This week, Sen. Barack Obama (D-IL) proposed new incentives for fuel efficiency. The proposal would help automakers cover health costs for retired autoworkers if they invest in technology that will improve their vehicles’ fuel economy. On the heels of Obama’s announcement, the Senate Commerce Committee approved a bill requiring new cars and trucks to average 35 miles per gallon by 2020.
Both measures are encouraging signs that the government is recognizing the essential role that fuel efficiency plays in efforts to combat global warming. The Center for American Progress pioneered the concept behind Obama’s proposal with its “health care for hybrids” plan. It’s a smart way to effectively confront a major national problem—the challenge of converting to cleaner cars and fuels as a crucial part of a larger strategy to increase energy security and combat global warming while helping automakers with one of their most pressing problems, legacy health care costs.
“Health care for hybrids” helps rebuild the auto industry, preserve jobs, and reduce the United States’ dependence on oil by directly confronting the debilitating cost of legacy retiree health care obligations shouldered by the Big Three automakers.
“Health care for hybrids” confronts automakers’ complaints about the cost of meeting higher fuel-efficiency standards by helping them pay for another huge expense: retiree health care costs. General Motors faces legacy costs—health care plus pensions for retired workers—that add over $1,500 to the cost of every car they produce. The Big Three automakers support 800,000 retirees all told, compared to less than 1,000 for foreign-owned competitors in the United States.
The failure to provide affordable, universal health and retirement benefits has cost the United States jobs and hurt the competitiveness of American manufacturing businesses. While this proposal does not substitute for a comprehensive solution, it provides immediate help to the auto industry.
Under Obama’s plan, the government would pay for 10 percent of U.S. automakers’ health care costs for retirees through the next decade in return for the firms’ promise to invest half of their savings from the deal into creating more fuel-efficient vehicles.
Adopting a “health care for hybrids” strategy would not only be a chance to do what’s right for workers, manufacturers, and the environment. It’s also a progressive way to reach a fuel economy goal that the public supports.
According to a survey that the polling firm Greenberg Quinlan Rosner conducted for the Center for American Progress, two-thirds of those surveyed support raising mileage standards for new cars and SUVs over the next 10 years to 40 miles per gallon from the current 24 miles per gallon—even when reminded that critics say it would lead automakers to produce smaller and more expensive cars. Less than a third, or 31 percent, of respondents did not think mileage standards should be raised.
A substantial majority of Americans know that a move toward greater fuel efficiency may carry costs, but they also think that it’s a worthwhile investment. When the full Senate considers the Commerce Committee’s fuel economy proposal—which could occur as soon as June—the body should consider fuel economy an essential step toward winning the fight against global warming and addressing the energy crisis. The addition of manufacturing incentives to convert the U.S. auto industry, like “health care for hybrids,” also makes fuel economy a tool for preserving family supporting jobs in America’s heartland.
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