May 05, 2006
Friday AM

MEMO TO: Senate/House Republicans, progressive Democrats and all advocates of market-based solutions and tax-cutting incentives for patriotic corporation and consumer action.

SUBJECT: A quick fix to continue America's quest for energy independence.

For decades, you spoke out against government regulations and said you wanted in the worst way to enact tax incentives as market-based solutions for reducing America's perilous dependence on oil imports.

Mission accomplished! In the 2005 Energy Policy Act, you found a perfect market-based, tax-cutting incentive solution - a tax credit for hybrid car purchasers that every conservative ideologue could love. Then you wrote it into law in the worst way - tacking on a mind-boggling cut-off clause that only a Washington lobbyist could love.

Now, with gas prices and oil company profits both soaring - and with the public demanding action from a government that sat by and let it happen - there is one urgent thing that you can and must do: Undo the mistake you made last year.

Your original tax-credit provision is something conservatives, progressives and liberals should love, including those who now drive guzzlers, but want to buy hybrid gas-saving cars, and those who hope others will. Also, those who are concerned about global warming and clean air should like it since the best of the full-hybrids emit little or no pollutants.

The 2005 energy act contains a provision granting a tax credit of as much as $3,400 to consumers who purchase the most fuel-efficient hybrid engine cars. The amount of the tax credit varies with the mileage and emissions of the car purchased. For example, the Toyota Prius - the trend-setting five passenger automobile that comes close to cutting in half the amount of gasoline consumed - is among those cars that merit the $3,400 tax credit. A number of other cars now being built with full-hybrid technology will merit large tax credits as well.

Full hybrids can run on only their electric engines at low speeds, such as in rush hour, as a computer turns the gas engine off automatically. Other full hybrid cars include: Honda's 2006 Civic, which for the first time is also classified as a full-hybrid; Toyota's 2006 Camry mid-sized sedan; Ford's small SUV Escape, and Mercury's Mariner.

So-called mild-hybrids, which use their electronic motor to assist the gasoline motor (both motors run simultaneously), will generally get lower mileage and lower tax credits.

What you need to remember here is that Toyota's visionary executives saw the urgent need to build fuel-efficient cars long ago and invested significantly in developing hybrid technology. Honda's execs followed suit. But America's myopic Big Three saw no need and figured you won't want one anyway. General Motors, Chrysler and Ford execs stayed in cruise control at a time when America's leaders were finally figuring out it was a national security imperative to cut consumption and thus reduce U.S. dependency on foreign oil. The inaction by U.S. automakers was not just shortsighted businesswise, but it put them on the wrong side of patriotism.

Fast-forward to 2005. When the Congress was drafting tax credits to encourage consumers to buy hybrid gas-saving cars, the U.S. Big Three and other automakers suddenly realized Toyota purchasers would get more of these credits because of Toyota's early lead in hybrids. As do all special interests, the U.S. auto manufacturers have been covering their assets by investing for years in the re-election campaigns of members of the Senate and House. Now, the car lobbyists also had some legislative language to suggest.

That's how the Congress, in its non-wisdom, tacked on what can be called the anti-Toyota-boondoggle provision. It said that once a car company sells 60,000 hybrid cars, its purchasers would no longer get those lucrative tax credits. In just one year, the tax credits will be phased down to zero. Thus, after Toyota reaches its quota, a person buying a Toyota Prius one year later will get no tax credit, while a person buying a hybrid car that may get lower mileage may still get a tax credit of a couple of thousand dollars. Toyota will likely lose a buyer that it earned the right to have, according to all that is great about capitalism.

This is mindless thinkology that stands conservative ideology on its ear. At the very moment that the market-based incentive is working wonderfully, it is to be scrapped. Perhaps angry prospective car buyers may turn away from the hybrids and back to the guzzlers. That will hurt America's effort to cut consumption of foreign oil - a quest that has become a national security imperative.

That is why the Republicans who control the Senate and House must move now to fix what the screwed up. Make the hybrid tax credits permanent.

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