President: Improve Competitiveness and Alternate Energy Strategies

WASHINGTON (Jan. 31, 2006) - In his fifth State of the Union address, President Bush touched on several issues that could impact the automotive industry. But which of them, if any, comes to fruition remains up in the air.

Striving to be competitive in the global economy, including the automobile industry, was one area of emphasis. Amidst a domestic climate that includes pension and health care legacy concerns and offshore producers and product counterfeiting allegations, President Bush maintained that calls for protectionist tariffs would be damaging to the U.S. economy.

America must remain competitive he stressed: "Protectionists want to escape competition, pretending that we can keep our high standard of living while walling off our economy. Others say that the government needs to take a larger role in directing the economy, centralizing more power in Washington and increasing taxes ... All these are forms of economic retreat, and they lead in the same direction - toward a stagnant and second-rate economy."

President Bush pushed for improvements to health care plans, especially Health Savings Accounts. "We will strengthen Health Savings Accounts - by making sure individuals and small business employees can buy insurance with the same advantages that people working for big businesses now get," he told the audience.

Remaining competitive in the years ahead will require a commitment to education, said the president: "Our greatest advantage in the world has always been our educated, hard-working, ambitious people - and we are going to keep that edge." He then introduced the American Competitiveness Initiative, to encourage innovation throughout our economy and to give the nation's children a firm grounding in math and science going forward.

Ongoing federal support for reducing dependency on foreign oil by developing alternative fuels must continue, President Bush asserted. "We must also change how we power our automobiles. We will increase our research in better batteries for hybrid and electric cars, and in pollution-free cars that run on hydrogen. We will also fund additional research in cutting-edge methods of producing ethanol, not just from corn but from wood chips, stalks or switch grass. Our goal is to make this new kind of ethanol practical and competitive within six years." Bush added, "Breakthroughs on this and other new technologies will help us reach another great goal: to replace more than 75 percent of our oil imports from the Middle East by 2025."

President Bush also introduced his new Advanced Energy Initiative, which will enable the U.S. Department of Energy to increase clean energy research funding by more than 20 percent. He noted, "Since 2001, we have spent nearly $10 billion to develop cleaner, cheaper, more reliable alternative energy sources - and we are on the threshold of incredible advances." 

In the days ahead, Congress will deliberate the President's recommendations. Which of them will be implemented in full or in part, if at all, is unclear. 

Other political issues loom, too. Sourcing money to fund programs and new initiatives will be difficult without either increasing the deficit or raising taxes - neither of which is palatable heading into an election year. Thus, making the leap from a president's impassioned rhetoric to actions by a cash-strapped Congress will be a daunting challenge.

(Source: White House)