CAFE PROPOSALS: Fact Sheet - 7/21/92 July 21, 1992 THE CLINTON-GORE CAFE PROPOSALS: LOSS OF JOBS, LOSS OF LIVES CLINTON: "In my administration, we'll...seek to raise the average goal for automakers to 40 mpg by the year 2000, 45 mpg by the year 2020." GORE: "I rise today as an original cosponsor of Senator Bryan's CAFE bill, S. 1224. I am proud to join my colleague in this effort ..." (June 22, 1989). On September 25, 1990, Gore voted in favor of S. 1224. Gore also supported S. 279, the latest reincarnation of Bryan's CAFE bill. Both bills would have increased the CAFE (corporate average fuel economy) standard for automobile fleets by 40% by the year 2001 (to about 40 mpg). Summary o Drastic increases in CAFE standards as proposed by Senator Gore and Clinton would mandate massive shifts to smaller and lighter cars, regardless of consumer preference. o This Clinton-Gore proposal on CAFE would cost thousands of lives in traffic collisions, put between 150,000 and 300,000 jobs at risk, and would unnecessarily penalize the U.S. auto industry -- an industry just now starting to recover. o According to former NHTSA Administrator Jerry Curry, raising CAFE would "decrease safety, harm U.S. competitiveness, put U.S. workers out of jobs and curtail consumer choice in the car marketplace." CAFE Kills o Proponents of increased fuel efficiency through higher CAFE standards often overlook something more important: human life. The easiest way (and, beyond a certain point, the only way) to increase efficiency is to reduce vehicle weight. But smaller and lighter cars provide less protection in auto accidents, leading to substantially more auto-related deaths. CAFE -- page 2 o The National Highway Traffic Safety Administration (NHTSA) estimates that weight reductions needed to meet a 40 mpg standard could result in up to 1,900 additional deaths and 17,000 serious injuries each year. o In addition to the NHTSA study, private studies (including one by Robert Crandall of the Brookings Institution) project even more fatalities. Crandall's study estimates that the Bryan Bill's 40 mpg standard would increase fatalities 30 to 60 percent over a car's lifetime. According to Crandall, the substantial weight and steel-content reductions that would be needed to achieve a fleet-wide fuel economy average of 40 mpg could raise the CAFE death toll to between 4,800 and 8,600 deaths per model year fleet. o Studies cited by the National Research Council have found the smallest and lightest cars are about twice as dangerous as the largest cars. Higher CAFE Would Cost US Jobs o The Motor Vehicle Manufacturers Association believes that the unreasonable (and unfeasible) increase in the CAFE standard as proposed by Clinton and Gore would put at risk between 150,000 and 300,000 jobs. o Domestic assembly plants currently producing family- and mid-size cars, light trucks, and vans that would be affected by higher CAFE standards have a combined labor force of 142,000 employees. These plants are located in 18 states and include GM's 4,500-employee Spring Hill plant in Senator Gore's home state. Suppliers reliant upon these plants for business account for many thousands more that would be put at risk. o By making new cars more expensive, CAFE standards reduce the demand for new cars at a cost of tens of thousands of jobs. Studies indicate that a 10 percent increase in the price of large cars decreases their demand by 30 percent. Higher CAFE Would Damage the US Auto Industry o Much of the CAFE debate has centered on engineering feasibility, on what mileage targets the automakers could achieve. But consumers, who are the ultimate decision makers, do not base vehicle purchase decisions on engineering feasibility or on fuel efficiency alone. To require U.S. auto companies to virtually ignore consumer preference would damage sales and hurt the U.S. industry's position vis a vis its foreign competitors. CAFE -- page 3 o Domestic automakers and the UAW believe that even the current CAFE program discriminates against American "full line" manufacturers, while Asian competitors (as manufacturers of predominately smaller vehicles) can more easily meet higher requirements. o Higher CAFE standards would prompt more American auto manufacturers to shift their large car production overseas, costing many American auto workers their jobs and harming the U.S. manufacturing base. o Due to the separate classification of domestic and foreign fleets, CAFE also provides an incentive for foreign auto manufacturers with American assembly plants to purchase parts from abroad in order to have their U.S.-produced cars classified as foreign. In fact, even one U.S. automaker (Ford) has increased its purchases of foreign parts for some of its bigger cars in order to have them classified as foreign for CAFE purposes. Congress had required automakers to calculate CAFE standards separately for their domestic and foreign-made fleets in hopes that automakers would produce small cars and create jobs in the U.S. This seems to have backfired. o The impact of higher CAFE standards would especially hurt the steel industry since reducing the steel content of cars is the easiest way to increase fuel economy. Many other supplier industries, such as rubber, glass, and aluminum, would also be affected adversely. CAFE Provides Little or No Environmental Benefit o CAFE does not significantly reduce fuel consumption. As fuel efficiency rises, driving becomes cheaper, prompting increased leisure driving and discouraging car pooling. o Smaller, more expensive new cars will cause people to delay new car purchases and keep their older, less efficient and more polluting cars longer. o One-size-fits-all Regulation: One of the proposed methods to raise CAFE is to increase fleet requirements by a certain percentage on a company by company basis. -- Firms that have the highest averages now would be penalized. Many of them have already used existing technology to improve their mileage. CAFE -- page 4 o Carbon Tax: The Congressional Research Service report on CAFE concludes that gas prices may need to be artificially elevated by steps such as a carbon tax for CAFE to work as Clinton-Gore intend. -- Imposition of a carbon tax would stifle American enterprise. Previous estimates of the effects of a carbon tax or equivalent policy are that it would cost 600,000 jobs by the year 2000, according to a report prepared by the CONSAD Research Corporation. -- Hardest hit industries would include coal, metal, mining, and oil and gas extraction. Other vulnerable industries would include transportation services and manufacturing industries such as chemical and paper products, according to the same report. o Carbon dioxide emissions from U.S. passenger cars account for only 2.8% of worldwide carbon dioxide, which in turn makes up only half of the greenhouse gases. Removing all cars from the United States would reduce projected global warming by less than 0.03 degrees Centigrade, according to the National Center for Policy Analysis. Better Ways to Promote Fuel Efficiency o A better way to promote fuel efficiency without endangering American jobs and lives is to use market-based incentives, such as those proposed by the President in the new Clean Air Act of 1990, to encourage responsible environmental actions. For instance, the President's "Cash-for-Clunkers" plan incorporates a tradable credit system to reduce the same amount of emissions as old-style regulation while saving industry significant compliance costs. -- Companies receive credits towards their emissions requirements for removing gas guzzlers from the road, getting the most polluting cars out of circulation. o A study by DRI/McGraw Hill last year found that an auto scrap program would be more effective than higher CAFE standards in reducing carbon monoxide and hydrocarbon emissions over the next five years. That is why the President's Cash-for-Clunkers Program and other market-based clean air initiatives make more sense: they encourage destruction of inefficient, polluting models and the purchase of more modern, less-polluting ones. This means both a cleaner environment and more work for Americans. CAFE -- page 5 o President Bush has directed Federal agencies to maximize their purchases of alternative fuels vehicles. Over 3,000 such vehicles have already been purchased and put into use. o There are other, better ways to make U.S. transportation more fuel-efficient, without the highway deaths and economic dislocations that would result from higher mandated CAFE standards. Many of these are outlined in the President's National Energy Strategy, including increasing funding for mass transit, increasing subsidies that automakers receive for producing vehicles that run on natural gas, ethanol, and methanol and investing up to $150 million over the next four years, in partnership with the automobile industry, on research into electric vehicles. The Administration will also accelerate R&D in high-speed rail systems and energy- efficient aircraft engines. o One of the most effective methods to reduce vehicle emissions is to simply tune-up the engines of automobiles already on the road. # # #