Obama’s wish to bailout Detroit and also impose efficiency regulations may conflict

Articles — By forcechange on November 14, 2008 12:10 pm

Will Obama follow up calls to bailout the automakers with strict requirements on emissions and efficiencies, or will their inevitable objections that new regulations will cause job losses, trump his environmental concerns?  That is a question that will be key in determining if Obama is going to make transformative, systemic change, or if he is going to continue with business-as-usual. 

On the one hand, Obama is a vocal supporter of the proposed government bailout of the Detroit automakers.  (Which is now looking less likely to succeed.)  He wants Congress to approve up to $50 billion in subsidies designed to prevent the Big Three automakers from having to declare bankruptcy.

As a part of this plan, Obama would also like to see a czar or board oversee the operations of these companies, similar to the receivership proposed by Tom Friedman.  David Brooks, also of the NYT, thinks is a terrible idea since a government “technocrat” is unlikely to have the innovation or creativity to make effective business decisions.  Brooks asks: “Who is this deity? Are we to believe that political influence will miraculously disappear, that the czar would have absolute power over unions, management, Congress and the White House? Please.”

On the other hand, Obama also wants to impose more stringent environmental and efficiency requirements on the automakers. 

However, there is a good chance that these two goals will conflict.  In reality, a more likely scenario would be that the automakers would use the bailout to continue on their meandering old ways.  They won’t become healthy until they can begin producing real cars that real people want, and it is hard to think that current management, or a government receiver could accomplish this task. 

And unfortunately, in their sick state, Obama may feel constrained in pursuing his stated efficiency and environmental regulations. 

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