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Salvaging the Auto Industry

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Salvaging the Auto Industry

Wednesday, February 8, 2006

By Barack Obama and Jay Inslee

Last Tuesday, the president told us it was time to get serious about America's addiction to oil. Last Wednesday, his advisers told us he didn't mean that literally. To underscore that point, the administration plans to start laying off government researchers who work on the very same renewable energy solutions the president said were our future. Meanwhile, his proposals would bring us back to the same level of renewable energy funding that we had at the beginning of his administration -- before he started cutting it.

Obviously, this isn't a real solution to America's oil addiction. But that doesn't mean we have to settle for more of the same timid approaches. We can put this country on a real path towards energy independence, and we can start with the biggest oil addicts in America today -- the cars we drive.

As demand for oil continues to rise, other countries are already realizing that an oil future alone is not a secure future. Toyota is doubling production of the gasoline-electric hybrid Prius to sell 100,000 in the United States this year, and it's getting ready to open a new production plant in China. The waiting lists for these foreign hybrids in our country are months-long.

Meanwhile, the American auto industry is struggling to catch up. Together, GM and Ford have announced plans to lay off up to 60,000 workers. And despite pledges to increase production of fuel-efficient hybrid vehicles, US auto companies will probably continue lagging behind their foreign counterparts. Ford is only making 20,000 Escape Hybrids this year, and GM's brand won't be on the market until 2007.

US automakers have frequently blamed their inability to invest in new technology on having to pay retiree health costs that foreign competitors do not have. GM alone is expected to pay $4 billion this year just to provide retiree healthcare benefits. In fact, healthcare costs represent $1,500 of the price of every GM car that's made, which is more than what they pay for the steel. The company's recent deal with the UAW to reduce retiree benefits helps, but by no means solves its financial difficulties.

The precariousness of an oil economy, crushing healthcare costs, and the failure to design for the future are killing our auto industry. And so we have a choice. We can sit by and watch it crumble. Or we can do something to save jobs and boost our economy.

It's time to help the auto industry invest in more fuel-efficient cars, and we believe the federal government has a role in helping them do it. We've introduced a proposal called the ''Health Care for Hybrids" Act to address the challenges of the US auto industry and reduce our country's dependence on foreign oil at the same time.

This bill would set up a voluntary program in which automakers could choose to receive federal financial assistance towards their retiree healthcare costs. In return, the automakers would be required to reinvest these savings into developing fuel-efficient vehicles. As a result, our proposal would measurably reduce our nation's dependence on oil. Some of these technologies are already available and awaiting use by the Big Three.

Instead of a no-strings-attached financial bailout of the auto industry that could lead to factories being built overseas, our proposal could jumpstart the industry to commercialize new technology that consumers are demanding. More American hybrid cars also ensure that there is competition in this growing market, and would also help keep car prices low.

Our proposal addresses a complex problem in a way that strengthens the American economy. Autoworkers would get the healthcare they had been promised, the auto industry would be back on a competitive footing, and our reliance on foreign oil would be reduced.

In the State of the Union, we had hoped that the president would take serious steps to address two of the problems weighing on the minds of Americans: the rising costs of healthcare and energy. Unfortunately, his proposals showed that he was more talk than action.

Health for Hybrids would show that we're ready to act on America's oil addiction. It would show that we're not ready to sit by and watch a giant of American industry fail while millions of Americans lose their jobs. And it would show that we're serious about one other goal the president mentioned in his speech: keeping America competitive in a 21st century global economy.

Barack Obama is a Democratic senator from Illinois. Jay Inslee is a Democratic congressman from Washington.

Cross-posted to the Boston Globe.

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