Mr. President - Hope Springs Eternal

It is interesting and maybe a little disturbing how the press falls all over any statement by the President as if it were a meaningful presentation of “new” information.

Today, President Obama stood before the microphones and announced a New Deal between the automakers, the autoworkers, the environmentalists, some portion of the elected officials and state governments. The historic compromise announced is an agreement on “tough” fuel economy rules, setting a standard of 35.5 miles per gallon. A change in the way business is done in Washington according to numerous news agencies.

The Obama administration will set regulations that will mandate a 5% annual increase in the fuel economy of new vehicles to 39 m.p.g. for cars and 30 m.p.g. for light trucks in model year 2016. In return, the auto industry will drop its lawsuits against California and 13 other states that had planned their own standards.

Yes, history in the making. But, is it really a big deal? Let’s see what is under the hood of this amazing story.

Well, two of the automakers, General Motors and Chrysler are now controlled by the President so I guess they would agree to any compromise he presented. Two of the other ten automakers, Toyota and Honda are presently producing the kind of cards the GM, Ford and Chrysler can only dream about, so for them … no big deal. Oh, did you read the end of the story where the House Democrats proposed to double up to $50 Billion to help the automakers actually produce the cars that are currently being produced by the Japanese, Korea and others. Of course, they were all smiling. The U.S. taxpayers will be sending them more money to do what they are already doing.

The autoworkers, how about them? These guys just want to be working right now so anything that says its okay to build cars is fine with them. But don’t forget, the UAW owes a big debt to the President of covering their butts with the GM / Chrysler bailout instead of letting the free market work and put them out on the street. So, autoworkers vote the way their benefactor points them.

The states why do the fall into line? Well, the largest state represented California already has stricter laws on its books so I guess Gov. Schwarzenegger could comprise on this one since he can’t get anyone in California to agree with him. Michigan Gov. Jennifer Granholm left the White House shortly after the event … I think maybe because her stomach could not handle the “great victory” that still leaves her state with massive unemployment.

Legislators why are they so happy? Well, they know that any Presidential statement needs Congressional approval so the numbers are going to change. Remember the Congressional Democrats only take broad suggestions from the President not actual direction and certainly with no expectation that the President will get what he asks for, even when he asks nice.

The environmentalists … well, this is their President so whatever he says is fine with them. Ask them later in private if he will deliver.

Oh, what was not in the headlines … all cars will cost at least $1,300 more, thank you Mr. President. Of course, what everyone forgets is that Toyota just dropped its price on cars that exceed the President’s standard to compete with Honda’s cars that beat the standards which both cost less than any by GM, Ford or Chrysler. So, why the increase in cost when the technology is there already? Next, everyone knows that big SUV’s are on the way out so eliminate them from the equation and how big a jump is really?

Oh, did you read the end of the story where the House Democrats proposed to double up to $50 Billion to help the automakers actually produce the cars that are currently being produced by the Japanese, Korea and others. Of course, they were all smiling. The U.S. taxpayers will be sending them more money to do what they are already doing.

“Three or four other presidential administrations have tried to do this and weren’t successful,” Schwarzenegger said. “This president, after 120 days in office, has created the action that brought everyone together.” Oh Arnold, you must have forgot that when previous presidents actually said these kind of things that did not get done is because of that place call Congress. Yes, we have a big to-do, which still requires Congressional approval which will not take place until sometime next year which will be an election year so actual approval? So, add at least one more year to the actual goal.

In addition, the automakers will hire the numbers guys that are helping the banks to report high profits the first quarter of 2009 with any changes in their operations. The banks still maintain the subprime loans on their books that were causing them the huge losses only six months ago. Those guys will help the automakers meet the “government” standard without any significant change in the product being produced.

My suggestion, which has been stated clearly by others, is much simpler and cheaper on the American taxpayer. Increase the gasoline tax. Americans will reward the companies that produce better gas mileage cars by buying them. Net cost to the American taxpayer … increased income and no money to automakers. We win, we get better cars and during the interim money flows to Washington to cover their crazy spending.