Speech- Detroit Economic Club May 7 2007

Remarks of Senator Barack Obama, Detroit Economic Club May 07, 2007

America is a country that hasn't come easily. In our brief history, we have been tested by revolution and slavery, war and depression, and great movements for social, civil, and equal rights.

We have emerged from each challenge stronger, more prosperous, and ever closer to the ideals of liberty and opportunity that lay at the heart of the American experiment.

And yet, the price of our progress has always been borne by the struggle and sacrifice of our people - by leaders who have asked ordinary Americans to do extraordinary things; and by generations of men and women who've had the courage to answer that call.

It was the greatest of all generations that took up this charge in the days after the attack on Pearl Harbor. Almost overnight, they were asked to transform a peacetime economy that was still climbing out from the depths of depression into an Arsenal of Democracy that could wage war across three continents. If you weren't heading overseas, you were heading into the factories - factories that had to be immediately retooled and reorganized to produce the world's greatest fighting machine.

Many doubted whether this could be achieved in time, or even at all. President Franklin Roosevelt's own advisors told him that his goals for wartime production were unrealistic and impossible to meet. But the President simply waved them off, saying, believe me, "the production people can do it if they really try."

And so the nation turned here, to Detroit, with the hope that the Motor City could lead the way in using its assembly lines to mass produce arms instead of automobiles. At first, the industry was skeptical about whether this was technologically possible or even profitable in the long run. But after repeated assurances from Roosevelt and some help from the federal government, the arsenal began to churn.

In an astonishingly short period of time, the auto industry and its workers became one of the nation's most important contributors to the war effort, manufacturing more planes, tanks, bombs and weapons than the world had ever seen. The New York Times declared that the automakers had achieved a "production miracle," and it labeled Detroit "the Miraculous City."

It was a miracle that was distinctly American - the idea that in the face of impossible odds, people who love their country can rise to meet its greatest challenges.

It's the kind of American miracle we need today.

At the dawn of the twenty-first century, the country that faced down the tyranny of fascism and communism is now called to challenge the tyranny of oil. For the very resource that has fueled our way of life over the last hundred years now threatens to destroy it if our generation does not act now and act boldly.

We know what the dangers are here. We know that our oil addiction is jeopardizing our national security - that we fuel our energy needs by sending $800 million a day to countries that include some of the most despotic, volatile regimes in the world. We know that oil money funds everything from the madrassas that plant the seeds of terror in young minds to the Sunni insurgents that attack our troops in Iraq. It corrupts budding democracies, and gives dictators from Venezuela to Iran the power to freely defy and threaten the international community. It even presents a target for Osama bin Laden, who has told al Qaeda to, "focus your operations on oil, especially in Iraq and the Gulf area, since this will cause [the Americans] to die off on their own."

We know that our oil dependency is jeopardizing our planet as well - that the fossil fuels we burn are setting off a chain of dangerous weather patterns that could condemn future generations to global catastrophe. We see the effects of global climate change in our communities and around the world in record drought, famine, and forest fires. Hurricanes and typhoons are growing in intensity, and rapidly melting ice sheets in Antarctica and Greenland could raise global sea levels high enough to swallow up large portions of every coastal city and town.

And this city knows better than any what our oil addiction is doing to our economy. We are held hostage to the spot oil market - forced to watch our fortunes rise and fall with the changing price of every barrel. Gas prices have risen to record levels, and could hit $4 a gallon in some cities this summer. Here in Detroit, three giants of American industry are hemorrhaging jobs and profits as foreign competitors answer the rising global demand for fuel-efficient cars.

America simply cannot continue on this path. The need to drastically change our energy policy is no longer a debatable proposition. It is not a question of whether, but how; not a question of if, but when. For the sake of our security, our economy, our jobs and our planet, the age of oil must end in our time.

This is a challenge that has not been solved for a lack of talking. Every single President since Richard Nixon has spoken in soaring rhetoric about the need to reduce America's energy dependence, and many have offered plans and policies to do so.

And yet, every year, that dependence keeps on growing. Good ideas are crushed under the weight of typical Washington politics. Politicians are afraid to ask the oil and auto industries to do their part, and those industries hire armies of lobbyists to make sure it stays that way. Autoworkers, understandably fearful of losing jobs, and wise to the tendency of having to pay the price of management's mistakes, join in the resistance to change. The rest of us whip ourselves into a frenzy whenever gas prices skyrocket or a crisis like Katrina takes oil off the market, but once the headlines recede, so does our motivation to act.

There's a reason for this.

A clean, secure energy future will take another American miracle. It will require a historic effort on the scale of what we saw in those factories during World War II. It will require tough choices by our government, sacrifice from our businesses, innovation from our brightest minds, and the sustained commitment of the American people.

It will also take leadership willing to turn the page on the can't-do, won't-do, won't-even try politics of the past. Leadership willing to face down the doubters and the cynics and simply say, "Believe me, we can do it if we really try."

I will be that kind of President - a President who believes again in America that can. A President who believes that when it comes to energy, the challenge may be great and the road may be long, but the time to act is now; who knows that we have the technology, we have the resources, and we are at a rare moment of growing consensus among Democrats and Republicans, unions and CEOs, evangelical Christians and military experts who understand that this must be our generation's next great task.

A comprehensive energy plan will require bold action on many fronts. To fully combat global climate change, we'll need a stringent cap on all carbon emissions and the creation of a global market that would make the development of low-carbon technologies profitable and create thousands of new jobs. We'll also need to find a way to use coal - America's most abundant fossil fuel - without adding harmful greenhouse gases to the environment.

I have already endorsed a cap-and-trade system that would achieve real near-term reductions in greenhouse gas emissions and return America to a position of leadership so that we can secure an effective and equitable global solution to this crisis. It would invest substantial revenue generated by auctioning off emissions credits into the development of carbon sequestration, advanced biofuels, and energy efficiency.

We'll also need new ideas on energy efficiency and the ability to harness renewable sources of energy, because there is absolutely no reason we shouldn't be able to get at least 20% of our energy from clean and renewable sources by 2020.

I will be laying out more detailed proposals on each of these areas in the months to come. But here in Detroit, I want to focus on a few proposals that would drastically reduce our oil dependence and our carbon emissions by focusing on two of their major causes - the cars we drive and the fuels we use. By 2020, these proposals would save us 2.5 million barrels of oil per day - the equivalent of ending all oil imports from the Middle East and removing 50 million cars' worth of pollution off the road.

It starts with our cars - because if we truly hope to end the tyranny of oil, the nation must once again turn to Detroit for another great transformation.

I know these are difficult times for automakers, and I know that not all of the industry's problems are of its own making.

But we have to be honest about how we arrived at this point.

For years, while foreign competitors were investing in more fuel-efficient technology for their vehicles, American automakers were spending their time investing in bigger, faster cars. And whenever an attempt was made to raise our fuel efficiency standards, the auto companies would lobby furiously against it, spending millions to prevent the very reform that could've saved their industry. Even as they've shed thousands of jobs and billions in profits over the last few years, they've continued to reward failure with lucrative bonuses for CEOs.

The consequences of these choices are now clear. While our fuel standards haven't moved from 27.5 miles per gallon in two decades, both China and Japan have surpassed us, with Japanese cars now getting an average of 45 miles to the gallon. And as the global demand for fuel-efficient and hybrid cars have skyrocketed, it's foreign competitors who are filling the orders. Just the other week, we learned that for the first time since 1931, Toyota has surpassed General Motors as the world's best-selling automaker.

At the dawn of the Internet Age, it was famously said that there are two kinds of businesses - those that use email and those that will. Today, there are two kinds of car companies - those that mass produce fuel-efficient cars and those that will.

The American auto industry can no longer afford to be one of those that will. What's more, America can't afford it. When the auto industry accounts for one in ten American jobs, we all have a stake in saving those jobs. When our economy, our security, and the safety of our planet depend on our ability to make cleaner, more fuel-efficient cars, every American has a responsibility to make sure that happens.

Automakers still refuse to make the transition to fuel-efficient production because they say it's too expensive at a time when they're losing profits and struggling under the weight of massive health care costs.

This time, they're actually right. The auto industry's refusal to act for so long has left it mired in a predicament for which there is no easy way out.

But expensive is no longer an excuse for inaction. The auto industry is on a path that is unacceptable and unsustainable - for their business, for their workers, and for America. And America must take action to make it right.

That's why my first proposal will require automakers to meet higher fuel standards and produce more fuel-efficient cars while providing them the flexibility and assistance to do it.

This is a proposal that's already brought together Republicans and Democrats, those who've long-advocated increases in our fuel standards, and those who have opposed those increases for years. It enjoys the support of corporate leaders like Fred Smith of Federal Express who understand that our economy is at risk if we fail to act and military leaders like General P.X. Kelley who know all to well the human cost of our nation's addiction to oil.

It's a proposal that answers the concerns that many have previously had with raising fuel standards - that it's too expensive, or unsafe, or not achievable. And it's an approach that asks our government, our businesses, and our people to invest in a secure energy future - that recognizes we can make great cars and protect American jobs if we transform the auto industry so that our autoworkers can compete with world once more.

It begins by gradually raising our fuel economy standards by four percent - approximately one mile per gallon - each year. The National Academy of Sciences has already determined that we can begin to achieve this rate of improvement today, using existing technology and without changing a vehicle's weight or performance. And so the only way that automakers can avoid meeting this goal is if the National Highway Traffic and Safety Administration can prove that the increase is not safe, not cost-effective, or not technologically possible.

This proposal provides additional flexibility to manufacturers as well. Currently, domestic automakers are disadvantaged by the requirement that their fleets have to meet the same overall fuel standard as foreign manufacturers even though U.S. companies sell a much broader array of vehicles. My approach would establish different fuel standards for different types of cars. This reform will level the playing field by requiring all car makers to achieve a similar rate of progress regardless of their vehicle mix. It will also allow manufacturers to get credit if they increase the fuel-efficiency in one particular car beyond what the fuel economy standards require.

We also know that, absent some assistance, the significant costs associated with retooling parts and assembly plants could be prohibitive for companies that are already struggling and shedding workers. Our goal is not to destroy the industry, but to help bring it into the 21st century. So if the auto industry is prepared to step up to its responsibilities, we should be prepared to help.

That's why my proposal would provide generous tax incentives to help automakers upgrade their existing plants in order to accommodate the demands of producing more fuel-efficient vehicles.

This approach would also strike a bargain with the auto industry on one of the biggest costs they face. We've heard for years that the spiraling cost of health care for retired autoworkers constrains manufacturers from investing in more fuel-efficient technology. We all know the statistic - health care costs currently account for $1,500 of every GM Car. So here's the deal. We'll help to partially defray those health care costs, but only if the manufacturers are willing to invest the savings right back into the production of more fuel-efficient cars and trucks.

Finally, we should make it easier for the American people to buy more fuel-efficient cars by providing more tax credits to more consumers for the purchase of hybrid and ultra-efficient vehicles. But we should also realize that the more choices we have as consumers, the more responsibility we have to buy these cars - to realize that a few hundred extra dollars for a hybrid is the price we pay as citizens committed to a cause bigger than ourselves.

For too long, we've been either too afraid to ask our automakers to meet higher fuel standards or unwilling to help them do it. But the truth is, if we hope for another miracle out of Detroit, we have to do both. We must demand that they revamp their production, we must assist that transition, and we must make the choice to buy these cars when we have the option. All of us have a responsibility here, and all of us are required to act.

Now it's not enough to only build cars that use less oil - we also have to start moving away from that dirty, dwindling fossil fuel altogether. That's why my second proposal will create a market for clean-burning, home-grown biofuels like ethanol that can replace the oil we use and begin to slow the damage caused by global climate change.

The potential for biofuels in this country is vast. Farmers who grow them know that. Entrepreneurs and fueling station owners who want to sell them know that. Scientists and environmentalists who study the atmosphere know it too.

It's time we produced, sold, and used biofuels all across America - it's time we made them as commonly available as gasoline is now.

I've already done some of this work in the U.S. Senate by helping to provide tax credits to those who want to sell a mix of ethanol and gasoline known as E85 at their fueling stations. And since it only costs $100 per vehicle to install a flexible-fuel tank that can run on biofuels, I've also proposed that we help pay for this transition.

Government should lead the way here. I showed up at this event in a government vehicle that does not have a flexible-fuel tank. When I'm President, I will make sure that every vehicle purchased by the federal government does.

Of course, to truly overcome the lack of a biofuel infrastructure in this country, we need to create a market for the production of more biofuels.

Like the auto industry, the oil industry has generally been resistant to making the transition from petroleum to biofuels - with some even trying to block the installation of E85 pumps at fueling stations.

To overcome this resistance and create this infrastructure, I've introduced a proposal known as a National Low-Carbon Fuel Standard, based on the one introduced by Governor Arnold Schwarzenegger in California just a few months ago. Like raising our fuel-efficiency standards, this approach simultaneously reduces our dependence on oil and reduces greenhouse gas emissions.

The idea behind the standard is simple.

Beginning in 2010, we will require petroleum makers to reduce the carbon content of their fuel mix one percent per year by selling more clean, alternative fuels in its place. This proposal will spur greater production and availability of renewable fuels like cellulosic ethanol and biodiesel, and it will even create an incentive for the production of more flexible-fuel and plug-in hybrid vehicles that can use these clean fuels or charge up with renewable electricity. This approach will also allow the market, not the government, to determine which fuels are used by fuel distributors to meet the standard. It's gradual, so it gives these companies time to meet the requirements. And if you're a fuel producer that's having trouble meeting the standard, it allows you to pay for a credit from a company that is.

The low-carbon fuel standard also provides a greater incentive for private sector investment in the cleanest biofuels possible. Corn-based ethanol has led the way here, and now we need to expand the universe of biofuels to include cellulosic ethanol made from switchgrass or forest waste that can reduce our carbon footprint even further.

In the end, the two major proposals I outlined today - higher fuel-efficiency standards and a National Low-Carbon Fuel Standard - will not end our oil dependence entirely.

But the transformation of the cars we drive and the fuels we use would be the most ambitious energy project in decades, with results that would last for generations to come: 2.5 million fewer barrels of oil per day; 50 million cars' worth of pollution off the road by 2020. The direct consumer savings at the pump in that year would be over $50 billion, not to mention the great economic benefits of a rejuvenated and fiercely competitive domestic auto industry.

Some will say that the goals are too large; that the ask is too great; and that the political reality is too difficult for this to work.

To that I'd say that we've heard it all before, and we still believe we can do it if we really try. Because that's who we are as Americans. Because that's who we've always been.

In the days and months after September 11th, Americans were waiting to be called to something larger than themselves. Just like their parents and grandparents of the Greatest Generation, so many of us were willing to serve and defend our country - not only on the fields of war, but on the homefront too.

This is our generation's chance to answer that call. Meeting the challenge posed by our oil dependence won't require us to build the massive war machine that Franklin Roosevelt called for so many years ago, but it will require the same sense of shared sacrifice and responsibility from all of us - not just the auto industry and its workers here in Detroit, but oil companies in Texas, power plants from New Jersey to California, legislators in Washington, and consumers in every American city and town. It's time for all of us to head back into the factories and universities; to the boardrooms and the halls of Congress so we can roll up our sleeves and find a way to get this done. I am ready and willing to lead us there as your next President, and I hope you are willing to join me in the journey toward that next great American miracle.

Thank you.

Questions and answers
For the beginning of Q&A, see part 4.