Home > autos, CAFE, carbon pricing, Henry Payne, Joskow, Kiesling > Henry Payne/NRO and the Deal Not Taken: He’s shocked, shocked that Dems won’t end CAFE mileage standards

Henry Payne/NRO and the Deal Not Taken: He’s shocked, shocked that Dems won’t end CAFE mileage standards

Henry Payne (cartoonist at the Detroit News and commentator at NRO) has a interesting post up on Feb. 18 at NRO’s enviro-bashing “Planet Gore” website: “Obama’s Washington Is the Enemy of Auto-Industry Reform“.  In it, Payne does a remarkable job of side-stepping the long history of the auto mess (poor governance, intransigent labor, counterproductive Washington meddling and competition from foreign automakers) and focussing on the blame that the Obama administration and “Washington Democrats” are likely to earn from further counterproductive policy.  In particular, he seems exercised that Dems are unlikely to eliminate the inefficient and costly CAFE standards.

Well, this seemed a little more myopic than I could stand, so I sent Mr. Payne the following note:

Henry, what did you expect to happen?  You can blame Dems for the mistakes that they will make, but Republicans are no better at governing, and it’s the car cos and the unions that are responsible for their current predicaments and unwillingness to budge.

“there will be no elimination of costly CAFE laws. It is shocking, in fact, that Washington Democrats are unwilling to even consider this fundamental, multi-billion-dollar reform. “

As for this, you are probably right – not the least because the Bush administration failed to act on climate change so enviro won the Supreme Court case that Jon Adler says essentially forces the EPA to do more of the same – but is anyone actually making a proposal that would include eliminating CAFE? 

But in this vein, back in the Bush heyday when Republicans had both houses of Congress, I’m sure Dems/enviros would have loved to trade away CAFE for rebated carbon taxes, or for improving power competition/smart grid a la Paul Joskow/Lynne Kiesling.  They might have even given up corporate income taxes entirely for such alternate revenues.  It is shocking, in fact, that Washington Republicans were unwilling to even consider this fundamental, multi-billion-dollar reform, that would have eliminated CAFE and avoided C&T pork and subsidies of the type that Obama and guys like Pickens wants.

But instead of even-handedness and looking for win-win deals, you can keep bashing Dems.  Good luck with that now, after Bush strong-armed Greenspan into creating this bubble, did a bunch of other nonsense and thus empowered Dems to finish off the job wrecking the economy – in order to “save” it.

While thinking creatively might not be easy, it’s a start at actually succeeding.



  1. TokyoTom
    March 2nd, 2009 at 10:39 | #1

    EH, thanks for your comment. Sorry for not seeing/posting it sooner, but I get so much spam that I sometimes fall behind.

    Some taxes are not as distorting as others; economists have long noted that taxes on income (particularly on capital) have the effect of dampening investment relative to cosnsumption. As corporate income is taxed at the dividend level, corporate income taxes further depress capital investment. To the extent firms can avoid income tax altogether, the use of armies of accountants and tax lawyers is a deaweight loss to the economy.

    If we taxed carbon, automakers would only see it in the energy that they use (and indirectly in the steel, etc that they purchase) and in a shift in demand by consumers for vehicles. Automakers would respond to such changes, which would be much less intrusive (and provide more direct benefits in terms of carbon policy) than are CAFE standards.

  2. EH
    February 24th, 2009 at 17:50 | #2

    Tokyo Tom,
    What makes you think carbon taxes are better than corporate income taxes or CAFE restrictions? Why should auto companies be faced to pay a different tax in order to get rid of an anticompetetive CAFE standard? Carbon taxes distort the market just like CAFE standards. I don’t see any difference. I don’t disagree with your points on poor corporate governance and stubborn labor, but your view that a carbon tax is some kind of creative new idea doesn’t follow. It just changes where the tax is paid, but doens’t change anything fundamental.

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