Obama In the Lion’s Den?

Last week Senator and presidential hopeful Barak Obama gave a major policy speech to the Detroit Economic Club and two thousand of Detroit’s business, government, and civic leaders. Obama’s hard-hitting speech laid down the stakes: oil dependency puts our nation at risk, politically, militarily, economically and environmentally. He told Motown moguls that at the very least we should be producing vehicles that improve fuel economy by 1 mile per gallon a year. He also called for a significant increase in low carbon fuels by fuel refiners, and promised expanded consumer incentives for buying fuel-efficient vehicles.

Needless to say, the standing ovation Obama received upon arrival was not repeated at the end. Even with his proposed package to help automakers cover the costs of transforming their industry—a 10-year federal subsidy to pay 10% of retiree healthcare pumping $6 to $8 billion into Detroit automakers coffers, lunch goers were unimpressed. Our automakers dismiss this amount as piddling. But is it?

The National Highway Traffic Safety Administration’s preliminary analysis of industry estimates puts the automakers investment to make 4% per year improvements in fuel economy at $85 billion over 10 years. Obama’s proposed federal assistance would thus cover 7% to 9% of the total investment needed. (While Obama’s proposal only requires automakers to invest 50 percent of the federal subsidy in fuel saving technologies, they would still receive a total of $6 – 8 billion. If they choose not to spend the other 50 percent on fuel saving technologies, that is their decision.) If 7% is too little, then how much is enough? Let the negotiation begin.

This week, Detroit did not want to accept Obama’s message just as Detroit did not want to accept the message we gave them in 2005, before Katrina, that fuel prices over $3.37 would make them hemorrhage red ink, or in 2006 when we concluded the best way to ensure higher and less volatile profits would be to proactively increase their fuel economy.

Just like they did not want to accept CAFE in 1975.

Detroit can’t keep saying “can’t”, they need new “can do” ideas that help America reduce oil dependency and slow or reverse global warming. Let’s hope that Ford’s appointment of a sustainability czarina and GM’s announcement that it is joining the U.S. Climate Action Partnership will translate into new ideas and new actions.


  • Stan Smart

    OH-BAMMA drives a Chrysler 300;
    360 hp V-8!!!

    He should’t throw stones …

  • Craig Northcutt

    They are getting exactly what they deserve. Let the free market decide, let us consumers keep voting with our dollars, and let the big three see what Honda and Toyota do to them over the next ten years. If the Big Three go out of business, so be it. That’s the efficience of the markets: Darwinism if you will.

  • Gerald Shields

    Yes. We’ve given The Big Three billions to produce either hybrids or alternative fuel cars and it’s produced meager results. Up the fuel efficiency and emissions standards, but not ONE DIME to help them.

  • Tom

    Don’t spend any money for American Carmakers. Let the Honda and Toyotas send their money back to Japan. Japan will own America. Can any of you speak the languages of Japan, Korea or China? You and your grandchildren had better learn.

  • John F Yeaman

    The automakers chose to destroy the EV-1, build Hummers, build big engine fuel guzzlers, and use ethanol to avoid real fuel improvements. Give buyers of hybrids and other fuel efficient cars tax breaks of $2,000 and see what Honda and Toyota do.

  • Ma

    If the Govn’t subsidize and fund the US Auto industry, How does americans benefit from it? Considering most cars and parts are made outside the US. Why do everyday americans’s taxes pay for their blunder but don’t get to share the wealth? How much job are they creating anyway? It seems foreign auto company hire more american hands than the US. With fundings and Credits, how much taxes are they generating?

  • History

    Did we as a nation not see this before? I seem to recall Chrysler needing to be bailed out after it did not learn it’s leson in the 1970′s. Oh yeah did we not see the Gas price jump then? Did not Japan come in with smaller cars and gain market share? Is it not happening again? Bailing out Detroit is yet another step to socialisim. Goverment STAY OUT OF THE FREE MARKET! Ye who has the better mouse trap will get the market share. Along those lines every businessman knows in the FREE market you adapt or die. My small business has to do so and I don’t get one dime of help from the fed. Why should Detroit get it?!

  • Mike R.

    I remember working for the gov’t during the late 70′s and all the new vehicles purchased were Chryslers. Ok so Lee Iococa got them back on their feet with the minivan. Great idea. But also Japan auto makers really made the big 3 squirm in the 70′s and it’s time for history to repeat itself.

  • Hal Howell

    This week I will be buying a Toyota Prius. Its a great car and sadly nothing is being produced like it by an American car company and certainly not for the price! I saw the reports of the Chevy Volt. Very impressive but it will not make it to market. Its just a concept car. The price would be near $30,000!!! If we are going to ever be free of foreign oil then we need good electric cars for the masses, a modern day VW that is appealing (not ugly) like the Chevy Volt that would attract more buyers. The trouble is Detroit will only make appealing cars for the more well to do which is the opposite of what needs to be done. Toyota is getting my money this week because they have done exactly that, made an appealing car that is affordable. Toyota announced that they will soon be going 100% hybrid. So where is Detroit? They continue to produce vehicles that get mediocre mileage even from their few hybrids, price them beyound the masses reach and then complain that no one buys their cars. Its hard to feel sorry for them. Listen up, Detroit, I WOULD have bought an American made car, if you had one that at least matched the Prius in function, price, quality and looks. Sadly, you haven’t.

  • Hal Howell

    This week I will be buying a Toyota Prius. Its a great car and sadly nothing is being produced like it by an American car company and certainly not for the price! I saw the reports of the Chevy Volt. Very impressive but it will not make it to market. Its just a concept car. The price would be near $30,000!!! If we are going to ever be free of foreign oil then we need good electric cars for the masses, a modern day VW that is appealing (not ugly) like the Chevy Volt that would attract more buyers. The trouble is Detroit will only make appealing cars for the more well to do which is the opposite of what needs to be done. Toyota is getting my money this week because they have done exactly that, made an appealing car that is affordable. Toyota announced that they will soon be going 100% hybrid. So where is Detroit? They continue to produce vehicles that get mediocre mileage even from their few hybrids, price them beyound the masses reach and then complain that no one buys their cars. Its hard to feel sorry for them. Listen up, Detroit, I WOULD have bought an American made car, if you had one that at least matched the Prius in function, price, quality and looks. Sadly, you haven’t.

  • domboy

    I have to wonder if the government of Japan has ever helped out any of their automakers… in any way, shape or form… I have a sneaky suspicion that they probably have…

  • ECD4ME

    The burden of legacy costs has to be solved for Big Auto to recover and it has to come from mgt and labor. Obama is clueless to think that American workers will be happy with subsidizing a bailout for Detroit and the UAW. Most workers now dont even have pension plans and are struggling just to hang on to health care while working.

  • Jeff

    The big three, Chrysler in particular, have simply been making cars that return the highest profit. If US consumers did not keep buying them then they would have dropped them a long time ago. Do not lay all this on the auto industry. It is the consumer. If we as a nation of consumers do not give a s$%t about fuel etc. then why would the big three care. No bail out for the auto industry. Let them sink or swim. Chrysler was just sold by Daimler. Lets see if it survives the reorganization. Nothing new here. Lets finally sign a DNR for big auto.

  • Brian Fields

    Lets bail out the Big Three in detroit again? Why? What for? They have been told for the past 15 years they need to start producing vehicles that our more fuel efficient and better quality. Why is it I can buy a Honda that gets 40+ MPG and will last more then 300,000 miles yet If I buy American I am lucky to get 100,000 miles before the engine needs a complete overhaul plus I can only get 30 MPGs at best?
    Yes, the big three are fully responcible! The American consumers have been told for years buy American or watch america go bye bye! now we have learned that when we buy American the American Auto maker goes bye bye and takes their manufacturing over seas. Meanwhile, Companies like Toyota have been building manufacturing plants here in the states. Creating Jobs, Yet we say don’t buy it, it isn’t an American Automobile!

    The Big Three Ceos and head executives all own stock in oil companies. They have absolutely no reason to produce fuel efficient vehicles. They are personally turning a profit and could care less!

    I see no reason to bail them out, my theory is they screwed up let them pay for it out of their own pockets! Maybe then they will listen to the consumers when they say “stop pawning crap off on us and build us what we really want!”

    However, having said that I will be buying American in late 2008. When I purchase my Venture One!

  • Brian Fields

    Way to go Barak Obama!!!!!!!

    You definately have my vote!!!!

  • Gerald Shields

    Yes to John F Yeaman’s comments. If folks that owned full hybrids or any vehicle with 40mpg and over received the tax breaks that the government gave for the Hummer, then the highways would’ve been awash in Priuses!

  • Neal P. Charydczak

    EV1 is a testament as to what what can be accomplished (and should be the standard vehicle by now). Un-fortunately the three-B’s control what is released and not released. My vote is for a President that will stand up to the three-B’s and do what is right for American citizens, the Environment, and the entire global population as a Whole.

    I hope it’s not too late.

  • DarthKleber

    Geewizz, the big 3 keep pumping out these oversized gas guzzling s@#$ boxes ,and wonders why noone wants to buy them , this is happening for one reason. Its all about controlling the masses.. Freedom has become a joke in america and to the rest of the world .. Hopefully companies like Tesla Motors and Pheonix Motors which are building full fledged electric cars and trucks and actually selling them can help set the new standards in the auto industry in the 21st century.. Wake up people . we are all slaves and that’s how these rich people who don’t give a damn what the american people want . It’s all about the all mighty dollar and who has the control. the Constitution begins with We The People , not we the corperations. Let the market decide and watch the big 3 wallow .What goes around comes around… That’s a fact of life … Do not underestimate the power of the people… :)

  • sergeantjones

    Interesting what a difference a year can make. Senator Obama has now traded in his Chrysler 300 for a 2008 Ford Escape Hybrid and those autoworkers, feeling the effects of current gas prices, would probably now give him that standing ovation.

    My next vehicle is probably going to be an Escape hybrid, but I want plug-in charger capability, so am looking hard at Lion EV. I wish Ford would just offer it this way themselves.