Obama, Congress face the moment of truth on taxes, spending cuts
President Obama, speaking during an election night rally in Chicago, must wrestle with a divided Congress over the so-called fiscal cliff -- tax increases and spending cuts set to take effect Jan. 1.
Photo credit: BLOOMBERG
With President Obama's auto agenda likely to be unchanged in his second term -- electric cars and stricter fuel economy rules -- industry leaders have turned their attention to a more immediate concern inside the Washington beltway.
Even before the next Congress is seated in January, lawmakers and the White House will wrestle with the so-called fiscal cliff, the result of automatic tax increases and spending cuts set to take effect on Jan. 1 that could slow down the economy next year. Bloomberg estimates the total in tax increases and spending cuts at more than $600 billion.
It's the "big gorilla" that could reverse the recent rise in U.S. auto sales, Renault-Nissan
CEO Carlos Ghosn told Automotive News last week. Sales were up 14 percent through October, but analysts say that might not last if consumers have to pay a larger share of their income in taxes.
"The day we're going to have an answer to this, we're going to feel much more comfortable about U.S. growth," Ghosn said.
If lawmakers delay the moment of truth on taxes, as some on Capitol Hill expect, the matter will face similar players in both houses of Congress. Democrats are set to retain control of the U.S. Senate, and Republicans will keep the U.S. House of Representatives.
It's hard to tell where Congress is headed because so little happened in the several months leading up to the election, said David Westcott, the incoming 2013 chairman of the National Automobile Dealers Association and owner of David Westcott Buick-GMC-Suzuki in Burlington, N.C.
"Our issues remain the same from a small-business standpoint, and who knows what they'll go forward with in the lame duck," he said. "No one really knows."
Ghosn: Beware the “big gorilla.”
The same is true of the leadership at agencies such as the EPA and Department of Transportation. They could still go through a major leadership shuffle, but no high-ranking officials have said they're heading for the exits.
Transportation Secretary Ray LaHood, 66, said last year that he planned to leave the administration at the end of President Obama's first term, but since then he has publicly wavered on that decision.
There has been no indication that David Strickland, 44, administrator of the National Highway Traffic Safety Administration, will leave his post.
EPA Administrator Lisa Jackson, 50, also has kept mum on her plans. But the agency's longtime point person on fuel economy standards, Margo Oge, retired at the end of September and was succeeded by her deputy, Chris Grundler.
In Congress, former car dealer Rep. Bill Shuster, R-Pa., said Thursday that he's running for the chairmanship of the House Transportation and Infrastructure Committee when the new Congress begins, which would give him a bigger role in setting legislation that affects the industry. He would replace Rep. John Mica, R-Fla., who faces his term limit as chairman.
Ryan Fitzpatrick, a policy adviser at Third Way, a centrist Democratic think tank, said Shuster, 52, the former owner of a Chrysler store, seems to be the favorite. "His already being a subcommittee chair puts him in line for that next move up in seniority," said Fitzpatrick, who previously had handled transportation issues for a Democratic congressman on the committee. "That's how they usually count it."
Meanwhile, one of the few Republicans likely to lose a seat is Rep. Mary Bono Mack, chairman of a House subcommittee that oversees auto safety. She delayed conceding the election, but her loss would open up a leadership spot on the House Energy and Commerce Committee's commerce subcommittee, perhaps for Bono Mack's second-in-command on the panel, Rep. Marsha Blackburn, R-Tenn.
Bono Mack, 51, is the widow of entertainer Sonny Bono. She took over his Palm Springs, Calif., seat when Bono died while in office in 1998. She recently championed a bill to lift NHTSA rules that require dealers to offer buyers booklets on insurance costs, even though they're rarely requested and often contain out-of-date information. It passed the House this summer but has yet to pass the Senate.
• What to do about the stock in General Motors. Four years after the bailout, the U.S. Treasury still owns 500 million shares of GM, roughly a one-third stake. GM is itching to buy back those shares, and the Treasury may start to sell them soon.
• Whether to issue new auto safety mandates. This year the White House pressed pause on a NHTSA rule that would require backup cameras in new cars by 2014. It would cost more, but officials may decide to tell automakers it's required for the sake of children's safety.
• How to treat dealerships under banking laws. The Consumer Financial Protection Bureau has started to investigate auto lending in search of predatory practices. These probes could have major implications for banks that do indirect retail financing through dealerships.
• Whether to set tougher air pollution limits. Automakers want to design cars to a single standard around the country, so they're asking the EPA for tailpipe rules that match California's standards. It hasn't happened, but the agency may opt to do political battle with refiners and order cleaner gasoline.
• How to handle trade with Asia. Last year the U.S. finished a trade pact with Korea, and it's in talks on a regional pact called the Trans-Pacific Partnership. That has the U.S. auto industry concerned because governments are so closely tied to automakers in nations such as Japan.
You can reach Gabe Nelson at firstname.lastname@example.org.