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No Gas Tax for Drive to Electrify, says Transportation Secretary

Government can't do it all alone, says Sec. LaHood.

by on Jan.11, 2010

There may be a new "partnership" between government and the auto industry, but don't expect the White House to fund the drive to electrify by raising gas prices, warned LaHood.

Stressing that the auto industry is an essentially part of a healthy American economy, U.S. Transportation Secretary Ray LaHood nonetheless cautioned that the government can only work with the industry, not cover the cost of the massive transformation it’s not going through — particularly if that would require new gasoline taxes.

LaHood provided the opening remarks for the 2010 North American International Hall, held at Detroit’s Cobo Hall.  Outside the center, a group of protestors gathered to express their anger at the Obama Administration’s multi-billion dollar bailout of General Motors and Chrysler, last year.  But the Secretary defended that controversial decision.

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“This industry would not have a bright future, said LaHood, without the government’s assistance.  “It’s a good investment,” and besides, he added, the protestors should be told that, “General Motors is starting to pay back the money taxpayers loaned to them.

The Secretary insisted that the Obama Administration has developed “a real partnership” with the auto industry, a critical change from years past.  Proponents note that during the prior Bush White House, Detroit’s industry leaders failed to win a sit-down meeting with the president until his last year in office, after two terms.

Just where that partnership goes is unclear, but there are certainly plenty of issues to address.  One of the first actions the new president took, in 2009, was to sign a measure sharply increasing the Corporate Average Fuel Economy, or CAFE.  That measure runs through 2016 and there’s sharp debate over what might follow.

Asked about the rising interest in “electrification,” the use of battery power to help improve fuel economy and reduce emissions, Secretary LaHood said it’s “what people want.”

The question is how to fund that transition, which a new study by the Boston Consulting Group estimates could cost $12 billion in the U.S. alone, and that’s just for the infrastructure required to support a fleet of electric vehicles.

The Secretary initially sidestepped the question of where the money will come from, but when pressed, he said “There has to be some leadership from the government.”  Does that translate into cash?  Not necessarily, he said, contending, “The government is not just going to solve this issue.”

Asked whether funding for the drive to electrify might have to be raised through a higher gas tax – something many environmentalists and industry officials actually agree on, LaHood gave a firm thumbs down.  “We’re not in favor of raising the gas tax when you have states like Michigan with 20% unemployment.”

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