major role in the setting of these new guidelines.

What's left out? The fact that U.S. automakers played such a key role that some foreign companies felt completely left out of the discussion. Volkswagen and others have complained that the new regulations set different standards for different types of vehicles -- specifically, lowering the fuel-economy bar for trucks and SUVs, which are made mostly by Detroit automakers. Moreover, the regs don't recognize diesel as a clean alternative fuel, which is a huge blow to Euro companies, who like a good diesel engine. Add all that together, and foreign automakers will have to work harder than their U.S. rivals to meet the EPA's new regulations. 

Another point: many argue that the new standards will cause car prices to rise. That's probably so, due to the cost of new technology, but estimates of the increase vary significantly. In some scenarios, the $8,000 in fuel savings outweighs the increased sticker price; in others, it doesn't. We don't have a clear answer on this bit, so for now, it's a wash.

Infrastructure

The GOP platform criticized America's transportation infrastructure, but didn't offer many ideas for repairing it. The Democrats veer a little more closely to the nitty-gritty:

Roads, bridges, rail and public transit systems, airports, ports, and sewers are all critical to economic growth, as they enable businesses to grow. That’s why President Obama and Democrats in Congress have enacted infrastructure investments that will sustain our Highway Trust Fund and provide states, U.S. territories, and communities with two years of funding to build needed infrastructure.... The President has proposed to go substantially further, including a significant up-front investment in our infrastructure followed by sustained increases in investment paid for with part of the savings from winding down our overseas wars, together with reforms that will better leverage government dollars and target significant projects.

Grade: C+. Dems deserve some credit for envisioning ways to pay for infrastructure improvements. However, whether those improvements will benefit from funds freed up after the U.S. winds down its overseas wars is a matter for debate. And the "reforms" mentioned in that last sentence could really use some fleshing out.

A bigger criticism: the "two years of funding" that the Democrats mention seems to refer to the recently passed surface transportation bill -- a monstrous piece of legislation that Transportation Secretary Ray LaHood once called "the worst transportation bill I've ever seen". And not only was it a dodgy bit of legislation, but it was also made possible by Republicans and Democrats, working together in a joint committee. Yes, Obama signed it into law, but it wouldn't have been possible without a handful of compromise-minded GOPers. 

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