During the campagin then Senator Obama said he would not raise taxes on the middle class, saying that 95% of taxpayers would pay no new taxes.  Four months into his administration and he has broken his promise.  He did so by requiring car makers to raise the fuel-efficiency standards of all cars and trucks (about 35 miles to the gallon) sold in the United States by 2016.  This new requlation would raise the price of a new car by an additional $600.  Actually the amount is $1,300 because it is on top of tighter regulations passed just last year.

I am sure President Obama would disagree but this is a tax increase.  A tax is a financial obligation put on a citizen by the government to pay for legislative mandates.  This regulation is no different than if the government taxed everyone $1,300 and gave the money to the auto companies so they could reduce the price of the care.  Anyway you slice it it is a tax increase on all Americans who buy cars.  President Obama countered by saying drivers would save $2,800 in gas over the life of the car.  I wonder how they came up with this number.  My guess is they calculated how much people drive under current circumstances and multiplied it by the price of gas.  Chances are if people are getting better mileage they will drive more (see post by Carpe Diem), which means they will buy more gas.  As well, if the price of cars and trucks increase, demand will go down.  People will continue to drive their gas guzzlers for as long as they can.  This will likely means even more auto workers will lose their jobs–though it would provide auto mechanics more work (along with car theives who steal cars for parts).

Another problem is care makers at this time don’t have the technology to raise fuel efficiencies cheaply.  Much of the past increases in mileage standards were achieved by making cars lighter.  I will bet anyone under 30 doesn’t know that before the 1980s, each car came with a full-sized spare tire–not some small donut-sized tire that prevented you from driving more than 30 mph.  Car manufacturers made the change in order to reduce the weight of the auto–not for any practical reason.  Car makers will have to reduce the weight of the cars even more to make these standards–at the cost of more deaths on the highway.

For me the biggest problem with this regulation is we are losing our freedoms.  By setting such a high standard which will apply to all autos, manufacturers will reduce the types and makes they produce.  In other words, every car maker will basically sell the same car–there will no longer be any variety.  The enviromentalists and Democrats argue that the Big Three in Detroit got into trouble because they built cars no one wanted.  That is not true.  A car maker stays in business when they sell cars–why would they build ones no one wanted?  Throughout the 1990s, when gas was cheap and the threat of terrorism was over the horizon, Americans wanted big cars (i.e. gas guzzling SUVs).  The problem with autos is it takes years to transition from designing and making a new type of car.  This puts auto makers in a bind when gas prices can double in a few months. 

This whole process reminds me of the song Red Barchetta by Rush:

My uncle has a country place, that no one knows about
He says it used to be a farm, before the motor law
And on sundays I elude the eyes and hop the turbine freight
To far outside the wire, where my white-haired uncle waits.Tires spitting gravel, I commit my weekly crime…

Jump to the ground
As the turbo slows to cross the borderline
Run like the wind,
As excitement shivers up and down my spine
Down in his barn
My uncle preserved for me, an old machine —
For fifty-odd years
To keep it as new has been his dearest dream

I strip away the old debris, that hides a shining car
A brilliant red barchetta, from a better, vanished time
I fire up the willing engine, responding with a roar

Like the song, pretty soon it will be illegal for Americans to drive a car not approved by the government.