Friday, February 19th, 2010



That vague screeching noise you hear in D.C., the slight odor of burning rubber? That’s the government trying to brake its anti-Toyota campaign. It may be a little late.

The Toyota spectacle has become slightly surreal, as a few uncertain questions about “sudden acceleration” morphed into a media and political firestorm over the safety of its entire fleet. It is also proving an interesting case study in the treacherous politics that accompany government ownership of U.S. industry. Washington’s initial enthusiasm in bashing Toyota is beginning to backfire.

There’s no question that in the first, heady days of recall, at least some in the Obama administration and Congress saw advantage in undermining Toyota. The majority owner of Government Motors felt it couldn’t hurt to fan the image of a “foreign” auto maker disregarding the safety of American drivers. Shoppers might just buy a Chevy instead, propping up government investment and bolstering United Auto Worker union jobs. And of course the trial bar would be thrilled by a fat new class-action target.

Vehicle recalls (there were 16.9 million in 2009 alone) are usually handled by the National Highway Traffic Safety Administration—but the Toyota case was commandeered by Obama Transportation Secretary Ray LaHood. He skewered the firm for being “a little safety deaf,” complained it hadn’t been responsive, and bragged it was the government that forced a recall.

“This is a big deal, this is a big safety issue,” he exclaimed as part of the LaHood Vs. Toyota Media Tour. It was, in fact, the “most serious safety issue” of his tenure. It was, to repeat, such a huge, scary, safety deal that his “advice is, if anybody owns one of these vehicles, stop driving it.” Mr. LaHood later claimed he’d misspoke.

Over in Congress, a geographically notable contingent of representatives piled on. Rep. Bart Stupak (D., Mich.) announced an investigation into “dangerous” malfunctions. Toyota was ordered to report to his Oversight subcommittee hearing next week. Rep. John Dingell (D., Mich.) berated the company for taking “two years” to step up and ripped them for not recalling more models.

UAW lobbyist Alan Reuther demanded Toyota make amends by keeping open a unionized factory in California, currently scheduled for closure. Chrysler, GM and Ford started offering cash incentives for car buyers to trade in recalled Toyotas for domestic wares.

The results of this campaign are now making pols queasy. It was inevitable that such a loud attack would lead to questions as to whether the administration was carrying water for the domestic industry. The White House is today fielding as many queries about its role as owner and regulator as Toyota is fielding about recalls.

This thinking also inspired reporters to dig into Congress’s Toyota ties and to question, conversely, whether it can be tough enough. The press dredged up Senate Toyota investigator Jay Rockefeller’s role in landing his state of West Virginia a Toyota plant. Did you know, the head of NHTSA, David Strickland, worked eight years for Mr. Rockefeller? Or that California Democrat Jane Harman, who sits on the House investigating committee, once made money selling stereo systems to Toyota? You do now.

It is also occurring to some Democrats that, while Toyotas are mainly assembled in red states, they are, uh, sold in blue ones. In addition to idled Toyota factory workers, Toyota dealerships and suppliers are getting hit by the company’s sharp drop in sales. Some of these folks even live in Michigan.

The angry phone calls to Washington only increased last week when four governors—three Republicans and Kentucky Democrat Steve Beshear—sent a sharp letter to Congress, accusing the administration of a “conflict of interest.” They unsubtly noted that many recent recalls were “as serious as or more serious” than Toyota’s.

This sent the media digging into the recall record of U.S. auto makers, which may have to revisit their own safety issues. Some politicians are worried about Japanese retaliation against U.S. auto makers.

All of which accounts for Washington’s recent piping down. Mr. LaHood devoted a lot of this week to touting stimulus grants. Quite a few Democrats have gone mute, leaving the issue to NHTSA and wishing it would go away. Some lawmakers are even stepping up to defend Toyota.

Yet having revved up the drama, the administration is now all but obliged to take action against Toyota, say with civil penalties. Mr. Rockefeller and other Democrats with ties to the carmaker are under pressure to get rough. And if Toyota bungles Washington as badly as it did the initial recall PR, this could go on a long time.

Toyota has not yet laid off a single one of its 34,000 U.S. workers, but that may change. Only a year ago, Democrats were wailing about economic damage if GM or Chrysler went bust. They forestalled that with government ownership. They, and Toyota, are now dealing with the all-too-easy-to-predict political behavior that followed such meddling in the private economy.