President Obama has offered an ambitious policy agenda for his second term, hoping to move beyond the debt-and-deficit debates that dominated Washington during the last Congress. While continued fiscal pressures and Republican opposition will make it hard for Obama to advance many of his proposals, he has outlined a clear set of priorities for energy, the environment, climate, trade, and other policies.
The Obama agenda includes many key issues for the automotive industry. For example, the recently announced transatlantic trade and investment negotiations could have significant implications for the industry, since successful talks have the potential of boosting trade volumes while harmonising regulatory regimes. The same could be said of the Trans-Pacific Partnership talks, especially if Japan joins the negotiations. Implementation of Obama’s signature health care reform law, which will be a major focus for his administration during the coming year, has broad implications for US employers, workers, and consumers.
In a notable proposal for the automotive industry, Obama wants to use revenues from oil and gas development of public lands and offshore tracts to create a new federal trust that would support R&D related to advanced automotive technologies
Of direct importance to the automotive industry is Obama’s environmental agenda. Citing the “overwhelming judgement of science,” Obama called, in his State of the Union address on 12 February, for renewed efforts to address climate change. He proposed that Congress approve a market-based system for cutting greenhouse gas emissions, like the cap-and-trade bill that lawmakers considered but failed to pass a few years ago. Since the current Congress is no more likely to pass such legislation, Obama vowed that his administration would also address climate change through executive actions and regulations – steps that do not require new legislation. The administration can be expected to use its existing authority to propose or finalise rules to control emissions of not only greenhouse gases but also other regulated pollutants.
Obama also offered extensive thoughts on energy policy during his State of the Union address, calling for continued expansion of domestic production of oil and natural gas – albeit combined with efforts to protect clean air and water – and for continued development of renewable energy sources. Obama’s new interest in natural gas is evident in his support for incentives to encourage the use of natural gas in vehicles, though the administration remains committed to vehicle electrification as well.
In a notable proposal for the automotive industry, Obama wants to use revenues from oil and gas development of public lands and offshore tracts to create a new federal trust that would support R&D related to advanced automotive technologies. The trust concept can be seen as an effort to secure funding for ’clean’ vehicle R&D without relying on regular Congressional appropriations, supplementing ongoing R&D programmes at the Department of Energy related to electric and plug-in hybrid electric vehicles, advanced batteries, etc. While Obama raised the idea again during a speech this month at Argonne National Laboratory outside Chicago, moving it through Congress will be politically tricky.
The administration will rely heavily on using federal regulations to reduce emissions from vehicles and other sources, while trying to protect federal support for automotive R&D from budget cuts
Obama will offer more details on his policy proposals when he belatedly sends his fiscal year (FY) 2014 budget to Congress on 8 April. Obama’s broad agenda faces serious political and fiscal challenges. He will find it hard to gain Republican support for proposals that require new legislation or increased funding, particularly since policy makers are also working to reduce the federal budget deficit. As a result, the administration will rely heavily on using federal regulations to reduce emissions from vehicles and other sources, while trying to protect federal support for automotive R&D from budget cuts.
Recent developments offer some hope that Congress and the White House are moving beyond the political gridlock that has gripped Washington for the past several years, but sharp differences remain on such diverse issues as climate change, environmental policy, federal support for R&D, international trade, and health care. President Obama’s second-term agenda encompasses all of those policies, many of which have clear implications for the automotive industry. The prospects for that agenda should start to become clear in the next several months.
The opinions expressed here are those of the author and do not necessarily reflect the positions of Automotive World Ltd.
Ian C. Graig is Chief Executive of Global Policy Group, Inc., has written in the past for AutomotiveWorld.com on a wide variety of US policy trends and their implications for the automotive industry. Global Policy Group is a Washington-based research and government relations consultancy whose clients include leading U.S., European, and Japanese firms in the automotive, energy, utility, information technology, and financial services sectors. For more information, visit www.globalpolicy.com or contact Ian Graig directly at ian.graig@globalpolicy.com.
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