GM chief pushing for higher gas taxes
Detroit — General Motors Co. CEO Dan Akerson wants the federal gas tax boosted as much as $1 a gallon to nudge consumers toward more fuel-efficient cars, and he’s confident the government will soon shed its remaining 26 percent stake in the once-bankrupt automaker.
“I actually think the government will be out this year — within the next 12 months, hopefully within the next six months,” Akerson said in a two-hour interview with The Detroit News last week.
He is grateful for the government’s rescue of GM — “I have nothing but good things to say about them” — but Akerson said the time for that relationship to end is coming because it’s wearing on GM.
“It’s kind of like your in-laws: It was a nice long weekend. We didn’t say a week,” Akerson said with a laugh.
And while he is eager to say goodbye to the government as a part owner of GM, Akerson would like to see it step up to the challenge of setting a higher gas tax, as part of a comprehensive energy policy.
A government-imposed tax hike, Akerson believes, will prompt more people to buy small cars and do more good for the environment than forcing automakers to comply with higher gas-mileage standards.
“There ought to be a discussion on the cost versus the benefits,” he said. “What we are going to do is tax production here, and that will cost us jobs.”
For the years 2017-25, federal officials are considering 3 percent to 6 percent annual fuel efficiency increases, or 47 mpg to 62 mpg. That could boost the cost of vehicles by up to $3,500.
“You know what I’d rather have them do — this will make my Republican friends puke — as gas is going to go down here now, we ought to just slap a 50-cent or a dollar tax on a gallon of gas,” Akerson said.
“People will start buying more Cruzes and they will start buying less Suburbans.”
With gas already over $4 a gallon in parts of the country, a higher gas tax is a hard sell.
Rebecca Lindland, an analyst with IHS Global Insight, said higher gas taxes in Europe did lead consumers to buy more fuel-efficient cars.
But she acknowledged that’s virtually impossible to see in the United States.
“It’s career suicide for a politician to call for raising gas taxes,” Lindland said.
Akerson isn’t the first auto exec to float the idea of a gas tax to encourage consumers to buy fuel-efficient vehicles. Ford Chairman Bill Ford Jr. has previously advocated a gas tax increase.
On Monday, a Ford spokeswoman said the company “will leave the policy decision to Congress”; in 2009, GM CEO Rick Wagoner called a higher gas tax “worthy of consideration.”
Stock boost sought
Akerson believes the Treasury’s continued ownership stake in GM — 500 million shares — is dragging down its stock price, which has fallen 23 percent this year, and closed Monday at $28.56. That’s well below the $33-per-share it fetched in November’s $23 billion initial public stock offering.
“I think that it is an overhang — to have 500 million shares sitting out there — it’s a problem,” Akerson said, adding that unrest in the Middle East and oil prices also are depressing GM’s share price. “They don’t know when (the Treasury is) going to come out. Investors hate uncertainty.”
David Whiston, an auto analyst at Morningstar, agrees that government ownership is impacting investors’ interest in GM.
“There are a lot of money managers that are waiting for the government to exit before jumping in,” Whiston said.
The Treasury, which rescued GM with a $49.5 billion bailout and once held a 61 percent majority stake, “will likely look at another (stock) sale in August, after second-quarter earnings are announced, Akerson said.
The Obama administration has made clear it is eager to exit GM — but hasn’t laid out a precise timetable.
Asked if GM is considering buying back its stock, Akerson paused for eight seconds before declining to answer directly. “But we have a lot of cash,” he added.
At the current stock price, U.S. taxpayers would be out more than $12 billion on GM’s bailout. Still, Akerson believes that, in the end, taxpayers will see the government made the right call in saving the automaker, as well as crosstown rival Chrysler.
“We are in the midst of transforming an iconic American company so 20 and 30 years from now (taxpayers) will look at this company and they’ll say, ‘Absolutely it was the right thing to do,'” Akerson said. “And it shouldn’t be measured on did it sell for $43 or $53 (a share) or did they lose a couple billion dollars?”
GM was saved, he said, because of the extreme generosity of Americans — a spirit that helped restore Europe and Japan after World War II and rebuild cities such as New Orleans after natural disasters.
“We’re the most generous country, even in terrible times,” Akerson said. “We don’t walk to the disaster as a nation. … We can’t wait to help.”
Things are looking up for GM’s image, he said. Pollster Peter Hart, conducting research for GM, found 16 percent had a positive view of GM before the bailout. But that had risen to 65 percent early this year, Akerson said.
“I couldn’t believe the press we got on the IPO — it was like a $100 million gift,” Akerson said.
GM’s rebound, he believes, was a “proxy” for the U.S.
“OK, we took the blow as a nation, we weathered the worst, and my God, we’re back,” Akerson said. “It’s why I came here. It was a story of underdog that tripped as we all have in our lives — it was a good feel-good story.”
Call for tax hikes
In his interview with The News, Akerson also weighed in on the nation’s debt ceiling, saying Congress should raise it from its current $14.3 trillion mark. The government could default on its debt on Aug. 2.
“We’re too good a nation to let ourselves be a banana republic,” Akerson said, warning that a default would be “unimaginable” and could hurt auto sales.
But he agrees with those who say the country has been spending money it can’t afford.
“Now, we need practical decisions,” Akerson said. “I think you need to cut the hell out of the budget and you’ve got to increase taxes … on everybody — including the middle class and the rich people.”
Akerson, who describes himself as “a Colin Powell Republican — not a Sarah Palin Republican” — said President Barack Obama has “done a pretty good job on the economy,” which, he said, was “a nightmare.
“I don’t think he can fix it in four years and I think we just have to stay the course,” he said.
Despite his Republican stripes, Akerson is frustrated with the political climate and the media.
He was invited to appear on CBS’ “Face the Nation,” but said: “I can’t go on it. I’m toxic. I’m like a lightning rod. I couldn’t have an intelligent discussion without someone saying, ‘He’s a welfare guy from the bailout.'”
But he noted the bipartisan spirit of GM’s rescue and the rest of the U.S. auto industry.
“If we had gone down,” he said, “the supply chain would have gone down. … And Ford was hanging on by its fingernails, too.”
GM’s failure also would have led to Detroit’s collapse, Akerson said. “I have not seen a city in this bad a shape since I went to East Berlin in 1969.”