No, I’m not talking about the mythical drivers of the 1970s, riding their luxe mobiles down to the benefits office to collect their check.

I’m talking about Detroit. Congress seems intent on handing yet another short-sighted free ride to the automakers. As reports the Wall Street Journal, Congress has come up with the following piece of “policy”: “The $11.5 billion auto amendment, adopted 71-26, would give an income-tax deduction to car buyers for both sales taxes and interest payments on auto loans.” This even as the newspapers are filled with stories of transit systems with expanding riderships nevertheless having to cut back for lack of funding.

There are, seemingly, no further requirements on this latest gift to the industry — e.g. no stricture that it be used only for high-mileage or hybrid vehicles, nothing that might make Detroit (or American consumers, for that matter) wake up and face reality.

Do you see a pattern here? Let’s review. There was the time Congress eviscerated the tax credit for hybrid vehicles — the more that are sold, the more the credit erodes (how’s that for incentives?). In Europe, the tax credits for lower-emitting vehicles don’t erode. Then there was the time Congress enacted tax breaks for “light duty” vehicles (the ones family farmers used to use back in the days such a creature existed), encouraging an entire generation to move away from higher-mileage vehicles into unsustainable suburban trucks. And then, as Daniel Sperling and Deborah Gordon note in their new book Two Billion Cars (which I’ve reviewed in the next Wilson Quarterly), there was the old “two fleet rule” for imports and domestics, “added at the request of the UAW, which hoped Detroit would be forced to keep building small cars to offset sales of gas guzzlers. This worked for a short time, but the share of imported parts rose in Detroit’s ‘domestically built’ cars defined as having at least 75 percent domestic content).”

The pattern seems to be: Detroit, caught in its oligopolistic slumber, runs ashore on the shoals of global socio-economic reality; Congress finds some short-term way to help them that leaves them precariously ill-prepared for the future. Repeat.

This entry was posted on Wednesday, February 4th, 2009 at 4:28 pm and is filed under Cars, Energy, Etc.. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.