In Detroit, All Eyes Are Fixed on Congress

Writing on, our Eric Peters examines the many challenges faced and (so far) surmounted by the Big Three domestic automakers, GM, Chrysler and Ford, in light of what may be their biggest challenge yet: A Senate energy bill that may mandate new corporate average fuel economy, or CAFE, standards at a whopping 52 mpg level.

Eric begins:

There are three ways to find yourself in a deep hole: One is to jump in; another is to fall in. The third is to get pushed.By an amazing trifecta of bad luck, bad decision-making and bad public policy, the U.S. auto industry finds itself in a deep pit — with no ladder in sight…

…and ends…

If competitive shackles had not been fixed around the ankles of Detroit’s Big Three, it’s entirely likely that Ford would not be reeling from the biggest losses in its entire corporate history, that Chrysler would not be in “financial rehab” under the wings of a privately-held equity firm, and GM would not have dropped to a 24 percent market share and second fiddle to Toyota – which just became the world’s largest automaker.This tragedy of events — and of almost suicidal policy-making — is still playing out. The Senate is considering increasing CAFE standards to 52 mpg. Senators Mark Pryor (D-AR), Kit Bond (R-MO), Carl Levin (D-MI), and George Voinovich (R-OH) have proposed an alternative — a 36-mpg standard for cars and 30-mpg for light trucks, a more than 30 percent increase over present levels.

Many — including the Big Three domestic automakers themselves — believe a 52-mpg standard could be one blow too many for our beleaguered domestic auto industry to survive. The automakers — and their union — support the Pryor-Bond-Levin-Voinovich alternative.

In Detroit these days, all eyes are fixed on Congress.

The National Center for Public Policy Research is a communications and research foundation supportive of a strong national defense and dedicated to providing free market solutions to today’s public policy problems. We believe that the principles of a free market, individual liberty and personal responsibility provide the greatest hope for meeting the challenges facing America in the 21st century.