Today’s WTF? Auto Makers to Be Punished by the DoJ

The WTFs actually are coming along a lot faster than one a day, but I don’t have time to comment on them all. Here’s a relatively small and manageable one:

The Justice Department (DOJ) has opened an antitrust inquiry into 4 major automakers who recently struck a deal with California to boost emissions standards for their nationwide fleets, The Wall Street Journal reports.

Why it matters: The report, if correct, signals the opening of a new and high-stakes front in the fight between California and the White House over vehicle emissions and mileage rules.

Where it stands: The WSJ reports that DOJ is seeking to determine if Ford, VW, Honda and BMW “violated federal competition law by agreeing with each other to follow tailpipe-emissions standards beyond those proposed by the Trump administration.”

The story cites anonymous sources familiar with the matter. DOJ declined to comment.

The big picture: The reported probe comes as the Trump administration is preparing to freeze Obama-era carbon emissions and mileage standards, rather than allowing them to grow significantly stronger through the mid-2020s.

You know the automakers are not voluntarily agreeing to carbon emissions standards out of the goodness of their hearts. They are agreeing to carbon emissions standards because they are not complete morons and they know they’re going to have to lower emissions eventually, Trump or no Trump. Presidents come and go; reality has a tendency to stick around, even when you try to ignore it. Paul Krugman:

Business leaders aren’t do-gooders, but they are realists. Most of them understand that climate change is happening, that it’s dangerous, and that we’ll eventually have to transition to a low-emissions economy. They want to spend now to secure their place in that future economy; they know that investments that worsen climate change are bound to be long-run losers. But they’ll hold off on investing in our energy future as long as conspiracy theorists who consider global warming a gigantic hoax — and/or vindictive politicians determined to erase Obama’s achievements — keep rewriting the rules.

By all accounts Trump is furious that the automakers aren’t lining up to genuflect to him in gratitude. I believe he ordered Barr to punish them, somehow.

Trump doesn’t actually understand building a sustanable business, especially manufacturing. He understands exploitation and grifting, which according to Krugman is the only part of the economy that is doing well under his stewardship.

To be fair, however, some kinds of business do thrive under Trumpism — namely, businesses that aren’t in it for the long run, operations whose strategy is to take the money and run. These are good times for mining companies that rush in to extract whatever they can, leaving a poisoned landscape behind; for real estate speculators sponsoring dubious ventures that take advantage of newly created tax loopholes; for for-profit colleges that leave their students with worthless degrees and crippling debt.

In other words, under Trump it’s springtime for grifters.

Grifting is all that Trump understands. He may not comprehend that most businesses can’t operate that way, at least if they want to remain in business for many years.

Trump promised to bring back manufacturing jobs, and instead the manufacturing section is shrinking.

In December 2018, American manufacturing was ending a more than two-year tear, cheered along the way by its most prominent patron, President Trump. …

…But this year, manufacturing has turned south and entered what Federal Reserve data show is a technical recession, or six-month slump. It seems unlikely to recover in the near future: A major survey of U.S. manufacturing purchasing managers found a negative outlook, and the other is just a whisker away from going negative for the first time since 2009.

The article linked above on manufacturing is worth reading. In brief, it analyzes the several factors that impact the manufacturing sector and explains why the things Trump has done to bring back manufacturing jobs either resulted in a brief bump that quickly dissipated; had no effect either way; or made things worse. And, of course, there are many factors out of Trump’s control.  And the bottom line is that Trump doesn’t appear to grasp any of this. The article argues that he’s an industrial-age president in a post-industrial world.

Trump’s 19th-century mindset may have a lot to do with why hardly a week goes by without news of some bit of protected federal land being opened up to mining or logging or (especially) extraction of fossil fuels. Trump must think this is the way economies grow. See A Timeline of Donald Trump’s War on Public Lands. See also Trump is trying to unload America’s public lands to oil companies before the election:

…officials in the Trump administration, some of whom came straight out of the industries from which they are supposed to be protecting the environment, have been rushing to auction off leases — no doubt with an eye to the election calendar and the current president’s poll numbers. If there’s any good news to be found in the speeded-up process, it’s that in their haste the paperwork has reportedly been so badly botched that legal challenges will likely succeed.

In pushing to open ANWR to drilling, the Trump administration estimated two years ago that it would earn the federal government $1.8 billion in lease sales by 2027. The Congressional Budget Office said a few months later that it would be more like $1.1 billion; it has since reduced its estimate to $900 million. But a recent New York Times analysis put the likely federal revenue at $45 million, and the Taxpayers for Common Sense group put it even lower — about $20 million. Regardless of which of the numbers is correct, it’s a relatively paltry sum in return for significant risk of irreversible damage to a remote region that is crucial to so many species.

Further, humankind must move away from relying on oil and other fossil fuels for energy. Expanding the amount of public lands that can be leased for oil production is against the nation’s long-term interests. The U.S. already is the world’s largest producer of oil; adding new oil from Alaska is not necessary for the economy and will just make it harder to achieve the reductions of carbon emissions that are required to keep from cooking the planet.

Take the money and run — that’s all Trump understands. There’s a resource just sitting there that’s worth some money, so let’s get it and sell it, even if demand for the resource is soft and the long-term consequences of taking it are huge.

But let us go back to AG Barr and his antitrust probe into automakers. This is in the NY Times:

In a clear signal that the administration intends to press the matter aggressively, top lawyers from the Environmental Protection Agency and the Transportation Department on Friday sent a letter of rebuke to Mary Nichols, California’s top clean air official. “The purpose of this letter is to put California on notice” that its deal with automakers “appears to be inconsistent with federal law,” the letter read. …

Legal experts and people close to the Trump administration said the investigation was meant as a show of force to companies that have displeased the president.

That’s what this whole mess is about. Trump is displeased. He tried to do the automakers a favor, and they didn’t appreciate it. So they must be punished.

Critics of the antitrust probe argue that this is a deal between the state of California and four automakers, meaning it’s a state and not a federal case. And there is no way that Bill Barr can argue the Department of Justice is trying to protect consumers.

 

7 thoughts on “Today’s WTF? Auto Makers to Be Punished by the DoJ

  1. Where's Trump gonna be when everyone he's threatened rallies to punish Trump. Ireland (to reference the previous post) can set up any rules and regulations of Trump's golf course that amuses them. If Trump becomes VERY unpopular with Irish voters (and it looks like he's there) defending Trump's property rights might be a dangerous position for an Irish politician.

    Regarding automakers – they can contribute to super-PACs in any amount they like. ANY amount. If Trump opens up anti-trust actions because they worked in concert to all be cleaner, I don't see ANY chance Trump's litigation will prevail. 

    Nazi Germany was powerful enough to beat anybody, but they couldn't beat everybody. That's the Trump flaw – he's making too many enemies simultaneously in the US and internationally. This could get very ugly in the next year if/when the world perceives Trump is vulnerable and his enemies pile on for the joy of being part of the pack tearing Trump apart. 

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  2. Krugman nailed it with his line about Trump University foisted as the American business ideal.  He was so right suggesting this is not the kind of businesses we need.  Like the Ponzi scheme, the primary if not the only benefit is to the con man.  Ah, a primary tenet of Trumpism:  Give no man or woman a fair deal.  

    The Poniewozik article got my attention, and gives plausible cause for much.  TVrump, is jealous of hurricane Dorian for stealing the limelight.  

    If you want to understand what President Trump will do in any situation, then, it’s more helpful to ask: What would TV do? What does TV want?

    Right now he feels neglected, with Dorian and it's victims getting all the press and all the air time.  TVrump, knows what TV wants as Poniewoozik continues:

    It wants conflict. It wants excitement. If there is something that can blow up, it should blow up. It wants a fight. It wants more. It is always eating and never full.

    So he is working everything from Alabama to petty feuds.  Why not pick a fight with those California environmentalists and throw in auto makers to boot.   His real fight is with Dorian, but they won't let him nuke it.  Nuking a hurricane would get him airtime.  Dorian makes him look bad with his climate change denialism too.  That too is a sacred cow of Trumpism.  But the  highest dogma of Trumpism might just  be : Thou Shalt Not Haveth Lead News Storied About Anyone but Me. That Dorian, to him,  is just an attention hog.   Green with envy is therefore the  primitive brain stem response. Besides, it also goes with his goal of being the poster child for all of the deadly sins. 

    https://www.nytimes.com/2019/09/06/opinion/sunday/trump-reality-tv.html?action=click&module=Opinion&pgtype=Homepage

  3. Those leases? I hope an early action of the next President is to cancel them all, and mete our penalties on any companies that chose to loosen their environmental controls during the Trump years.

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  4. Dodge took Ford to court because he was paying higher wages. Ford won because he argued it was to increase his sales. The world has higher standards for autos than this administration. If US automakers want to maintain sales worldwide, it knows they have to build vehicles to meet those standards. It doesn't make financial sense to build two different levels of vehicles. If the the courts decide to take the case they will need to decide whose profits are of more importance: Oil or the auto industry?

  5. The long drive of automotive development has been toward more efficiency. Emissions are only part of the reason. A smaller, more efficient drive train means fewer materials purchased and a higher profit margin. Modern internal combustion engines are around 40% efficient at best while electric motors used in vehicles are over 90%. But possibly I miss the point and Mad King Donald is defending ignorance for its own sake, along with his principles of greed and scams:

    https://www.forbes.com/sites/jamesellsmoor/2019/06/15/united-states-spend-ten-times-more-on-fossil-fuel-subsidies-than-education/

    Anecdotally, I attended a family function in northwest Indiana a month ago. One attendee lives in California and drove his Tesla there. According to him an all-electric car can now be easily driven more than half way across the country. Eventually the technology will be more affordable.

     

  6. Toad Barr trying to intimidate again.not surprising.

    Is big $ seeing this as their last chance to rape the earth? 

    I see steyer on tv. I don't trust any of these self promoters. Where were they in 2000? Making money off of fossil fuels. Gore should've won. And the last thing we need is a Nader or Stein to siphon just enough votes away again. It is too late now. Ice is melting and forest burning and storms cat 5s.

  7. As I understand it, from my totally layman perspective, anti-trust means collusion on price and availability to goose the market to achieve a financial benefit for the business entities involved.  While technology to meet emission standards likely will mean cars use less gas, impacting the beloved oil industry, the price of cars will increase, at least initially, to pay for the new technology.  And there is the argument that this is but one thing that needs to be done to save the environment which Trump believes is a "hoax" perpetrated by the Chinese.  Which makes it even more interesting what "contribution" EPA lawyers will make in this case.

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