Obama talks tough to Detroit

This is a great article about Barack Obama and how he stuck to his guns when he spoke candidly to automakers in Detroit.

I think he is being fairly conservative in the benchmarks he proposes, in terms of fuel efficiency. The small steps are probably realistic to get compliance though.

Obama Criticizes Auto Makers
For Opposing Tough Fuel Standards
By MIKE SPECTOR and JACKIE CALMES
May 8, 2007; Page A8

Far from playing to his audience, Illinois Sen. Barack Obama told Detroit's business elites during a speech there that auto makers deserve much of the blame for their financial predicament, and called for annual increases in federal mileage standards for their vehicles.


The Democratic presidential contender, in a speech yesterday that drew about 2,000 people to a sold-out Detroit Economic Club luncheon, also proposed what he called a government-industry bargain: Auto makers would get some federal assistance for their crippling retiree health-care costs, in return for producing more fuel-saving hybrid vehicles. And Mr. Obama promoted his new legislation, an idea borrowed from California Republican Gov. Arnold Schwarzenegger, mandating a low-carbon fuel standard for the oil industry to spur development of alternative fuels.

While the senator acknowledged the auto industry's problems weren't all of its making, his indictments were sharp. Even as foreign rivals developed fuel-efficient models, increasing their sales and market share amid rising gasoline prices, U.S. auto makers kept investing in ever-bigger vehicles -- and in lobbyists who worked in Washington to defeat the fuel-economy changes "that could've saved their industry," Mr. Obama said.

As the companies have shed jobs and profits, he said, "they've continued to reward failure with lucrative bonuses for CEOs."

Mr. Obama's speech, with its focus on energy, the environment and auto makers' place in a changing economy, marked his latest bid to showcase his substantive case for the Democrats' presidential nomination, after critics suggested the charismatic politician is all style. But perhaps more notable was his choice to deliver it in the nation's auto-making capital.

"I don't believe in making a speech like this in California, and giving a different speech in Detroit," Mr. Obama said in an interview afterward. "This was an attempt to lay my cards on the table. I want to help strengthen the industry here in Detroit. I don't see us doing that by maintaining the status quo."

Mr. Obama's comments came as a Senate panel plans today to take up a bill to mandate steady increases in federal fuel-economy rules, known as Corporate Average Fuel Economy, or CAFE, standards. Auto makers would have to achieve a fleetwide average fuel-economy standard for most cars and trucks of 35 miles per gallon by 2020. The bill would require 4% annual fuel-economy increases after that. The fuel standard for passenger cars over the past 20 years has been 27.5 miles per gallon.

Mr. Obama pointed to superior fuel economy as a main reason Toyota Motor Corp. recently replaced General Motors Corp. as the world's best-selling car maker. Many Asian cars, including Toyota's, get better than 35 mpg.

Domestic auto makers oppose such CAFE increases as prohibitively expensive and technologically unfeasible. They cite a Transportation Department estimate that 4% annual increases would cost them $85 billion between 2010 and 2017. But Mr. Obama, in his speech, said "expensive to do is no longer an excuse for failure to do."

The Senate bill's latest version attempts to mollify concerns of some senators, particularly Michigan Democrats Carl Levin and Debbie Stabenow, that the technology costs of meeting higher fuel-efficiency standards would doom U.S. auto makers, notably DaimlerChrysler AG's struggling Chrysler Group. A bipartisan amendment would allow the Transportation Department to lower mileage targets if it finds legislated targets aren't feasible or proves by a "clear and convincing evidence" standard that a target isn't "cost effective." While GM, Ford Motor Co., Chrysler and Toyota have lobbied for letting the DOT set fuel economy standards, there are signs auto makers might oppose the Senate bill.

But Mr. Obama made clear to reporters after his speech he isn't prepared to let auto makers off the hook: "For the last two decades, we've been hearing the same arguments," he said of their complaints about the burden of increasing fuel economy. "And the consequences are here: The Big Three auto makers are hemorrhaging money. The sooner we start [increasing fuel efficiency], the better off we're going to be."

Write to Mike Spector at mike.spector@wsj.com and Jackie Calmes at jackie.calmes@wsj.com