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Fuel efficiency enters bailout debate

House Financial Services Committee Chairman Barney Frank speaks during a news briefing with House Speaker Nancy Pelosi after attending a meeting with House Democrats to discuss a federal bailout of the U.S. automotive industry.

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Kai Ryssdal: What seemed so certain yesterday about this time doesn't look like such a slam dunk anymore. The haggling over a government rescue of the American automobile industry continues in Washington.

Congress and the White House are still at odds over what conditions to impose on the companies, that in return for $15 billion worth of taxpayer loans. That should be enough to keep the Big Three in business until springtime. Longer-term restructuring plans would have to be in place by the end of March.

What we know about negotiations goes something like this: There's talk of a car czar, strict consequences for any of the three that can't demonstrate they're going concerns and what kinds of fuel efficiency standards Detroit ought to be held to.

Marketplace's John Dimsdale has more on that from Washington.


John Dimsdale:
Environmentalists say for many years, U.S. auto companies ignored the market warnings about the declining popularity of big cars.

Daniel Weiss: That has to do with the huge management failure on the part of all three of these companies.

Daniel Weiss worked for 16 years at the Sierra Club and now he's with the Center for American Progress.

Weiss: The Big Three business model was based on cheap oil and gasoline and being able to block stricter fuel economy standards. There's more profit to be made from making a big gas guzzling car than there is from a smaller fuel sipping car.

Many in Congress are asking for greener cars in return for a taxpayer bailout. Some think the 35-mile per gallon average by 2020 should be moved up by five years. Others are pushing for a faster switch to electric-powered vehicles. But David Cole, at Detroit's Center for Automotive Research says Congress is pushing technologies that few car buyers can afford.

David Cole: But ultimately the market is going to determine what sells. Congress can't force people to buy, the auto industry can't force people to buy. And if you're in the business of making cars and trucks, you have to be in sync with the market or you'll go out of business.

Cole says more affordable batteries and alternative fuel engines will be available soon without government mandates.

Congressional members from California and 15 other states are backing a bailout condition that car companies drop their suits to block tougher emission standards in those states. So far, the White House is resisting that provision.

In Washington, I'm John Dimsdale for Marketplace.

About the author

As head of Marketplace’s Washington, D.C. bureau, John Dimsdale provides insightful commentary on the intersection of government and money for the entire Marketplace portfolio.

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