Questionable Future for State Health Plans

Many individuals are embracing the summer season with fear. A Washington state health insurance program for low-income adults is planning to close, ending insurance coverage for about 65,000 individuals.

The ill economy is forcing Washington state as well as many other states to shave their health insurance programs for low-income people, even as jobless motives are demanding help. Five of the six states that

utilize state funds to help adults who are not covered by Medicaid are considering cuts. These program cuts are barring new enrollment or raising fees.

The 250,000 individuals taking advantage of the state programs are adults who do not qualify for the federal-state Medicaid program. This is either because they have no children or have earnings exceeding the limits which state imposes on Medicaid eligibility. The number of adults represent a small fraction of those who get government health insurance coverage, even though the state programs are often their only option for health coverage.

Individuals are taking action to counter the state's insurance cuts. For example, in California, many are consulting insurance brokers for Medigap insurance quotes to fill the coverage gaps of Medicare. This type of plan is also known as supplemental insurance.

The U.S. Senate passed a health bill that does include funding for the state programs. That bill, along with a bill the House of Representatives passed, would also expand Medicaid and provide federal subsidies to help low-income and middle-income Americans acquire affordable insurance. The bill's fate is uncertain as Democrats regroup after a recent loss in a key Senate seat.

Even if the bill is approved, the relief for states, as well as the uninsured population, is years away. For this reason, experts are advising the uninsured to be prepared and obtain personal health insurance quotes from several insurance providers.

Potential Stimulus Protection

Stimulus money from the Federal government has sheltered many state Medicaid programs. However that funding is set to run out in December and could result in Medicaid eligibility cuts, on top of potential cuts in states' adult health programs.

A Washington senator added a provision to the Senate health bill to permit a state to find federal funds for Basic Health until 2014. The senators spokesman says the provision would apply to other states with basic health insurance plans.

A second Cantwell amendment would allow states to form basic health insurance plans after 2014. These plans would be available to individuals who earn over the limit for Medicaid but less than twice the poverty level.

Many insurance experts say such state insurance plans would not be needed if a healthcare overhaul passes. This is because most individuals who qualify would suit the new Medicaid enrollment guidelines or qualify for federal subsidies.

"There will be no reason for states to pay for this themselves," says an expert at the Urban Institute.

However, an overhaul is still up in the air. Until then, policy experts recommend shopping for individual health insurance with the best benefits.

Whatever the outcome of the debate at the capital, policy experts cross their fingers that lawmakers can seek the money to save Basic Health.

For more information on how to protect yourself with affordable, health insurance coverage, consult a policy expert to better understand your insurance options.

Granholm's Final State of the State 'All About Jobs'

The Detroit News

Lansing -- Gov. Jennifer Granholm delivers her eighth and final State of the State address tonight with a heavy focus on the two issues she sees as most important to propping up the foundering state in her last 10 months in office: jobs and education.

The term-limited governor hopes the hourlong televised message will set the stage for a year of reform she outlined in a speech in Lansing last week in which she called for up to 46,000 public employee retirements, reductions in benefits and other cost-saving measures to stabilize a budget in chronic deficit.

"The governor is going to focus on her priorities, the priorities of Michigan -- job creation, economic diversity, educating citizens and protecting them," said Liz Boyd, Granholm's spokeswoman. "But it's all about jobs."

Granholm won't talk about restructuring the tax system as the state faces a $1.6 billion deficit. Any talk about that may come on Feb. 11 when she presents the budget for the fiscal year that begins Oct. 1. One tax change she has favored is extending the sales tax to services.

With no forecast showing the state rebounding this year from the collapse highlighted by the auto industry's implosion, the state's first female chief executive likely will leave office after eight years with the economy still in the tank -- a decline that started a year or so before she took the reins.

That fact threatens to overwhelm the list of Granholm successes, including the implementation of a workplace smoking ban, increased state minimum wage, an accord barring Great Lakes water diversion, a major job retraining program, tougher high school graduation requirements and a new economic focus on advanced battery and other alternative energy businesses.

But her tenure will be dogged by mocking replays of her statement in her 2006 speech that "in five years, you're going to be blown away" by a diversified economy in Michigan.

"She wanted the state to be blown away (with jobs created by diversifying the economy), and obviously that's not going to happen by the end of this year," said Bill Ballenger, editor of the Inside Michigan Politics newsletter. "Things could get worse. Fairly or unfairly, when you're governor for that long a period of time and the news continues to be bad, it rubs off on you."

Michael LaFaive, economic development expert at the Midland-based Mackinac Center for Public Policy, a free-market think tank, said overall, he gives the governor low marks.

"This is one administration that relied primarily on symbolism over substantive policy," LaFaive said. "When the state's fortunes were plummeting and citizens were getting poorer, she turned to economic development programs we knew would not work. Her focus was on job announcements, not real jobs."

Robert Kolt, a Democratic-leaning public relations consultant and political observer in Okemos, said the perception of Granholm as a cheerleader who governed by press release is unfair.

"I have to give her high marks for being a good communicator, but due to major problems in her backroom operation, most people never saw her deliver on promises made," he said.

"She's really bright. She just did not have enough focus, will and following to get many things done. And she even said herself she needed more legislative experience."
Success significant

Over the past seven years, there have been significant achievements, some with considerable help from key legislators and other officials.

The governor called for a public smoking ban a couple of times, and it finally won passage in the Legislature in December. She got assistance from legislators such as Sen. Ray Basham, D-Taylor, who made a career of pushing the ban. She was able to sign an agreement with other governors to protect the Great Lakes from diversion. Experts say her predecessors paved the way on this issue, but she gets credit for pushing it over the hump.

Michigan's high school graduates must complete a rigorous slate of courses, which educators say will better prepare them for college and the workplace. State schools chief Mike Flanagan and education leaders in the House and Senate played a huge role in getting that done. Students also must stay in school until they're 18, another Granholm proposal that became part of the deal when reforms were enacted last year to draw federal Race to the Top funds.

The state's minimum wage was increased by $2.25 an hour to $7.40 an hour between 2006 and 2008, which the governor called for in her 2005 address. Granholm had much help from labor backers in the Legislature, and ultimately the business community signed off on the raise.

"You always have to have dogged legislators or others to take what the governor proposes and get it done," said Bill Rustem, president of Public Sector Consultants Inc., a Lansing independent public policy think tank. "But on issues like the smoking ban and the increased minimum wage, the governor deserves credit for raising the issue so it can move through the process."

Granholm's No Worker Left Behind program has retrained more than 100,000 people for 21st -century jobs and has a waiting list. That came after the governor's Michigan Opportunity Partnership matched 124,599 people with mostly health care jobs between 2005-08, said Marcia Black-Watson, a deputy director at the Department of Energy, Labor and Economic Growth.

Project Great Start launched school readiness efforts for children up to 5 years old, and there are 55 local centers to coordinate programs. A recent study suggested this and other early childhood education initiatives save the state $1.15 billion a year.

She set up the 21st Century Jobs Fund to spur investment in high-tech companies and research, with the aim of diversifying the economy -- although it has been scaled back recently due to budget cuts. The full impact of the program cannot be measured for years.

In several addresses, the governor called for the replacement of lost auto jobs with green energy jobs. Her focus on advanced battery production has helped to make Michigan a hub for that technology. Former car parts makers are now manufacturing wind turbines. And lawmakers passed, at Granholm's urging, a plan to increase electricity production from renewable sources over the next 15 years.
Program eliminated

Other initiatives she proposed met with mixed results.

She upgraded former Gov. John Engler's merit scholarships for college students to a $4,000 Michigan Promise Scholarships program in 2005. But budget slashing last year prompted legislators to eliminate the program against Granholm's wishes.

The governor won funding for a new 100-trooper recruit school in 2008. But fiscal woes forced her to lay them all off last year and then call back all but about 15.

She donned sunglasses to promote her Cool Cities initiative in 2004, intended to spruce up cities to attract young professionals and entrepreneurs. The Legislature never approved funding, so the administration scrambled to find it through block grants, arts grants and other sources. The state spent $4.2 million on 48 grants in 32 cities over three years, ending in 2006.

Its success is difficult to measure, said Karen Gagnon, program manager at the Michigan State Housing Development Authority. "A lot of what we have is anecdotal. We'll have to wait for the next census for more data."

The Michigan First health care plan was proposed by Granholm in 2006 and was intended to provide health coverage for 550,000 uninsured. But the state never won federal approval for the program, and it's on hold during the heated debate over national health care, said James McCurtis, spokesman for the Department of Community Health.

The governor pushed for business tax reform in 2007 and, after a tough battle, the Michigan Business Tax was born late in the year. But the tax is nearly as reviled as the one it replaced. Repealing a 22 percent surcharge on the tax is the business community's No. 1 goal in Lansing.

The governor and legislative leaders share the blame for this botched effort, observers say.

Rustem said an assessment of Granholm's time in office will be defined by her actions as well as by forces beyond her control.

"She did some good things, but the implosion of the auto industry in Michigan was an overwhelming issue this decade will be remembered for," Rustem said. "Also, term limits really kicked in, and the Legislature had difficulty meeting deadlines and forging compromises."

GM's Plan to Sell Hummer to Chinese Company Delayed

USA Today

DETROIT — General Motors' plan to sell the hulking, once-hot Hummer line to a Chinese heavy equipment maker has been delayed by a month, officials said Monday.

General Motors and Sichuan Tengzhong Heavy Industrial Machinery said they are extending the deadline to complete the transaction until Feb. 28 pending final approval by the Chinese government. The previous deadline was Jan. 31 for a definitive agreement to sell the line once synonymous with America's love for big off-road vehicles.

Hummer spokesman Nick Richards said the deal has cleared U.S. regulatory hurdles. He called it a complex agreement but said both companies are "optimistic the deal will be completed" by month's end.

Sichuan Tengzhong said in a statement it's cooperating with the approval process.

Financial terms weren't disclosed, but Hummer has been estimated to be worth about $150 million. GM's bankruptcy filing last summer said that the brand with its born-in-the-military cachet could bring in at least $500 million.

Hummer hit the streets for civilian use in 1992 while owned by AM General, which makes Humvees for the U.S. Army. Actor Arnold Schwarzenegger, now the governor of California, was among the first customers.

The brand, whose smallest model gets 16 miles per gallon in combined city and highway driving, sold well until the middle part of the last decade when fuel prices began to rise. Sales peaked at 71,524 in 2006.

GM is selling Hummer to focus on core brands Chevrolet, Cadillac, Buick and GMC.

GM signed a deal last week to sell its Saab brand to small Dutch automaker Spyker Cars for $74 million in cash plus $326 million worth of preferred shares in Saab. It hinges on a $550 million loan from the European Investment Bank.

The sale came after an earlier attempt to sell Saab to another Swedish automaker fell through, and after GM's bid to sell the Saturn brand also collapsed.

Toyota Accused of 'Not Being Frank' on Accelerator Problem

Detroit Free Press

When owners of Lexus sedans began reporting harrowing crashes involving stuck accelerator pedals in early 2007, Toyota told U.S. safety regulators there was no safety problem with its floor mats -- but it would send owners an orange warning sticker just to be sure.

The flaw has since been linked to at least 12 deaths, and last week, Toyota expanded its recall over floor mats to 5.3 million vehicles. As with a separate recall of 2.3 million cars and trucks for sticky pedals that also could cause sudden acceleration, the automaker downplayed early warnings of both problems.

A Free Press review of documents from nine U.S. investigations since 2003 into sudden acceleration complaints show Toyota repeatedly ruled out many owner complaints, dismissed several concerns as posing no danger and modified models in production without offering similar changes to vehicles already on the road. Not until the 2007 floor mat investigation did any of the complaints lead to a recall.

Safety advocates and attorneys for owners suing over sudden acceleration say Toyota has simply stonewalled.

"I think Toyota is still scrambling to find the root causes of all the sudden acceleration that's been reported to them," said Don Slavik, a Milwaukee attorney representing a California man whose wife died in a crash off a cliff in their 2005 Toyota Camry that he blames on sudden acceleration.

The automaker has defended its actions, saying defects weren't found in most probes, that it fully cooperated with regulators and did not try to minimize safety concerns.

But Toyota also said it continuously reviews data for signs of safety defects, and would look back over prior complaints.

"We never truly close an investigation," said Toyota spokesman Brian Lyons.

Toyota had to be pressured

With its decision to recall vehicles for faulty gas pedals, Toyota reversed calls it made in 2007 and 2008 that the same pedals weren't a safety threat in response to consumer complaints in the United States and Europe.

The Japanese automaker made several similar decisions in earlier investigations involving sudden acceleration, and had to be pressured by federal regulators into a recall of floor mats that could trap gas pedals. That recall has grown to cover 5.4 million vehicles.

Sean Kane, a safety researcher who works with attorneys pursuing cases against Toyota, said Friday that he had found 19 deaths and 341 injuries stemming from 815 separate crashes involving Toyotas and sudden acceleration.

"This company is not being frank about the causes of sudden acceleration," Kane said. "We need to get down to the cause, and get it resolved quickly."

Automakers launch most safety recalls on their own, without prodding from the National Highway Traffic Safety Administration. NHTSA keeps watch on consumer complaints it receives along with accident data, but has to rely on the companies for the data needed in safety investigations, which the automakers often try to interpret to their benefit. The Free Press reported last week that in 2003, Toyota hired a former NHTSA investigator to handle relations with the agency.

The agency typically gets a fairly small number of sudden-acceleration complaints annually, but in recent years, Toyota has received far more than other automakers. Over the past 10 years, NHTSA had launched more investigations into sudden acceleration in Toyotas than all other automakers combined.

Hundreds of complaints

Since the 1990s, NHTSA had concluded that most sudden acceleration complaints were caused by drivers mistakenly hitting the gas pedal instead of the brake. When a Massachusetts man asked in April 2003 for an investigation of 1997-2000 model Lexus sedans, citing 271 complaints of unintended acceleration, the agency rejected his request without querying Toyota for data.

On Jan. 22, 2004, an elderly Las Vegas couple died after the 2002 Camry they were driving sped off the fourth floor of a parking deck at the Golden Nugget casino. Their son later told NHTSA that witnesses saw the car stop, then accelerate off the deck.

In February 2004, a nurse from Maryland asked the agency to review the 2002 and 2003 Lexus ES350 sedans, saying her throttle had malfunctioned several times and led to one crash. A month later, NHTSA launched a wider investigation into the electronic throttles on nearly 1 million Lexus and Toyota sedans, citing more than 100 complaints.

From the start, Toyota pushed NHTSA to narrowly define the problem as short bursts where the engine surged to "something less than a wide-open throttle." It compared many of the complaints to the prior sudden acceleration cases that NHTSA had deemed driver error. Toyota also said the computer could not open the throttle without the accelerator pedal being pressed, and said even if built-in safety checks failed, stepping on the brakes would stop the car.

But the company did reveal that it was conducting a "customer satisfaction campaign" to replace motors controlling the throttle, which could fail and send vehicles into a "limp home" mode. Such campaigns are typically made available to only owners who suffer the problem. It also admitted it bought back two vehicles from owners who had complained of repeated sudden-acceleration events.

After four and a half months, NHTSA closed its investigation, saying it could find no evidence of a defect and no trends in warranty and repair data suggesting faulty electric parts. Since then, no NHTSA investigation has found a defect in Toyota's electronic throttle controls.

Despite the findings, owners kept asking the agency for another look.

Keep digging

Three times -- in 2005, 2006 and 2008 -- Toyota customers asked NHTSA to investigate uncontrolled acceleration in their vehicles stemming from electronic throttle controls. Despite hundreds of complaints, NHTSA found no evidence of a defect in any of the cases. In all cases, Toyota provided data it said showed no evidence of defects, and in the 2008 look into Tacoma pickups, Toyota contended many of the complaints were "inspired by publicity."

Jordan Ziprin, a retired Phoenix attorney who filed the 2006 request, said the new recalls were evidence that Toyota was hiding its problems with electronic engine controls.

"It's just a matter of time before they get to that issue, which is going to be very, very expensive for Toyota," he said.

NHTSA officials declined to comment.

Toyota did find some problems that needed fixing -- just like the pedals in 2007 and 2008.

During the 2006 investigation, Toyota discovered corrosion inside some throttles on Camry sedans and changed the part in production. But it did not make the change available to vehicles on the road and minimized the change to NHTSA, saying it would only happen "under certain circumstances, such as driving through a flooded road, in the heavy rain, or a hurricane."

Fixing part of the problem

But with the investigations of Lexus floor mats that began in March 2007, the company's actions were not sufficient to satisfy NHTSA. After reports of seven injuries from vehicles with pedals trapped by all-season floor mats, Toyota once again said there was no safety issue. It did say it would mail owners and dealers with instructions for how to install the floor mats, along with an orange sticker and doubling the height of a warning embossed on the surface to 10 millimeters.

"There is no possibility of the pedal interference with the all-weather floor mat if it's placed properly and secured," the automaker told regulators in April 2007.

But by August, federal regulators had found 12 deaths linked to the mats. A survey of 600 Lexus owners found 59 reporting sudden or unexpected acceleration. NHTSA also found evidence that in some crashes, owners were standing on the brakes yet unable to stop their vehicles. Toyota issued its first recall in September 2007 covering 55,000 vehicles.

NHTSA began testing some of Toyota's claims about the problem. It found that the brakes in the Lexus ES350 sedan could stop an engine at wide-open throttle -- but only after 1,000 feet, and only with five times the amount of pressure usually needed to bring the car to a halt.

Regulators were also worried about confusion from the start-stop buttons that Toyota had installed in many models instead of keys. The automaker told regulators that the engine could be shut off in an emergency if drivers held the button for three seconds.

But early in 2009, as part of another customer petition, Toyota disclosed that its owner's manuals incorrectly stated that the start-stop buttons would turn the vehicle off only if the transmission was in park. Toyota said it would change manuals for new models, but once again did not offer to update those already on the road.

And despite a rising tally of injuries and crashes, including the death of a California Highway Patrol officer and three family members, it would take another two years for Toyota to expand the floor mat recall to several other models. When it did in September of last year, it denied at first that the issue met the legal standard for a defect.

Under pressure from NHTSA officials, Toyota relented and dubbed the move a recall. In November, it agreed to make software changes that would shut down a gas pedal if the brakes were applied at the same time, along with reshaping the pedals to avoid contact. Those fixes aren't expected to be available until April.

Toyota also will buy back all all-season floor mats that first launched the investigation, telling regulators that "Toyota appreciates this opportunity to cooperate with NHTSA."

Toyota President Akio Toyoda broke his silence over the recalls Friday on the sidelines of the World Economic Forum in Davos, Switzerland, with an apology to owners.

"We're extremely sorry to have made customers uneasy," Toyoda told Japan broadcaster NHK. "We plan to establish the facts and give an explanation that will restore confidence as soon as possible."

Toyota's Pedal-Repair Plans Due Next Week

Detroit Free Press

Toyota will announce plans next week for repairing 2.3 million vehicles under recall for accelerator pedals that could stick, but the timeframe for completing the repairs has yet to be finalized, the company said Friday.

The Japanese automaker took another public relations hit when Consumer Reports, one of the most-watched arbiters of automotive quality, pulled its "recommended" ratings from the eight Toyota models whose sales have been halted until Toyota provides a repair. The magazine also advised shoppers to avoid used models under the recall.

Toyota was also summoned to a U.S. House Oversight committee hearing next Thursday on the recall. It had already been asked to provide data and testify at a Feb. 25 hearing by a House Energy and Commerce

subcommittee headed by Michigan Rep. Bart Stupak after committee staffers explored the issue with Toyota earlier this week and were left with several questions.

Combined with a recall of 5.4 million vehicles because of floor mats that could also lead to sudden acceleration, Toyota now has 5.6 million vehicles under recall.

The automaker had been working on two possible repairs dealers could perform for the accelerator pedal flaw and had discussed options with federal regulators.

CTS, the supplier that made the pedal at the center of the recall, said it is building replacement pedals in its factories.

"We will not start recalling and repairing vehicles, but we will be able to tell people what our plans are and a tentative start date for those plans," said Toyota spokesman Brian Lyons.

Toyota's European operations said Friday its recall for the same problem would cover up to 1.8 million vehicles, but the automaker did not plan to stop production of the affected models as it had in North America.

The six plants where the models are built in the United States and Canada halt production for at least one week starting Monday.

Consumer Reports said its yanking of the recommended label was necessary because "our position is that you shouldn't compromise on safety," said Jim Guest, president of Consumers Union, which issues Consumer Reports.

The move also applied to the Pontiac Vibe, which Toyota had built for GM until this year.

GM said Friday the Vibe was safe to drive and it was waiting for more information from Toyota.

Also on Friday, Hyundai and Chrysler joined Ford and General Motors in offering incentives for Toyota owners to buy their vehicles.

Ford Says Less Than 1% of U.S. Workers Accept Buyout

Business Week

Ford Motor Co. said 300 workers, or less than 1 percent of its U.S. union workforce, accepted a buyout offer for as much as $75,000.

The rate among the 41,000 U.S. hourly workers was “in line with expectations,” Mark Truby, a company spokesman, said today in an interview. The Dearborn, Michigan-based company attracted about 800 takers with similar offers in 2009, he said.

Ford is trying to further pare labor costs after reducing North American employment by 47 percent since Chief Executive Officer Alan Mulally joined the automaker in late 2006. The company today reported net income of $2.7 billion for last year, its first annual profit since 2005.

“Given the improvement in our business and the overall job market, we didn’t anticipate a large number of employees would take this offer,” Truby said. “We still have some employees on indefinite layoff and this enables us to move some of them back into positions.”

Ford sought further labor reductions after United Auto Workers members in November voted down givebacks such as a six- year ban on some strikes and a wage freeze for new hires until 2015. The Detroit-based union had granted similar terms to General Motors Co. and Chrysler Group LLC, which reorganized in government-aided bankruptcies.

Under Ford’s latest offer, extended last month, workers with 30 years on the job or at least age 55 were eligible for as much as $40,000 in cash and a $25,000 voucher for new Ford vehicle or an additional $20,000 payment.

Those younger than 55 with at least one year of service could get $50,000 and the choice of a $25,000 vehicle voucher or $20,000 more in cash, said Marcey Evans, a Ford spokeswoman.

Those who accepted the offer will begin leaving the company Feb. 1, with all expected to have departed by March 1, she said.

Christine Moroski, a UAW spokeswoman, didn’t immediately respond to a call for a comment.

Ford fell 14 cents to $11.41 at 4:15 p.m. in New York Stock Exchange composite trading. The shares have risen 14.1 percent this year after increasing more than fourfold last year.

Toyota: Too Big, Too Fast

The Wall Street Journal

Three or four years ago senior Honda executives demanded to know from their underlings how arch-rival Toyota could expand its production and sales so quickly and still keep its quality intact.

Now they're getting the answer: Toyota's once-vaunted quality actually was eroding. This week the company suspended the sale of eight different models, including the popular Corolla, Camry and Avalon, for potential safety problems. Next week Toyota will halt production at the five North American factories that make those vehicles.

The company also expanded a recall that already was the largest in automotive history. Some 4.8 million Toyota cars and trucks might suffer from sticking accelerator pedals or faulty floor mats that seem to grab the accelerator (some have been recalled for both reasons) and can cause the car to accelerate out of control. Several deaths have been attributed to the problem.

How could this possibly happen to the car company that was the undisputed leader in quality, the company that all the others from Germany and America and even Japan wanted to emulate? The answer is almost too simple.

Toyota is suffering from trying to get too big, too fast. In the early years of this century the company sensed weakness among its Detroit rivals in the American market, and also opportunity in China and other emerging markets outside the U.S. So it began a headlong expansion spree around the world.

In doing this Toyota abandoned one of the shibboleths of its conservative culture: never building a new product in a new factory with a new workforce. Any new Toyota factory, anywhere in the world, would first build a vehicle that Toyota was making at one of its existing plants. That approach minimized quality-control variables.

But in 2006 Toyota started building its first full-size pickup truck at a new factory with a new workforce in San Antonio, Texas. That truck, the Tundra, was recalled both for the gas-pedal issue and for another problem, potential corrosion of the vehicle's frame.

When this newspaper's Norihiko Shirouzu first began writing about Toyota's quality glitches in 2006 and 2007, some company executives reacted angrily, saying he was blowing the issue out of proportion. But numbers don't lie. In 2005 Toyota recalled 2.38 million vehicles in the U.S., which was slightly more than the number of cars and trucks the company sold in America that year. Last August the company recalled 700,000 cars in China because the power-window controls might short-circuit. The recent gas-pedal recall also affected China and Europe. Toyota's quality problem has gone global.

Consumer Reports, the bible of the car-buying public, now rates Ford's quality higher than Toyota's. Last year the Japanese company lost $4 billion, its first annual loss in nearly 60 years, and it is heading for another loss in the current fiscal year ending March 31. The production halt announced this week will add to the red ink.

The immediate question is what Toyota's dramatic moves will do to its reputation. Consumers might (and should) give the company credit for taking unprecedented and costly action in the interest of protecting their safety. But many Toyota owners are worried, and brand-loyalty ratings have begun to drop.

In last year's J.D. Power Customer Retention Survey, Toyota lost the top spot to Honda for the first time since the poll began six years ago. Toyota and Lexus still hold the second and third positions in the survey, but the trend has to be discomfiting. General Motors, meanwhile, has begun offering special discounts to Toyota owners who trade in their cars, a marketing move that might backfire the next time GM has a big recall.

Another question is how quickly Toyota can resolve the unintended acceleration issue. It's a problem with a curious history. In the mid-1980s Audi was accused of having a similar problem, and its U.S. sales almost evaporated. But the issue, fed by media hysteria, turned out to be bogus.

Toyota's acceleration problem appears to be the real thing. The company has pinpointed specific likely causes—linkages in the gas-pedal mechanism and the size of the floor mats.

In an era when cars have more microchips than many desktop computers, these things are amazingly low tech. Reports yesterday said Toyota was zeroing in on a repair: inserting a "spacer" in the pedal mechanism that would increase the tension in a spring and help prevent sticking.

Finally, the big question is whether and how quickly Toyota can right itself as a company. The new management team led by Akio Toyoda, a scion of the founding family, seems contrite and worried, which is a good sign.

The company has enormous financial and technical resources, and it remains the leader in gas-electric hybrid technology. Toyota is reversing its overexpansion and reducing excess capacity by closing an assembly plant in California (which was a joint venture with GM), and postponing plans to build another plant in Tupelo, Miss.

One pressing need is for Toyota to develop a new generation of talented and trusted local leadership in the many countries where it operates. Because it is Japan's biggest auto maker by far, Toyota tends to be insular. The near-term temptation will be to circle the sedans in Toyota City, site of the company's headquarters, but it's impossible for a small inner circle in Japan to run a global company effectively in the long run.

General Motors held the title of "world's largest car company" for decades before things began to go wrong there. Toyota grabbed the top spot last year, and things started going awry in just a matter of months.

Maybe it isn't good to be king after all.