GOPideas... ideas done right

The brilliance of team Obama is their use of coordinated strikes of soaring ideological rhetoric combined with administrative knife fighting. Their housing plan combined the rhetoric of "saving" the homes of people who are breaking agreements made of their own volition by tying tangentially related rules, regulations, executive fiats and legislation together in a manner that achieves their social goal without revealing the direct assault on freedom that it is.

The current plight of the Hummer brand is another such example. Astute observers will note that the Obama administration has never said that they wish for the brand to become extinct, but piecing together their actions make this goal undeniably clear. To understand the complexity and brilliance of this strategy, a number of obscure regulations must be understood.

First, the Corporate Average Fuel Economy (CAFE) standards must be understood. In essence, in each model year, a car manufacturer must produce a selection of vehicles that achieve a particular average miles per gallon (MPG). This allows companies that wish to produce vehicles with low MPGs to offset this production with other vehicles that achieve high MPG ratings. If a company falls short, they are fined by the federal government based upon how fall they fall short of the goal (as defined by the federal government).

Implicitly, this increases the cost of a manufacturer to produce low MPG cars --- and the higher that standard is pushed, the higher the cost of low MPG cars will go. The Obama administration recently unilaterally raised MPG standards by fiat, superceding a Congressionally-agreed standard. Thus, the cost for large automobiles must rise. (At this point environmentalists cheer, moderates applaud --- who could be against good mileage --- and conservatives shrug; just another administrative dictate.

Then comes GM, with a host of problems that have been festering for years. One of these problems is a multitude of brands and models --- and it is a legitimate problem. However, with an administration aimed at exterminating large vehicles, guess which brand is getting the boot? Hummer.

You may be thinking that this is great --- let's get the brand into the hands of a company with competent management. However, I would refer you to the first paragraph on CAFE. The only buyers who could potentially purchase hummer and not pay massive fines are those that have fleets with MPG vehicles. Chrysler cannot. Ford would not dare (they may need to get bailed out in the future --- and we see how the White House deals with political opponents --- ask the Chrysler bondholders). Toyota and Honda --- why would they want the headache? Of course, this leaves three options: an independent buyer, a foreign buyer or just kill the entire brand. Clearly killing the brand is the worst for the taxpayer, but it not like the current administration is really concerned with them --- why else would you spend $50 billion of taxpayer money and then hand the company to the UAW? In other words, if someone offers GM $1 for the nameplate, its better than nothing.

But who could buy it? Given the CAFÉ standards, no independent could buy it without massive fines due to low MPG --- because a new company would not have smaller cars to offset the Hummer.

This leaves a foreign buyer, which now looks likely. This should be Exhibit A for "unintended consequences of liberal policies." The Obama administration wanted to rescue GM, save the environment and keep jobs. The combinations of their policy choices have forced GM to give up a unique brand to a company that operates in a country with lax environmental standards and even lower labor costs. Thus, more Hummers will be produced that will create more greenhouse gases where they will be regulated less and produced by non-American workers.

UPDATE: The Chinese government is now thought to be objecting to the purchase, meaning that the Hummer brand may not be sold to Sichuan Tengzhong because the deal runs counter to their strategy of focusing on fuel efficiency and would instill more competition into their struggling domestic auto industry. Thus, the policies of the Obama administration are in lockstep with the centrally-planned Chinese; that global cooperation America can do without.

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