01/11/2009 05:12 am ET | Updated May 25, 2011

Obama: Rescue Detroit and Buyout Gas Guzzlers

Here is my take in the Financial Post on the missing link in all the debate and politics about baiing out Detroit and the four-million related jobs:

"The rescue of Detroit, and the four million or so related jobs, is a good idea, but the insistence that the Big Three produce fuel-efficient cars will guarantee failure again unless strict emissions standards are imposed immediately.

"There is another idea, however, that will help bring about a turnaround, clean the environment, reduce American dependency on foreign oil, dramatically reduce the trade deficit and help the economy plus Detroit. The U.S. and Canadian governments should devise a scheme to get the gas guzzlers off the highways.

"There are nearly 200 million vehicles in the two countries, many of which use too much gasoline, are fuel inefficient emitters or are obscenely oversized. A strategy should be put in place to retire these wasteful vehicles as quickly as possible in order for their owners to be able to buy new fuel-efficient cars made by Detroit and others.

"There are many ways to accomplish this, through tax incentives, government-backed loans, grants or changes to laws that allow rapid depreciation for fleets and corporate owners as well as commercial vehicles. While some may balk at such government involvement the facts are that it is in the government's interest (and society's) to rid the road of SUVs, mini vans, smoke-spewing junkers and the like.

Here are some ideas:
"-- Anyone with a car that does not meet new fuel-efficiency standards should be able to retrofit or to finance a new fuel-efficient car (or a used one that's efficient) with a cheap, government-backed loan from automakers. There should be no sales tax on such vehicles, no annual road taxes (where applicable) and possibly a grant to help defray the cost to lower income owners.

"-- The justification for this government investment is that once draconian fuel-efficiency standards are imposed, the after-market for guzzlers will continue to deteriorate or disappear. In a sense, such laws represent a legislatively-enacted "expropriation" of value in these undesirable vehicles so, also in a sense, it is arguable that governments should defray a portion of the cost.

"-- The other justification for getting this stuff off the road is to help save the environment, but it is also economic in the case of the United States. The price of oil has dropped, but so has the hunt for new supplies. And unless demand drops commensurately forever worldwide, which is unlikely, the price of oil will soar down the road. In other words, the current downturn has caused gasoline to drop in price but will sow the seeds for more economic disruption, deficit problems and the increasing transfer of wealth to questionable regimes or a handful of huge corporations which control oil supplies.

"Canadians, the biggest exporter of oil to the United States, are also wise to consider retiring their guzzlers from the nation's fleet even though we are more than self-sufficient in energy sources. That is because if Canadians reduce dramatically the amount of oil they use domestically (and transportation fuels are more than half of the use of oil), they can sell the stuff to the Americans, Chinese or whoever and enhance Canada's trade and economic future.
"To think that the Age of Oil is going to end before 2030 is wishful thinking. Long-term strategic plans should be put in place as soon as possible. To merely bailout Detroit, with its lousy management and proclivity toward producing huge cars, is a formula for disaster. And to bailout Detroit and force it to make fuel-efficient vehicles -- without forcing or encouraging consumers to buy them -- is also misguided."

Your thoughts?"