As Political Winds Shift, Detroit Charts New Course

Surrounded by auto workers and executives, President Obama announced tough new rules on Tuesday for fuel efficiency and emissions standards.


May 20, 2009
News Analysis
As Political Winds Shift, Detroit Charts New Course
By JOHN M. BRODER and MICHELINE MAYNARD

WASHINGTON — Why, after decades of battling, complaining and maneuvering over fuel economy standards, did carmakers fall in line behind the tough new nationwide mileage standard President Obama announced Tuesday?

Because they had no choice. The auto industry is flat on its back, with Chrysler in bankruptcy, General Motors close to it, and both companies taking billions of dollars in federal money. Foreign automakers are getting help from their own governments. Climate change legislation is barreling down the track, and Congress showed last fall that it had no appetite to side with Detroit any more.

Simply put, Detroit and the other companies need Washington’s help, and they are powerless to block the rules Washington dictates.

“They can feel the political winds changing,” said David Doniger, a lawyer with the Natural Resources Defense Council who has faced the car companies in court many times. “They need government aid to stay in business. When you have your hand out for help, it’s hard to use the same hand to thumb your nose at the federal government.”

It is a clear victory for the president, who introduced fuel economy legislation as one of his first acts as a senator, and it is the latest blow in a four-year decline in Detroit’s influence in Washington.

In 2005, car companies were able to stop fuel economy legislation. By 2007, with the country awakened to the realization that global warming was a threat, they were forced to go along with higher standards but managed to water them down.

This time, they arrived at the table so debilitated they could extract only the barest of concessions. The primary gift carmakers received from Mr. Obama in Tuesday’s proposal was the certainty of one fuel economy standard from California to Maine, rather than the patchwork that would have resulted from two sets of regulations, one by the 18 states that wanted tighter standards, and another for everywhere else.

“We understood there had to be a different approach,” said Dave McCurdy, the former Democratic congressman hired by the auto companies two years ago to be their chief voice in Washington. “We saw the election of Obama as a unique opportunity to bridge the differences between all the stakeholders and to provide certainty and clarity to the manufacturers.”

Yet there is more to come. The troubled auto industry is at the front end of a wave of changes driven by President Obama’s determination to put the United States on a fossil fuel diet. The administration is moving on multiple fronts, from the Environmental Protection Agency’s proposed finding that heat-trapping gases are a threat to health and the environment to the sweeping cap-and-trade legislation moving through Congress.

Taken together, these measures may create markets for fuel-efficient cars, change how Americans heat and light their homes and, ultimately, decide what industries will rise and fall.

On Tuesday, Mr. Obama gathered the chief executives of 10 auto companies from around the world in the Rose Garden to announce his proposal for a single national fuel-efficiency standard of 35.5 miles per gallon by 2016, a nearly 40 percent increase from today’s level. Also in attendance were environmental advocates, officials from California and Michigan and cabinet members who worked on the plan.

Mr. Obama praised the car companies’ willingness to cooperate in the effort, saying it marked a sharp reversal. “You know, in the past, an agreement such as this would have been considered impossible,” he said.

James C. Lentz, the president of Toyota Motor Sales USA, now the country’s second-biggest seller behind Ford, said he could not recall a similar occasion when executives from American and foreign companies, environmental groups and state officials had gathered at the White House in agreement.

Mr. Lentz said consumers’ swift reaction to record gasoline prices last summer was an important factor in the industry’s embrace of higher fuel standards. “The industry woke up to the fact last year that when gas hit $4.50 a gallon, consumers were going to demand better fuel economy,” he said.

At the same time, the auto companies found themselves on the losing end of a string of environmental lawsuits, including the big one, Massachusetts v. E.P.A., in which the Supreme Court gave the Environmental Protection Agency the authority to regulate vehicle emissions of heat-trapping gases like carbon dioxide.

The industry also suffered from the diminished power of its staunchest ally in Washington, Representative John D. Dingell, the Michigan Democrat who has served in Congress for 54 years.

In November, Representative Henry A. Waxman, Democrat of California, wrested the chairmanship of the Energy and Commerce Committee from Mr. Dingell in a hard-fought battle. Mr. Dingell had used his perch there to protect the automakers from repeated efforts by lawmakers and agency officials to strengthen automotive environmental, safety and mileage standards.

Representative Edward J. Markey, Democrat of Massachusetts, was a co-author of the 2007 mileage standards and, with Mr. Waxman, of the climate change bill before Congress. Mr. Markey said the fuel-efficiency law, looming E.P.A. regulation of emissions and the election of Mr. Obama had put the carmakers in a vise.

“With the full political force of Congress and a new administration pushing the automakers, and the business folly of an overreliance on gas guzzlers on full display to the American consumer,” Mr. Markey said, “the auto industry was simply unable to continue their strategy of delaying action, denying they could meet higher standards and litigating to prevent them in the first place.”

Jason S. Grumet, president of the Bipartisan Policy Center in Washington, said the auto manufacturers were seeing this agreement as a lifeline and a way to end 30 years of conflict.

“It represents one place that was important to their future where they could seize a measure of control of their own destiny,” said Mr. Grumet, who is close to many of the administration’s energy and environment policy makers.

“I also think this was a classic example of an entrenched disagreement that had outlived its useful life,” Mr. Grumet said. “The fight had exhausted itself. People on all sides of the issue were ready to reach a principled compromise and move forward.”

John M. Broder reported from Washington, and Micheline Maynard from Detroit.