REVERSE GEAR

Posted at 11:37 a.m. ET:

One of the bizarre aspects of current government policy is the attitude toward our auto industry.  On the one hand, the administration says it wants to help the domestic industry get back in gear.  On the other, it wants to impose rules that may well kill it.  Rich Lowry reports on the sober contradiction:

...the Obama administration is acting quickly to approve a waiver for California to impose costly new restrictions on carbon-dioxide emissions from cars.

... As many as 13 states will follow California's lead, creating a regulatory patchwork with automakers forced in practice to meet the higher standard.

Even California admits that the new strictures will add $1,000 to the cost of vehicles by 2016. (The carmakers estimate $3,000.) So, GM and Chrysler will struggle to shed labor and legacy costs - just to see new regulatory costs imposed on them by the very political authorities that are putting taxpayer dollars at risk to save them.

It's the rise of self-defeating industrial policy.

But it satisfies the radical base of the Democratic Party.

When Detroit came to Washington in extremis last year, the rational reaction would have been to lift burdens on it. Instead, the fashionable rap on Detroit was that it had created its own mess by making SUVs on the foolish assumption that gas prices would stay at $1.50 a gallon forever.

This critique was premised on the foolish assumption that gas prices would stay at $4 a gallon forever. As gas prices have plunged, sales of SUVs and light trucks have picked up again. In December, they were 51 percent of all vehicle sales, a return to the normal pattern. Drivers simply like the convenience and comfort of the bigger models.

But that is bad news to the enviro-religionists.  And the auto companies are in a dilemma:

If a normal sense of self-preservation were at work, Detroit would howl at another step toward bludgeoning it out of its most profitable line of work. But now its relationship with Washington is as important as its business model. Its executives have to drive to Capitol Hill in hybrid cars to do their begging and pretend that GM's plug-in Volt - prospectively priced at $40,000 per vehicle - is the car of the future.

To some of the financiers of enviro-religion, $40,000 is what they spend on a vacation, so reality hasn't dawned on them.

This contradictory policy is driven by worry over the far-off threat of global warming, the killer abstraction that hangs over all of Obama's economy policy. At the same time everyone is aflutter with the need to stimulate the economy, Al Gore called in congressional testimony for the imposition this year of a cap-and-trade system, effectively imposing a new tax on energy.

As government intervention proliferates, we are about to see industrial policy run by people who don't like industry very much.

Detroit wanted a bailout, and it will get it good and hard.

There are some signs in polling that Americans are waking up to the contradictions in Obama policy, and to the pandering to ideological interests.  There are also signs that Americans are starting to question the "science" behind global warming, especially when that "science" is presented by politicians. 

It's up to the Republicans to point out the problems, the con jobs, and try to cure the mess.

January 31, 2009.