Obama suggests money for fuel economy deal for automakers
Trying to jump-start gains in auto fuel efficiency after decades of inaction, Sen. Barack Obama, D-Ill., is proposing an unusual swap for the Big Three U.S. carmakers: Washington would pay some of Detroit's multibillion-dollar health costs in exchange for it making cars that get higher gasoline mileage.
The federal government would pay 10 percent of the $6.7 billion in annual health costs for retirees that are weighing down General Motors, Ford and Chrysler if they'll commit to building more fuel-efficient cars, Obama proposed in a speech Tuesday before a panel at the National Governors Association conference. He called it a "win-win proposal for the industry."
Obama, a charismatic freshman senator, is under growing pressure from liberal Democrats to raise his profile nationally. His choice of this issue as his first claim to national leadership is revealing. It features a traditional liberal's approach of government help for a troubled blue-collar industry and environmental conservation, but it adds a requirement that the industry meet a performance standard in exchange. Democrats haven't pushed this kind of public-private "industrial policy" since the 1980s.
Equally significant, Obama's proposal breaks with liberal orthodoxy by shunning a call for Washington simply to order automakers to raise fuel-economy standards via federal regulation. That may signal a shift toward the political center, matching a similar move by President Bush last month.
After years of pushing greater production as his answer to America's energy needs, Bush stressed conservation, framing the issue dramatically: "Here we have a serious problem: America is addicted to oil."
Together, experts say, the president and Obama may be signaling movement by both sides in America's long-stalemated energy-policy wars. Fuel economy standards for cars are at 1985 levels.
"Look at the Obama thing not in the specifics but in the broad idea of thinking outside the limits of the debate," said Henry Lee, a Harvard energy professor who served as energy secretary to Democratic and Republican governors in Massachusetts.
"Leaving things the way they are, we're just continuing the stalemate," said Linda Stuntz, a former deputy energy secretary under President George H.W. Bush. Obama's proposal "brings together some important elements. I think the auto industry is ready and would like some help on these sort of things. ... We're not just going to make it a handout, we've got to get something in return."
"We look forward to working with the senator in finding solutions," said Mike Moran, a spokesman for Ford.
Car industry lobbyists were caught off-guard by Obama's proposal and said they needed time to think about it.
In an interview, Obama said U.S. automakers and unions that had fought higher fuel standards in the past "are a lot more prone to listen" now because of Detroit's financial woes. General Motors lost $8.6 billion last year; health care costs add $1,500 to the price of every GM car. Last month Ford announced it will close 14 factories in the next six years.
Peter Fox-Penner, a former senior energy official under President Clinton, said Obama's idea "resonated better than anything else that has been proposed" in at least five years to raise fuel efficiency standards.
Just as Bush's energy-conservation proposals were "a gigantic step toward the middle," Fox-Penner said, Obama's plan shows that Democrats realize that Detroit is in bad financial shape and needs help to change its gas-guzzling ways.
Obama's proposal also shows that he's "trying to become one of the main voices of the Democratic Party," said Mike Alvarez, a political scientist at the California Institute of Technology.




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