The Obama administration has been touting new Corporate Average Fuel Economy (CAFE) standards to be imposed on America’s automobile manufacturers saying that it will save all Americans money at the pumps. Unfortunately, there are all sorts of hidden costs of which the administration isn’t noting, costs that will drive up the price of driving in multiple ways for all of us.

The new standards are supposed to raise the miles per gallon requirements from the 2016 mandate of 35.5 mpg to 56 mpg by the year 2025. The administration claims that this would be a big savings and would serve to help get Americans off a reliance on foreign oil.

Curiously, as Obama touts his new CAFE standards as a way to get us off foreign oil, there is no talk at all of increasing domestic oil production which would help do the same thing. But I digress.

Still, even if raising the mpg standards is a good idea, at this time automotive technology can’t reach that goal. Because of that, the car companies will have to spend billions in research and development to reach the new requirements. This will cause an added cost that isn’t being considered.

This new wave of R&D and the subsequent finished products based on that research is estimated to add up to $6,000 to the cost of every new car by 2025. Sadly, this would price low-end car buyers right out of the new car market.

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The White House has a new report out touting the “resurgence” of the automotive industry, primarily aimed at depicting President Obama’s auto bailout as an unqualified success.

One thing that springs out of the report are claims it makes as to job creation within the industry as compared to job losses projected by the White House and sustained prior to the bailout.  The report states that:

Since GM and Chrysler emerged from bankruptcy, the auto industry has created 115,000 jobs, its strongest period of job growth since the late 1990s.

And:

It was the interdependence between the auto companies and suppliers, dealers and communities that led some experts at the time to estimate that were GM and Chrysler allowed to liquidate, at least 1 million jobs could have been lost.

And:

In the year before President Obama took office, the industry shed over 400,000 jobs.

This is interesting, some observers say, in view of action the Obama administration is currently contemplating that would impact the auto industry, potentially very adversely: Vastly increasing Corporate Average Fuel Economy (CAFE) standards for model years 2017-2025.

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There was a time when Chevy built cars and trucks. The Corvette and Camaro were legendary sports cars, and the Impala offered full size comfort a middle class price. But that was before Change came to town.  The brand that used to compare itself to Baseball, Hot-Dogs, and Apple Pie is no longer content to just make reliable vehicles, it is now as green as a wheatgrass and algae smoothie.

For instance, in the following commercial: Chevy isn’t just building cars anymore, it’s “investing” in windmills, and planting trees.

This is the kind of business model that you get when Leftists take over. Before 2008, GM just tried to make cars that people would buy, for a little more money than they cost to build. Now, they have to plant a forest.

It’s for reasons like this that General Motors is never expected to fully pay back the bailout money. According to the Congressional Oversight Panel, Taxpayers will lose about 19 billion dollars on the General Motors bailout.

That’s a lot of green. You can’t really blame General Motors. When you have an extra 19 billion to play with, why not plant windmills and trees? It seems like the corporate suites, are working on a bigger Buzz than the one they hired to do the voice-over. A more rational voice might ask about the forest that had to be cut down to print all that money.

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From the New York Times:

It was billed as “Investing in America,” a live televised conversation on the state of the economy between President Obama and American workers, students, business people and retirees, a kind of Wall Street to Main Street reality check.

But it sounded like a therapy session for disillusioned Obama supporters.

In question after question during a one-hour session, which took place on Monday at the Newseum here and was televised on CNBC, Mr. Obama was confronted by people who sounded frustrated and anxious — even as some said they supported his agenda and proclaimed themselves honored to be in his presence.

People from Main Street wanted to know if the American dream still lived for them. People on Wall Street complained that he was treating them like a piñata, “whacking us with a stick,” in the words of Anthony Scaramucci, a former law school classmate of Mr. Obama’s who now runs a hedge fund and was one of the president’s questioners.

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I’m mad as hell, and I’m going to do something about it.

I’ve been to Missouri quite a few times since becoming “Joe the Plumber”: Rolling hills, farmland, beautiful rivers, vibrant cities, honest people. So I’m not in the least surprised that the rural town of Caulfield has produced a true statesman. A statesman that all freedom-loving Americans have searched for since the Reagan years.

I AM surprised and disgusted that these same “conservatives” who have been shouting fiscal conservatism from the mountain tops are now throwing a true statesman under the bus instead of rallying to his side.

Chuck Purgason is a State Senator for a portion of southern Missouri. He’s worked his way up from the House to the Senate ever since his “Tea Party” moment in 1996. He has proven the hard way that you actually can be a man of integrity in a government full of wolves. When liberal U.S. Senator Kit Bond (R) decided to retire, he anointed RINO Congressman Roy Blunt (R) to be his heir apparent. After Roy Blunt’s votes for the TARP Bailout, Cash for Clunkers, No Child Left Behind, taking the most lobbyist money, etc. (I really could go on and on and on . . . ) Chuck said there was no way he was going to let Blunt represent Missouri in the US Senate.

State Senator Chuck Purgason threw his hat into the race for US Senate against mega power broker Roy Blunt.

Now this is where the story begins to get interesting. Just a week or so ago, Democratic Governor Jay Nixon ($170,000+ donations from unions) called for a special session to pass a $150M “tax cut” to Ford Motor Company. Every Republican started lining up like good little bees because tax cuts are good – right? Besides, Missouri has a lot of unions – they wouldn’t win their re-elections if they didn’t vote for this bill.

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Paul Krugman has been on a roll the last two weeks. After announcing that America is in its “Third Depression” last week, he provided an encore last weekend, by blaming U.S. Federal Reserve Chairman Ben Bernanke for his concerns about the evils of deficit spending for failing to increase economic stimulation of the economy. During the Great Depression President Franklin Roosevelt brushed away concerns regarding the wisdom of deficit spending by saying; “If we can boondoggle ourselves out of this depression, that word is going to be enshrined in the hearts of the American people for years to come.” Perhaps Professor Krugman is frustrated that so many Americans have not enshrined the boondoggle of deficit spending in their hearts the same way he has.

Our good Professor just won the Nobel Prize for economics in October 2008, for his theory, that to be economically dominant, industries must concentrate their producers and suppliers into a common metropolitan area near their customers to maximize economies of scale and transportation savings. His model perfectly explained the 1950’s and 1960’s success of the U.S. auto industry’s tight concentration of assembly plants, steel foundries and parts suppliers in and around the city of Detroit; and within one days delivery to the bulk of their big city customers.

But Krugman’s theory of economic dominance through concentration has been rendered meaningless by modern supply chain management revolution that interconnects competitive vendors from across the globe. China has a massive balance of payments surplus because they can competitively ship products 10,000 miles to Detroit and beat local parts manufacturers on price and quality. Just nine months after our Nobel Laureate picked up his $1.8 million check and Norwegian hardware, General Motors, the poster child of the Professor’s industrial policy, filed the largest bankruptcy in the U.S. history in September 2009 with only $82 billion in assets, but $172 billion in debt.

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United Auto Workers (UAW) union rank and file members shout down their own UAW leadership in a heated meeting on January 24th, as their UAW leader loses it at the podium.  Sunday’s meeting in California made last summer’s Town Halls look like a family picnic, after a few choice words from their UAW leader spurred the crowd of rank and file members to erupt in screaming and chaos.  At one point,  another attendee tries to reason with the crowd, pleading “we have women and children in here that are scared.”

WARNING: Strong language, angry-town-hall-mob-like-behavior

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I first crossed paths with Dennis Lennox more than two years ago. At the time, he was a junior student at Central Michigan University. By the time I first spoke with him, he had engineered a near year long battle with the faculty at CMU over Gary Peters. At the time, Peters was running for the U.S. Congress and concurrently he was holding the distinguished Griffin Chair. (Peters eventually won his Congressional election) The Congressio nal district was about 400 miles from campus. If, and now when, Peters won, he would have had to give up Chairmanship. Furthermore, the Griffin Chairmanship was supposed to be non partisan and a Congressional candidate was hardly that. Subsequently, emails and other leaked correspondence showed evidence of a corrupt process in choosing Peters for the Chairmanship.

Lennox waged a battle to have Peters choose, the Chairmanship or his Congressional race. By May of 2008, Lennox had effectively won his battle and Peters was asked to resign and he did. Lennox was not unscathed from his battle. The administration threatened sanctions against Lennox on a number of occasions. Eventually, a letter of reprimand was put into Lennox’ university records. In fact, the school attempted to hold a number of disciplinary hearings at which the potential punishment of Lennox could have been expulsion. At one hearing, Lennox showed up flanked by no less than six members of the media. The administration quickly cancelled that hearing and held another in secret over Spring break a couple weeks later.

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We know why new investment in auto assembly in recent decades has not gone to Michigan but to, say, Alabama, Tennessee, Kentucky. In short and making no effort to put too a fine point on it, this is to avoid the crushing weight of the collective bargaining agreements that killed American auto manufacturing.

We also know why the unions push “green jobs” so aggressively, despite the overwhelming evidence that the schemes harm employment (that is, reduce the overall work force): as effectively federally mandated (but certainly “federally”– that is, taxpayer) — funded) jobs, they are uniformly de facto or de jure Davis-Bacon or otherwise union jobs.

Read the following excerpt from Sen. James Inhofe’s opening statement in a Senate Environment and Public Works Committee hearing today on that body’s version of cap-and-trade energy rationing, Kerry-Boxer:

“Let me recount a telling moment in [a recent] hearing. Sen. Sessions asked the government witnesses-and they were CBO, EPA, EIA, and CRS-whether anyone disagreed with the finding that the net effect of cap-and-trade would be a reduction in jobs. None did.”

But at least these schemes increase the union labor force. And that’s really what’s important.

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