Will they attain it??? Probably not unless the Federal Government “tinkers” with the economy (oil, gasoline, taxing vehicles that don’t meet these standards) which will in the end force Americans into these vehicles.

Unfortunately, I can see this present administration (Congress included) doing this. They are not afraid to Choose Winners and Losers in any situation.

A carbon tax, on the other hand, makes it fair across the board (ok, yeah, you can have rebates – but that is tougher to hide since it is more readily understood by the average voter). The only downside, though, is the word TAX. Noone running for office says they like raising taxes and wants to be burdened with that label. We’ve fundamentally lost our ability to prioritize what behavior we want to encourage and then use taxes to promote or discourage such behavior. This is a shame. If Obama and the Dems wanted to responsibly use their power for change – they would take this on. However, they’ll hide behind Cap and Trade instead – which is less efficient, allows them to avoid the negative stigma of being a tax (which it really is – voters will catch on eventually), while at the same time promotes their reelection campaigns through selective use of “incentives” for worthy industries (further corrupting our political system).

The Supply side solution, CAFE, will not work if gas prices remain low. Perhaps Cap and Trade will result in higher taxes on gasoline restoring some sort of balance but history has shown that CAFE ONLY worked when gas prices were high (early 80s) – they had no effect when gas prices were low (all years since – until 2007-2008). During years when they didn’t work, automakers sold small cars at a loss (remember Ford Escort and Chrysler Neon?) and, even then, there still wasn’t sufficient demand. Electric cars are not the answer in the next few years – they cost MORE – not LESS – therefore they will not be high-volume anytime soon (certainly not by 2016). The only way these higher CAFE standards can be met by 2016 is by reduction of choice – no cars other than subcompacts could meet the standard and be sold profitably. Result – cars that don’t meet the standard become more expensive (and unaffordable), severe cutbacks on new car production, loss of jobs, etc.

If you want a good case study on the possible effects, just check out what happened to the General Aviation market after product liability lawsuits and higher aviation fuel prices decimated the industry in the late 70s. In the space of about 10 years, the market for new small planes went from 10s of thousands of planes to hundreds and used planes became the only way to affordably buy a plane. Cessna ceased making small planes (they have mainly made corporate jets since), Piper has been in and out of bankruptcy with many different owners. Beech and Mooney changed hands and stopped/started operations many times. Kit planes became popular because the builder was the user and assumed the liability.

But this same situation (as in GA) won’t be allowed to happen – the auto marketplace is too important. But I find it is just ridiculous to regulate market behavior this way and particularly on this timescale. I agree on the goal of reducing carbon emissions but the most effective way is to slap a carbon tax on all fuels and let the overall marketplace figure out where and how to gain the efficiencies – no bureaucrats and lobbyists are required and it gives a far more effective result!!!

(P.S. We very badly need campaign finance reform. Lack of it is the root cause of a lot of problems.)