written by IBD Editor
Tuesday February 14, 2012
Incentives: Doubling down on industrial policy failure, the administration decides to bump up the taxpayer subsidy for Government Motors' touted electric car. Who said its range wasn't enough to drive us to the poor house?
Tucked away in the recesses of President Obama's 2013 budget, a budget that (Democratic) Senate Majority Leader Harry Reid says he will not bring to the Senate floor, is a nugget that speaks volumes about the troubles we're in:
While delaying the Keystone XL pipeline, the administration plans to increase the subsidy for the Chevy Volt and other "new technology" vehicles to $10,000 per car.
"We give consumers the incentive to buy these cars," White House economic chief Gene Sperling said at a budget briefing where he announced the 33% increase from the current $7,500 subsidy. The budget document, titled "Investing in Our Future," includes a goal of putting "1 million advanced technology vehicles on the road (by) 2015."
So, doing the math, we're talking about a $10 billion dollar "incentive" to get people to buy the Chevy Volt and similar vehicles. Can people be bribed to buy Government Motors' electric car? Even with the $7,500 rebate for each buyer, Chevy sold only 7,671 Volts in 2011.
We wonder if people making $170,000, the average income of the relatively few buyers of the $40,000 Volt to date, really need the incentive. It is not your typical family or factory worker's car. So doesn't that make this the functional equivalent of tax credits for the rich?
As the Daily Caller notes, only Mercedes-Benz drivers, at an average $174,000 a year, earn more than Volt drivers. Their high income puts Volt buyers in the top 7% of households, according to census data, and slightly above the rankings held by households with BMWs, Lexuses or Cadillacs.
It does not seem likely the Occupy Wall Street crowd will be lining up at their local GM dealer any time soon.
"Each Chevy Volt sold thus far may have as much as $250,000 in state and federal dollars in incentives behind it — a total of $3 billion altogether," according to an analysis by James Hohman, assistant director of fiscal policy at the Mackinac Center for Public Policy. This is not counting the cost of bailing out GM itself.
"This might be the most government-supported car since the Trabant," said Hohman, referring to the car made by the former communist state of East Germany. Actually, the administration's industrial policy of picking winners and losers with tax dollars is barely distinguishable from the command and control economies of the old Soviet bloc.
These are not good times for electric cars and the companies that manufacture them. Fisker Automotive, maker of an exotic electric sports car being built with help from a $529 million federal government loan guarantee, has announced layoffs at its Delaware plant as it tries to persuade the Energy Department to send it more public funds.
Ener1, an electric-car battery company to which the Obama administration awarded a $118 million stimulus grant to expand operations, filed for Chapter 11 bankruptcy protection after being unable to repay pressing debts.
The news came a year after Vice President Joe Biden visited Ener1's Indiana plant to tout the company's bright future, just as he and Obama did with the heavily subsidized and politically connected solar panel maker Solyndra before it went belly-up. [Solyndra filed bankruptcy in September 2011 after receiving a $535 million taxpayer funded government loan guarantee. (emphasis mine)]
The White House boasted that the facility Biden visited "would not exist if not for a $118.5 million grant from the Department of Energy ... part of a $2.4 billion Recovery Act investment in electric vehicles."
That's precisely the point. There is no consumer demand for vehicles that wouldn't exist except for government investment in such so-called green ventures.
Meanwhile, the Keystone XL pipeline is blocked by an administration all too happy to see oil and gas prices rise in an unstable economy while the Obama administration pursues its own pipe dreams.
These are not good times for electric cars and the companies that manufacture them. Fisker Automotive, maker of an exotic electric sports car being built with help from a $529 million federal government loan guarantee, has announced layoffs at its Delaware plant as it tries to persuade the Energy Department to send it more public funds.
Ener1, an electric-car battery company to which the Obama administration awarded a $118 million stimulus grant to expand operations, filed for Chapter 11 bankruptcy protection after being unable to repay pressing debts.
The news came a year after Vice President Joe Biden visited Ener1's Indiana plant to tout the company's bright future, just as he and Obama did with the heavily subsidized and politically connected solar panel maker Solyndra before it went belly-up. [Solyndra filed bankruptcy in September 2011 after receiving a $535 million taxpayer funded government loan guarantee. (emphasis mine)]
The White House boasted that the facility Biden visited "would not exist if not for a $118.5 million grant from the Department of Energy ... part of a $2.4 billion Recovery Act investment in electric vehicles."
That's precisely the point. There is no consumer demand for vehicles that wouldn't exist except for government investment in such so-called green ventures.
Meanwhile, the Keystone XL pipeline is blocked by an administration all too happy to see oil and gas prices rise in an unstable economy while the Obama administration pursues its own pipe dreams.
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