Bill Clinton photo

Background Briefing by Senior Administration Official

September 29, 1993

The Briefing Room

11:42 A.M. EDT

MS. ROMASH: My name is Marla Romash. I'm with the Vice President. Let me set some ground rules and tell you who we have up here. Joining me on the stage, moving from my left to right, is [names deleted]

These folks have all been intimately involved in crafting this agreement.

Q: Can this be on the record?

MS. ROMASH: We go through this every time we do it. It's a BACKGROUND BRIEFING. The industry officials you can identify as senior industry officials. They are all [deleted]. And the administration officials you can identify as senior administration officials. And with that, I'll turn it over to [deleted] and you folks can answer questions.

Protest noted, obviously. I understand.

SENIOR ADMINISTRATION OFFICIAL: Thank you. I think all of you have heard the context of the agreement today from the President and the Vice President. In the February technology initiative the administration released, we laid out the goal of developing a clean car initiative with the auto industry. We've been working hard on it for a long time with the people you see up here and the CEOs of the Big Three, and many other people. We think this will be an historic beginning of a venture that in 10 years will be of great value to our economy and to the world.

And with that, I'll start any questions you want to ask.

Q: Could you give us an idea of what you think is the ballpark that this will cost? Also, what are you doing to guard against this project becoming a technological boondoggle in the great tradition of the SST, to name a whole bunch of others?

SENIOR ADMINISTRATION OFFICIAL: First off, we don't have a precise price tag at the moment. Currently, the federal government spends several hundred million dollars on technology research related to transportation and automotive technology. Our goal is not to spend new money, it's to spend the money we have now smarter and with more of a focus. We have a lot of people carving paths through the forest and no one's really scaled the trees to look at where we're going. That's what this agreement is about.

In terms of how do you prevent it from being a boondoggle, first off, Dr. Mary Good, from the Department of Commerce, will be a terrific watchdog on that. She served both in industry and academia on the National Science Board, and is the Under Secretary for Technology at the Department of Commerce.

We also are going to be developing some generic cooperative research and development agreements that facilitate processing funding projects. And the important thing to remember is that the technology projects are initiated by industry's views of what is necessary to reach this goal and by an analysis of the federal government's resources that can be used to help reach this goal. So we will be working very hard to make sure we spend our money more wisely.

SENIOR ADMINISTRATION OFFICIAL: It may be worth pointing out also that we've agreed that we would have a neutral highly credible body, such as the National Academy of Sciences, take a look at what we're doing to make sure that we're on the right tack.

Q: If there is a breakthrough development that's patentable, who owns the patent? How are the taxpayers' investments in this protected? That kind of thing.

SENIOR ADMINISTRATION OFFICIAL: The details of the intellectual property rights are going to be worked out over the next 60 to 90 days as we work on ways to implement the agreement in the details. There are models already in place at the Department of Energy, at the Department of Defense that deal with cooperative research and development agreements, both in things like advanced batteries and other advanced manufacturing techniques. So we're not starting from scratch on that question, and the specific details will be forthcoming in a few months.

Q: I have one question for the government and one for the industry. The government: Environmental groups and energy groups have asked for more input into this. What way will they have input, if any? And for the industry: I want to know what you want to get your hands on from the government? What have you seen in the national labs that you think might be used for a car? Try to be as specific as possible.

SENIOR ADMINISTRATION OFFICIAL: From the government side, all groups -- environmental, energy, manufacturing, suppliers -- have an open door to bring ideas to the government labs, to the government agencies, and to the policymakers regarding how do we reach this goal of a three-time improvement in fuel efficiency. There is no set number of technologies that we are looking at and only those. We are looking at the goal, and any technology that helps us meet the incremental steps we need to reach to meet those goals will be considered.

Q: There's no formal advisory council or anything that would involve consumer energy groups or anything?

SENIOR ADMINISTRATION OFFICIAL: The group that Dr. Good will head is the Federal Coordinating Council's Committee on Advanced Manufacturing. There will be no formal, brand-new committee formed to gather ideas because we think we have a process in place to do that.

Who would like to answer the industry question about the labs?

SENIOR INDUSTRY OFFICIAL: I think the issue here is that the inventory of technologies that are out in the labs right now probably are not sufficient singularly to solve this level of problem. What we need to do is to get the discussion started as to what technology is being worked on now and how can we focus these projects, avoid redundant work on research and design the program so that we can realize the breakthroughs.

My personal point of view is that there are no existing technologies today that, in and by themselves, solve the comprehensive goals of efficiency, energy independence, environment and affordability in utility.

Q: What's the one thing that you've seen like for materials or an engine or electronics or something that you could use in that equation?

SENIOR INDUSTRY OFFICIAL: Sure. I think anything that reduces a mass and anything that improves thermal efficiency are the things that we're looking for. But there are no silver bullets in this kind of process.

SENIOR INDUSTRY OFFICIAL: If I may add something to that. We have found a lot of ideas in the national labs, but as you know, their objective so far has been to produce one of a kind expensive weapon system or some kind. The challenge for our industry is to work with them and to see how many of these bright ideas, whether they are material, new systems, we can make affordable. And that's why it's very difficult for us to tell you today exactly where we're going to be successful. We all know that you can get expensive material, expensive new power train idea and put them together. But this will not make the super car that we're talking about because this car would be too expensive and therefore will fail.

Q: Let me ask Dr. Gibbons, is there some technology that you think is the most promising. And is there something that perhaps the industry representatives aren't aware of that you think -- from the weapons labs that might be very productive?

SENIOR ADMINISTRATION OFFICIAL: You know, one of the favorite things for scientists and engineers is to get thrown a new challenge. And I think what's going to happen here is that people working in a great variety of disciplines and technological areas are going to be thrown a new set of challenges, a new sort of problem to go after. And I think what we'll find is that within these labs there already exists some rather well-developed ideas and a knowledge base that may be directly applicable to the goal we're after. There are others that simply are going to take their experience in an area that may not be seen as directly relevant now, but it's a cross-current from what they know and the new challenge of how can I use that knowledge that will probably bring up some ideas we haven't come across yet.

But I think the great challenge we need to understand is multiple. One is to -- like C.P Snow said -- to provide the merging of two cultures. In this case, not science and non-science, but the kind of science that goes on in these big labs on big, long-term projects with the kind of science and technology that's going to be relevant to meet the challenge of the industry, not just to produce a car, but to produce a production prototype that can actually work and be produced in large quantity and be sold in a competitive marketplace. That throws an extra challenge to us.

But I believe -- I would hope that we would see very soon, perhaps in the area of nitrogen oxide catalysis, for example, which is a real challenge in terms of meeting clean air standards, and also keeping auto efficiency up, that we'll have some very interesting cross-fertilization between the industry and the labs.

Q: Do you think the most promising approach is to try to improve the combustion engine, or to try some of these other technologies?

SENIOR ADMINISTRATION OFFICIAL: The goal -- and you probably want to explore this farther -- but the goal that we worked out together challenges us to get beyond the internal combustion engine. The internal combustion engine has still great promise and is going to be around for a long time to come, especially in hybrid form. But it's limited in a sense because of what you call "Carnot's Principle." The question is, can you get past these heat engines to such things as fuel cells, or other devices that get you past the heat engine and, therefore, into a range of efficiency that we didn't have before, and very, very low emissions.

Q: Are there any antitrust implications?

Q: What's Carnot's Principle?

SENIOR ADMINISTRATION OFFICIAL: Carnot's Principle is that -- well, let's see -- if he works for government, it's a real problem. (Laughter.) Carnot basically said that efficiency of a heat engine is related to its temperature. The higher temperature you can go, the better off you are in terms of efficiency. But at some point, everything melts or turns into gas. It's part of what people call "thermodynamic principles."

Q: Are there any antitrust implications regarding the industry involvement?

SENIOR ADMINISTRATION OFFICIAL: We don't believe so, because U.S. Car, for instance, has gone through all of that. That's the industry's own ability to work together on generic issues, but clearly separate themselves when they get into things that relate to the marketplace.

Our work with the industry has already -- we've already had some careful legal review of this process. It will appear in the form of these credos and other individual agreements that will come out of this process. And that's one of our very first efforts, is to clarify and make sure we've got a good starting ground in which the public interest is well represented and protected as well as the private sector interests.

Q: Help me understand when something is going to come of this that will actually be beneficial to some poor guy who's getting 23 miles to the gallon in his Jeep Eagle Premier that I'm getting right now and wants to get more for his car.

SENIOR ADMINISTRATION OFFICIAL: I was going to say, if you'll slow down to 55, that will help a lot. (Laughter.) You know, you've got to remember that out there on the highway it's like swimming. When you get up to a high speed, that air really gives you a problem. So streamlining, as you're seeing on the cars -- but I think we will see the benefit of this, my guess is -- and I'll let my colleagues from autos check me on this -- that within -- even as soon as -- less than five years, let's say, you will begin to see some things happening, things rolling in to the way incremental changes occur -- for instance, for example, on nitrogen oxide control --

Q: Begin to see what -- I'm sorry.

SENIOR ADMINISTRATION OFFICIAL: Incremental improvements in the way the new fleets, as we roll through the '90s, are going to look -- in the late '90s. But remember what we're after here is -- if you'll read the details of this agreement, it's really three-fold. The thing that properly receives the most excitement and interest is our long shot at getting this three-fold increase in performance, and that's a real challenge.

Q: How far out is that?

SENIOR ADMINISTRATION OFFICIAL: We say we hope that if you're optimistic, within about a decade, within approximately a decade, within as soon as a decade, we could see a production prototype, and those two words are very important. A production prototype is very different from a concept vehicle. Production prototype means that you're figuring out and you think you've got a way to make the thing and produce it, not just to demonstrate it. So that's a challenge.

But in the interim time, we're going to be working together to try to figure out how all of these technologies and regulations move us in the right long-term direction. And we want to see if we can work out a migration path that really keeps our eye on the target and that we don't move too far away from it one way or another as we approach it.

We also know there will be incremental technologies. Some of them -- I mentioned the catalyst -- that will be -- we can just draw out and maybe begin to utilize in the time much sooner than a decade. But then there's that overarching goal that we talked about.

SENIOR INDUSTRY OFFICIAL: One of the important things to realize is that the industry as a whole has committed to introduce these technologies as they become commercially viable, not to wait to the end of 10 years. As we get a technology that is commercially viable that will increase fuel economy, we will build them into our normal product cycle. That's a commitment on the part of the industry.

Q: Can you tell us how this fits into the notion of free trade, free and fair trade, when it's such a governmentsubsidized policy?

SENIOR ADMINISTRATION OFFICIAL: We're willing to trade these vehicles. (Laughter.)

Q: But it is a step toward industrial policy.

SENIOR ADMINISTRATION OFFICIAL: Could you repeat the question --I'm sorry.

Q: The question is, how does this fit into a policy of free and fair trade when it's such a government-subsidized effort?

SENIOR ADMINISTRATION OFFICIAL: First off, we already have cost-sharing projects with this industry and we have had for a number of years. So this is not something that is brand new. What's brand new is we have an agreement with Detroit on what this money is intended to produce. So this is far different from going out and actually having the government pay for the complete production of something. The government has been doing research in technologies of this sort for years, but the government doesn't sell cars, the government helps do research. And we're trying to make sure the research goes to the people who do so.

Q: There's a follow-up question.

SENIOR ADMINISTRATION OFFICIAL: Who would like to follow up on it?

Q: This administration -- for example, the steel industry is upset with the European and other foreign steel makers because of the level of subsidies those foreign steel makers have received. We're upset about agricultural subsidies. What's the difference between the things we criticized foreign government for doing and the federal role in this project?

SENIOR ADMINISTRATION OFFICIAL: First off, we are not subsidizing, number one, the price of the vehicle to make it artificially marketable. We are dealing with generic research issues which have traditionally been accepted as the proper role of the government. The difference in steel and agriculture is that often the government subsidy is directly related to the price in the marketability. We are talking about the technology, and when we say a production prototype that's commercially feasible, Detroit determines what's commercially feasible, not the government.

Q: How is this different from Airbus?

SENIOR INDUSTRY OFFICIAL: I think it's worth first pointing out the magnitude of the monies that you're talking about. The automotive industry, not the automotive industry even as a whole -- just the three companies that are represented here, not counting our suppliers -- already spend $11.2 billion a year on R&D. That was our number for last year.

One dollar out of every seven spent in industry today on R&D is spent by these three companies. So we're talking about something that is relatively on the margin, and the agreement is, is that those items that are most uncertain and most long-term will have the largest government involvement. That's been a government tradition in terms of basic and applied research ever since Vanavar Bush. There's no difference in that.

SENIOR INDUSTRY OFFICIAL: I would like to ask something. Somebody talked about Japan or Europe as far as fairness of trade with them. We have to recognize today that in Europe, as well as in Japan, there is collaboration in research for the automobile industry. The French government, for example, works with Renault and Peugeot every day with the French national labs to move the technology of the next Renault or Peugeot car. MITI in Japan is well known for directing government research money to all the Japanese, and have them be more competitive outside of Japan in the U.S. So what we are doing is extremely fair and I would say it is time that we start doing what the other guys have been doing on the --

Q: That's exactly what Treasury Secretaries going back for years and years have criticized. About MITI and about --


SENIOR ADMINISTRATION OFFICIAL: Particularly the European one, they've had in their framework program, which you know about, Jacques, they've had a clean car-green car program at a very high level of research and development for a very long time. This is really no different from that because it is research and development, it is not commercial development, okay?

Secondly, I think you need to understand that this whole business of pollution control and so forth is very much in the public interest. What we're interested in doing is to push some of these technologies towards those kind of end results. And that is not necessarily the research that would be at the top of the people who are actually trying to build a car.

So it seems to me that we have to think in terms of the public interest in these kinds of technologies, as well. And this is an R&D agreement which is very comparable to the R&D agreements, particularly the one in Europe which is a very interesting model. And clearly, the Japanese have been doing these kinds of R&D agreements for a very long time. So there's nothing unique or different about them. And I think also you need to focus on the fact that many of the goals of this agreement are in the public interest. If we're going to get any really decent answers to the things like CO2 and environmental issues, we've got to work on them, and this is part of the issue.

SENIOR ADMINISTRATION OFFICIAL: My colleague has to leave in just a moment. Are there any other questions for my colleague?

Q: Yes, I have a question. Within three years, Honda will be building all the cars that it sells in the United States here in the United States. And other Japanese automakers, because of the yen problem, are going to be doing the same and they'll be following suit. If this research is in the public interest, why aren't they here, too?

SENIOR ADMINISTRATION OFFICIAL: That's a -- these are questions that we've really got to work out as we go forward. But if you look at public money that we spend in the United States, it seems to me there is nothing particularly wrong without at least giving American companies a shot at that. On the other hand, these R&D agreements and the work that comes out of them in the long run, most of it will be in the public literature. And I would assure you that the Japanese automakers have not been -- they have not been bashful in harvesting that literature to their effectiveness in the past. I would expect they would continue to do so.

Q: If you, in one of your research labs working with all these other fellows, came up with this super engine that uses water or something and doesn't pollute, and it gets about one million miles to the gallon, are they all going to have one to put in their individual cars? Or will there be -- will only the guys who worked the hardest on it be able to put it in their cars?

SENIOR ADMINISTRATION OFFICIAL: Well, you know, there's going to be competition here, fellas, just like there always is. And, look, there's technology every day that does not get used very effectively. One of the issues here is to at least have the people doing the research understand what the ultimate goals are. And that's the reason for having them talk with the car companies up front, so they begin to understand what it is we're trying to do, what are your ultimate goals for the technology you're trying to develop. But my guess is that it won't change much, as it has in the past because good companies and those who get out front learn how to take advantage of the technology in a very innovative way.

Remember, innovation starts once the inventions are made, normally. Innovation is how you take that invention and create something of commercial value. And these guys know how to do that, and they're going to compete with each other to utilize those fundamental technical breakthroughs that we get to the best of their advantage.

Q: You joined the government from another kind of a high-tech company.

SENIOR ADMINISTRATION OFFICIAL: Well, we had a big automotive sector, if you'll remember. (Laughter.)

Q: My question is, as you move away from the internal combustion engine, how do other companies that have a lot of expertise in different areas get into this if this is a Big Three operation? Maybe the Big Three doesn't end up producing the engines for these cars?

SENIOR ADMINISTRATION OFFICIAL: That's very possible. We are not going to be that selective about where the technology is going to come from. If you think about it, issues with respect to fuel cells and things like that have been supported by the government for a long time as an R&D effort, and those kinds of technologies were started primarily because of aerospace interests as much as anything else. And one of the issues will be that there's nothing which says that this technology is not going to have application in other kinds of transportation, in addition to what we're talking about here.

I mean, if you talk about -- if this really boosts fuel technology, there are other applications for that that will benefit from it just as much as the car companies. So you have to understand we're talking about generic technologies which are -- and the commercial gold, as one of my friends used to say, the gold will go to the company who learns how to take that and innovates with it very quickly.

Q: Can you talk more about the funding and give us a little better idea about what we're talking about here? Could this be -- you said several hundred million dollars is currently being spent on transportation research. Conceivably, could this be, say, you know, a half a million dollars split how -- 50-50 over the next five years, 10 years? And explain that more, would you please?

SENIOR ADMINISTRATION OFFICIAL: Right. First off, there are half a dozen or more agencies who currently spend money on this. NASA, DOD, Commerce, Energy, Transportation, EPA. So there are a number of different agencies who have programs that relate to this goal.

Q: And they're spending several, what --

SENIOR ADMINISTRATION OFFICIAL: Several, several hundred million. We're trying to --

Q: Is that three or four hundred or seven hundred, or what?

SENIOR ADMINISTRATION OFFICIAL: I'd say right now it's conceivably a half a billion, somewhere in the neighborhood to several hundred to a half a billion dollars. We're trying to identify programs across the government and the more we got into developing this agreement, the more programs we found.

Q: And the autoworkers will then what, match what --

SENIOR ADMINISTRATION OFFICIAL: There will be cost sharing as -- the more ambitious the research development project, the more the government will share of it. The more near term it is, the more the industry will share of it.

Q: Over the life of the program, the government will what, pay basically half of it and the auto industry half, or what?

SENIOR ADMINISTRATION OFFICIAL: There's a general principle of a 50-50 cost share, but that is not in any particular case a golden rule. That is -- it depends on the project, what the history is, what the risk is, and who's already ahead in that technology.

Q: Can you clarify for us where the administration stands now on CAFE standards and specifically the President's pledge last year of a goal of 40-mile per gallon --

SENIOR ADMINISTRATION OFFICIAL: Well, first off, as the President said today, this agreement is not about CAFE, it's about research and development. And we have not, as he said, abdicated any of our obligations under the CAFE law or under the fuel efficiency goals. What we are trying to do is to identify what is feasible -- an ambitious program that's technologically feasible to improve fuel economy.

Now, the agreement itself states that as the technologies that come from this work become commercially viable, the industry, as my colleague said earlier, is committed to putting those into the fleet. So this is -- the program we're announcing today is about the car we hope to have a production prototype of in 2003, but it's also about near-term improvements in technologies that apply to everything from aerodynamics to fuel cells to better batteries to all sorts of things that will go toward fuel economy.

Q: Does that mean that you're not going to push for increased CAFE standards?

SENIOR ADMINISTRATION OFFICIAL: The near-term fuel efficiency changes that we would seek are still under consideration, and those are not part of this agreement.

Q: Could you answer the question about where you stand now on the campaign promise?

Q: Yes. Where are they now? I mean, where are you on that?

SENIOR ADMINISTRATION OFFICIAL: The 40 miles per gallon by 2000 was based on trying to achieve technologically feasible fuel economy improvements by the year 2000. We are -- under this agreement, we are looking at -- and under the Global Climate Action Plan, we are looking at what is technologically feasible that would provide for fuel efficiency improvements over the next decade, and those decisions are being made within the context of other agencies and processes that are not complete. So we are working on those and they would be announced fairly shortly.

Q: Given that this initiative is peculiar to the Clinton administration and it may take 10 years, and the results are risky and uncertain, what are the implications if the Clinton administration gets tossed out of office in '96?

SENIOR ADMINISTRATION OFFICIAL: I don't usually like to deal in that hypothetical. (Laughter.) But we are trying to change the way the government deals with the auto industry. We are trying to replace lawyers with engineers, we're trying to replace confrontation with cooperation. And I would suggest that any administration would have the same goal.

Q: I have two questions. The first one is, you said that the administration would like to see this project implemented -- program implemented without new spending by the administration. Does that mean -- what kind of spending are the automakers going to do on this specific program? And the second thing I'd like to ask about -- Tier 2 emission standards, are they going to be implemented earlier than called for under the 1990 --

SENIOR ADMINISTRATION OFFICIAL: Let me answer the first question. Currently, the industry is involved in cost-sharing agreements. They will continue to be involved in cost-sharing agreements. The nature of the agreements will be different from case to case, based on the kind of technology we're doing and whether or not -- for instance, if you're using something the government's already put millions of dollars into, into Star Wars technology, like ultra-capacitors, there will be a different kind of cost-sharing formula. This is not going to be a large infusion of new money by the industry, nor by the government. It is a focused way of spending the money.

On the Tier 2 --

SENIOR ADMINISTRATION OFFICIAL: It's in review. It's not affected by this agreement one way or the other.

SENIOR ADMINISTRATION OFFICIAL: The Tier 2 standards are not affected by this and are under review. We don't have decisions on all of those issues as part of this agreement, because this agreement is not about that issue.

Q: Can you explain what it is that you have agreed to? Is it that each car company will produce a production prototype, that the three of you together will produce a production prototype?

SENIOR INDUSTRY OFFICIAL: It's probably too early to say. But we are committed to work with Dr. Good and put together a plan that is not going to be secret. We're going to publish it. And along the way we're going to tell the world and the taxpayers what we are doing together.

We recognize that the perception may be that we are spending taxpayer money, although it has been said that we are just using money that is already being spent, but in a more organized way. We also spend a lot of money, and we're going to put it together to try to find the breakthrough that everybody's dreaming about. And along the way, we're going to report progress and we may also report failure. When we get to the end and the point where we feel that we have one or two or three solutions to get there or more than that, we'll decide between the three manufacturers what is the most effective way to demonstrate production feasibility, because again the goal is to present to everybody a production a prototype, which means some -- can be produced at an affordable cost and meets all the other objectives. And maybe it would one car, maybe it would be several cars, or maybe it would be only half of a car if we only resolve 50 percent of the equation.

MS. ROMASH: This is the last question.

SENIOR ADMINISTRATION OFFICIAL: Can I add one comment to that. When Neil Armstrong landed on the moon, he had less than 10 seconds of fuel remaining for his descent. Now, if they had planned it that way, nobody would have supported the moon program. The closer we get to our goal, the more we'll be able to focus our attention on how we get there. And the agreement today is that we are trying to reach a goal, not just continue inching toward the future, but try to leap into the future.

Q: Can I just ask you about weapons applications. You mention the ultra-capacitors coming out of the Star Wars program. What are some of the other weapons technologies that you think might be productive? Are we talking about the ultra-lightweight materials used on missiles?

SENIOR ADMINISTRATION OFFICIAL: Well, several, like my colleague just mentioned supercomputers -- very important in simulating, for instance, crashes accurately so you don't have to break up a lot of cars to understand what's going on, and also to be able to design and effect things much more rapidly so you speed and streamline the whole production modeling design change process.

Another are very, very high speed rotors -- so-called centrifuge -- which store energy not electrically like a battery or by, say, having hydrogen and oxygen separated, which you then put together in a fuel cell, but in the fly wheel you just have this mechanical energy stored up. And these are various ways of putting on board mechanisms to transform energy sources into action at the wheel.

Q: And where do the rotors come from?

SENIOR ADMINISTRATION OFFICIAL: Rotors have come out of some programs, including even some black programs. So any of -- they come out of the defense.

SENIOR INDUSTRY OFFICIAL: On the subject of defense, obviously the first idea is to take advantage of things that are being found out there. A case can be made that defense is going to benefit from that the other way. For example, if we work on a new low-cost turbine as part of this hybrid car that we may build one day, we are going to reduce drastically teaming up together the costs of this turbine, which means that the cruise missile that may one day use the same technology will have a decreased cost as a benefit of having worked with Detroit. So it's a two-way street from that perspective.

THE PRESS: Thank you.

END12:14 P.M. EDT

William J. Clinton, Background Briefing by Senior Administration Official Online by Gerhard Peters and John T. Woolley, The American Presidency Project

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