Congress, Industry Equally at Fault for Detroit’s Problems

Posted November 17, 2008 at 4:46pm

Sen. Hillary Rodham Clinton (D) was not the only hot topic this weekend. Though the prospect of the junior Senator from New York joining the Obama administration as secretary of State created a definite buzz, most of the Sunday talk-show chatter focused on an issue that should concern us all: a potential taxpayer rescue of our moribund auto industry.

[IMGCAP(1)]As Congress returns for a brief lame-duck session and conducts such household chores as assigning offices to new Members, selecting committee chairmen and electing its leadership for the next session, the nation is debating the merits of bailing out an industry on the critical list, one that could turn catastrophic in the current economic recession.

Democrats will have their hands full gathering the votes to help extend a line of credit to the automakers. Just take a look at the Senate. Most conservative lawmakers are against the pending bailout, arguing vociferously that the auto companies were mismanaged and short-sighted, and, therefore, should be allowed to fail. Before Congress begins placing all the blame on Detroit for its woes, it needs to admit how much downward help came from inside the Beltway.

It’s true that the U.S. auto industry has long ignored the need to produce smaller, more fuel-efficient, environmentally friendly vehicles. But it’s also true that Congress and U.S. consumers helped steer the industry toward the crash it’s now facing. It was consumer demand that led the industry to build ever-bigger, gas-guzzling SUVs. And it was our leaders in Washington who gave Big Oil billions in subsidies and tax credits, including tax credits for businesses buying the SUVs and big pickup trucks.

Too bad that folks who really needed a break when it was all pedal-to-the-metal were never given a handout to help ease their pain. There were no tax credits for single moms who needed small, inexpensive, fuel-efficient cars or for small businesses that needed small, fuel-efficient trucks.

After the Arab oil embargo of 1973-74, both Presidents Richard Nixon and Gerald Ford called energy the nation’s top priority and set an ambitious goal for eliminating reliance on foreign oil by 1980. Similarly, when the Iranian revolution led to another severe oil shortage in 1979, President Jimmy Carter announced to a prime-time national television audience his new comprehensive energy plan, declaring it “the moral equivalent of war.” Yet since Carter called upon Congress to implement fuel-efficiency standards for the auto industry, every subsequent administration has either weakened the standards or pushed back the implementation deadlines.

Yes, the automakers lobbied hard to relax the standards, but it is the job of a responsible government to take the high road based on the long term. Well, the future is now. And yet, unless you buy an expensive hybrid vehicle, you get no tax break for purchasing a fuel-efficient passenger car — a sorry fact that can only be blamed on the currently elected group of lawmakers in Washington.

Some argue that it’s time for U.S. automakers to step up and compete more effectively against foreign automakers, who, they claim, are doing fine. The truth, however, is that Honda and Toyota sales in the United States are significantly down from a year ago. For the past dozen years, both companies have concentrated on producing bigger cars, bigger trucks and V-8 engines that suck up gas. Neither of them now makes a vehicle for the U.S. market that can compare with the fuel-efficient ones they exported to the United States in the 1970s. Remember the teeny-tiny Honda CVCC and the Datsun B210?

While our government is as responsible as the auto industry for the inefficient product line now offered, this doesn’t mean Congress is responsible for the industry’s cash crunch, which is why these corporations must be bailed out with a loan and not a grant. The Chrysler bailout in the 1980s gave us a blueprint for how this can be done without costing the taxpayers a dime. We can make that happen again, if we’re careful in how we implement it.

Speaker Nancy Pelosi (D-Calif.) noted that “it is essential for the domestic automobile manufacturing industry to re-emerge as a global, competitive leader in fuel efficiency and in new, path-breaking energy-efficient technologies that protect our environment.” But she wisely said it is equally important that emergency assistance “be conditioned on executive compensation restrictions, a prohibition on golden parachutes, rigorous independent oversight, and other taxpayer protections to ensure that any companies that benefit from this assistance — and not the taxpayers — bear the full burden of repaying any costs that are incurred.”

There is a national security issue that needs to be recognized as well. A large and vibrant U.S. manufacturing base is the second most important national security asset we have. Our elected leaders would do well to look back to World War II and decide, “Well, we would have failed without this manufacturing infrastructure in place.” I don’t think we could have even fought, much less have won, without it.

Even during a transition to a global economy, our elected representatives should never fail to remember that. But they have. This is one of the many things that need to be changed in Washington as soon as possible.

Donna Brazile, the campaign manager for Democratic presidential nominee Al Gore in 2000, runs her own grass-roots political consulting firm.