Marquette Warrior: Washington Post: Stop Electric Car Subsidies

Thursday, January 12, 2012

Washington Post: Stop Electric Car Subsidies

The Washington Post has a reputation as a liberal newspaper, and indeed that’s what it is.

But it has shown itself able to take a cold hard look at some of the programs that give liberals the warm fuzzies. One recent example dealt with one of the Obama Administration’s favorite class of subsidies.
THERE MAY NOT have been a party in Times Square to celebrate, but two of the most wasteful subsidies ever to clutter the Internal Revenue Code went out with the old year. Congress declined to renew either the 45-cent-per-gallon tax credit for corn-based ethanol or the 54-cent-per-gallon tariff on imported ethanol, so both expired Dec. 31.

Taxpayers will no longer have shell out roughly $6 billion per year for a program that badly distorted the global grain market, artificially raised the cost of agricultural land and did almost nothing to curb greenhouse gas emissions. A federal law requiring the use of 36 billion gallons of ethanol for fuel by 2022 still props up the industry, but the tax credit’s expiration is a victory for common sense just the same.

Meanwhile, a lesser-known but equally dubious energy tax break also expired when the year ended Saturday: the credit that gave electric-car owners up to $1,000 to defray the cost of installing a 220-volt charging device in their homes — or up to $30,000 to install one in a commercial location. As a means of reducing carbon emissions, electric cars and plug-in hybrid electrics are no more cost-effective than ethanol. What’s more, only upper-income consumers can afford to buy an electric vehicle (EV); so the charger subsidy is a giveaway to the well-to-do.

The same goes for the $7,500 tax credit that the government offers purchasers of electric vehicles, a subsidy that, alas, did not expire at year’s end. The Obama administration says that the credit helps build a market for EVs, which helps create jobs. Given the price of eligible models, like the $100,000 Fisker Karma, that rationale sounds an awful lot like trickle-down economics.

Backers of the charger tax credit may lobby Congress to renew it when lawmakers tackle the payroll tax extension issue again in the new year. We hope that Congress says no. Not only is it a case study in upward income redistribution, it also would represent a deepening of the taxpayers’ commitment to what looks increasingly like an industry not ready for prime time.

Sales of electric vehicles were disappointing in 2011, with the Volt coming in below the 10,000 units forecast. In addition to its high price, the Volt brand is suffering from news that some of its batteries burst into flames after government road tests. Meanwhile, Fisker, the recipient of more than half a billion dollars in low-interest Energy Department loans, repeatedly delayed the introduction of its ballyhooed Karma — while repeatedly raising the sticker price. And now Fisker has announced a recall of the cars because of a potential defect in its batteries — made by A123 Systems, another large recipient of Energy Department support.

Evidence is mounting that President Obama was overly optimistic to pledge that there would be 1 million EVs on the road by 2015. Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future. They simply pose too many issues of price and practicality to attract a large segment of the car-buying public. More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.

The ethanol credit was on the books for 30 years before it finally died. Let’s hope Congress can start unwinding the federal government’s bad investment in electric vehicles faster than that.
The problem, of course, is that policies like this have nothing to do with a cool-headed policy analysis. Rather they are mostly symbolic. The liberals who favor them want the “committment to green energy” that these programs claim, and aren’t inclined to ask whether they are really “green” and if so whether they are green at any sort of reasonable price.

After all, they are paid for with other people’s money.

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Anonymous Anonymous said...

You may do well to look at Ford's announcement today regarding the 100 mpg Ford Fusion being launched in 2013. Imagine millions of those on the street and the impact this technology will have both on global warming and our overdependence on foreign oil. I really do enjoy the usual sneering you Republicans exhibit repeatedly when the subject of green crosses your path. And the gays. You get a C/D for content, but I'll give you an A for consistency.

12:12 PM  
Blogger John McAdams said...

You don't have the authority to give me any grades. And when a liberal paper like the Washington Post begins to doubt the orthodoxy, you need to pay attention.

Are you still a big supporter of ethanol?

2:18 PM  
Anonymous Anonymous said...

No, I am not a supporter of ethanol. Ethanol has been nothing more than an expensive gimmick.

The media, and Barack's energy advisers, are behind the curve with regard to advances made in green tech in the last 12 months. A political blog is not the place to get into what those advances are; however, the announcement by Ford this morning underscores well that the technology is there.

When Hillary ran in 2008, she talked passionately about creating a new economy of millions of high tech, green jobs. Barack climbed on her bandwagon in the primary, but anyone really listening knew he was doing nothing more than paying lip service to the idea, and that has played out in his administration.

Our country needs an energy mandate- yep, I said it. A energy mandate dictating that 70% of our energy be derived by alternative energy sources by the year 2030 or so creates instant demand and hundreds of billions of dollars in investment. As a businessman, I am so there.

Before you get hysterical, try thinking Iran. Our nation is in trouble, and this time, the threat is real. Iran is run by crazy fools. Our energy dependence abroad is putting our security at home at serious risk.

Next March, I am dumping my car and buying a lexus. The Ct200 hybrid lexus. 43 mph on the highway, 41 city. Using the Costco buying car service, I will be paying 28k. Not bad for a luxury car. You would do well to think twice about this example before spouting off that the green movement is a movement we cannot afford.

Gosh, I didnt even mention global warming once. Green tech. It solves our dependence on foreign oil, creates a new economy, and addresses the global warming crisis confronting the world.

Some in the media spent all day today trying to pin down Ford on the cost of the 2013 Fusion. It may very well be too expensive for the vast majority of consumers. The Lexus C200 is not.

By the way, solar is now competitive with coal in certain parts of the nation. Check it out if you dont believe me. And be careful before you cite a source. The source is probably already dated.

9:29 PM  
Blogger John McAdams said...

Our country needs an energy mandate- yep, I said it.

It seems you have learned nothing from ethanol, or from the Synfuels Corportion.

Government has a terrible record of deciding what sort of energy people should consume, or how it should be produced.

1:31 PM  

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