Chevy Volt Subsidized by US Taxpayers

WASHINGTON: Obama’s budget proposal this week includes a $7500 tax credit for all electric vehicles like the Nissan Leaf or the Chevy Volt. Such proposals have popular support and seem on first glance a benefit to consumers and taxpayers alike. Upon further examination this particular initiative neither improves the environment nor helps the economy, but instead amounts to a transfer of wealth from the poor to the rich. Let’s look at it.

The assumption that electric vehicles are cleaner for the environment is not one without challenges. Electric vehicles get their fuel from the coal-driven power grid. They also introduce a new pollutant to the environment, substantial quantities of lead. When compared to the clean cars already on the market the new EVs do not present a substantial improvement to the environment:

What’s going on here? ”We’ve known for quite some time that zero-emissions cars wouldn’t make much difference if they substituted for very clean ones,” Robert Hahn, an economist at the American Enterprise Institute, said.

And new cars are very clean: the gasoline-powered cars mandated for California remove 95 to 98 percent of the pollutants detrimental to health. Note, too, that most plants in California generating electricity for the electric cars burn natural gas, emitting pollutants that offset part of the already modest gains made at the tailpipe. Peter Passell, New York Times

How popular are these vehicles and what kind of impact they will have in the environment is still being discovered. Last year is the first year the Leaf and the Volt were offered for sale. If you add January 2011 sales to the total of 2010 sales you get 650 Volts and 106 Leafs were sold in the entire US. The most hopeful 2011 sales forecast is 20,000. 20,000 vehicles will make no difference to our environment. Is the $220 million price tag worth it?

Another part of the initiative are grants of $10 million each to 30 cities to build public plugin stations. It only makes sense to put these stations in highly populated areas like the Northeast, Chicago, and the West Coast. Another $300 million payoff to blue state Obama voters.

Let’s look at the $7500 price tag of the Obama tax “incentive”. What is the source of this $7500? $5000 comes from taxpayers and $2500 is borrowed. If you add the interest payments of a 30 year bond on the part that is financed you add $3500 to the cost, bringing the total cost to American taxpayers to over $11,000. Even though many think that the “poor” pay no federal taxes, yet all employed persons pay FICA and Medicare which funds are poured into US general revenue coffers and spent at will. You can be assured that none of those folks can afford the $40,280 price tag of the Chevy Volt, even with the subsidy.

Obama at "Work" Again

Since the US government owns General Motors you can expect initiatives like this one. That’s what happens when government takes over private industry: they tilt the playing field for their benefit. Just last week the Department of Transportation exonerated Toyota for last year’s accelerator scare. The US government did all they could to pound Toyota for their impertinence of becoming the world’s #1 carmaker, all in an effort to depress Toyota sales and benefit GM. At the time NIP warned our readers of the motives behind the scare and now the Department of Transportation has proven us right.

Obama’s $7500 subsidy amounts to an advertising program for GM, a payoff to auto unions, and a blue state get-out-the-vote drive. Sure, GM and the UAW make money, but where does the money come from? It comes from taxpayers who have no choice in the matter and who can’t afford it. It’s robbing the poor to benefit the rich. Where is Robin Hood when we need him?

Obama is "Fixing" More Than Your Car

WASHINGTON (or is it Detroit?): The NIP was the first to call into question the Congressional witch hunts against Toyota. Our position was that all credibility of the National Traffic Safety Administration has been lost now that Obama is in the car business. Turns out we were right, but it goes much further.

When unions spend more than $60 million on an election, they demand results. That money put Andy Stern, head of the SEIU, in the White House more than any other visitor. Andy Stern warned us that the union thugs “prefer to use the power of persuasion, but if that doesn’t work we use the persuasion of power.”

Big money always means big influence. Unions came out on top when it came time restructure GM, ironic because unions were at the heart of the automaker’s troubles. Guess who receives barrels of union money:

We are told that 19 of the 36 Democrats on the House Energy and Commerce Committee were given sizable checks by the UAW for their election campaigns. We also learn that 12 of 25 Democrats on the House Oversight and Government Reform Committee got checks, too. In my opinion, such a conflict of interest puts Toyota at quite a disadvantage…

I offer this from Brian Johnson, who serves as the Federal Affairs Manager for an outfit called Americans for Tax Reform. He writes, “When GM fired over 35,000 employees between 2006 and 2008, Toyota laid off zero. GM loses almost $2,500 in profitability per vehicle where Toyota makes almost $1,500 per vehicle.

“This is largely due to GM’s forced union contracts. GM’s union, the United Auto Workers (UAW), mandates that GM pay, on average, each non-skilled line worker about $33 per hour. This inflated wage includes workers who are “idle,” meaning they don’t have a specific job that day, but can still come to work, sit in a special facility and collect a pay check,” Johnson explained. Roy Exum, Chattanoogan.com

As independent examiners look into the so-called “evidence” it turns out that much of it has simply been manufactured in order to smear the number one automaker:

During last week’s hearings, a tearful Rhonda Smith of Sevierville gave a compelling testimony, but we have since learned the car in question was promptly sold, that nothing could be found wrong, and it has since been driven 27,000 miles without an incident. That wasn’t told at the Congressional hearing.

Worse, an “expert,” Dr. David Gilbert of Southern Illinois University, offered testimony from research he said he had done but afterward, when he was asked to duplicate it for unbelieving Toyota researchers, it could not be replicated. Further, it was not revealed at the hearing that Dr. Gilbert’s research was … er, “funded” by lawyers with suits pending against Toyota. In my opinion, that’s not right.

Today comes word from the highly-respected Consumer Reports that, “as early as this week,” they will return eight Toyota models to their vaunted “recommended” list because – Congress not withstanding – Toyota products have factually been proven to be among the most reliable automobiles in the world.

On Tuesday the spring auto issue of Consumer Reports will be released and – what is this? – Toyota is again No. 3 on the list. (Honda and Subaru are tied for first.) Ford is ranked 11th while GM and Chrysler are again at the bottom of the annual rankings.

Last year Toyota displaced General Motors as the world’s largest automobile manufacturer. Today there are Toyota manufacturing plants in eight states that employ 35,000 workers. This week at least three of the plants will be idle – due to the recalls. But, get this, Toyota will still pay each worker, having them attend safety classes rather than man the assembly lines. Roy Exum, Chattanoogan.com

These kinds of shenanigans are what you can expect when government gets out of control. GM and the country would have been far better off had GM been allowed to go through normal restructuring. The whole point of government assistance was to avoid bankruptcy, which happened anyway last June. With a normal bankruptcy GM would have been able to redraw its union contracts, but the Obama administration stepped in and not only prevented such action, but awarded the union with control of the company.

With the unions in control of GM, Congress and the White House, they are on now in full attack mode against Toyota and free enterprise. Are you feeling safer yet?

Market Manipulation?

WASHINGTON (or is it Detroit?): Just as one Federal investigation of Toyota is winding down, the National Traffic Safety Administration announced today that they are launching an investigation of possible flaws in Toyota’s steering system, this time in the bread and butter Corolla line:

The National Highway Traffic Safety Administration will open an investigation into a possible flaw in the steering systems for the 2009-2010 Corolla, likely to lead to another massive recall for Toyota, ABC News has learned.

NHTSA says it has received 163 complaints about the steering causing the Corollas to veer from side-to-side. A number of accidents and injuries have been tied to the issue, according to federal officials. ABC News

While the NIP does not dispute the seriousness any Toyota car accident, we do have serious questions about the frequency of charges leveled against the automaker by the Federal government. Could the steady barrage of charges against the automaker be market manipulation?

It wasn’t so long ago that Toyota was vying to be the number one automaker, the car of choice for the value-conscious consumer. GM appeared on its last legs due to its declining market share and extremely high labor costs. Indeed we were told that GM was on the brink of survival and needed massive cash infusions from US taxpayers to even keep the doors open.

GM was saddled with draconian labor contracts that added $1,635 per vehicle on health care for active and retired workers in the US. Toyota costs were $215 for active laborers, and zero for retired workers. Union work rules added  another $630 per vehicle to every car, compared to zero for the Japanese firm. If GM wished to idle a plant for any time at all union rules required it to pay union workers 95% of their take home pay plus all of their benefits. (2007 figures reported by CNN.) The sweetheart deals cut with big labor threatened to strangle the GM golden goose.

Fortuitously for the unions the 2008 Presidential election rolled around. Rather than make concessions to help GM become more competitive, the unions pumped over $60 million into the Democratic campaign, electing Barack Obama. GM was nationalized,  bondholders were stiffed (read your retirement plan), and unions walked away with 17.5% ownership cementing their permanent control over the automaker.

Today finds union leaders being the most frequent visitors to the White House. The constant pummeling of Toyota by Federal officials it makes us wonder how many of the recent charges are overreactions calculated to smear the Japanese automaker to the benefit of Government Motors.

While such a charge is beyond the resources of the NIP to prove, the point is that we shouldn’t have to prove it. The government should not be involved in private enterprise. When it is, the impartiality that we depend upon to ensure justice is compromised.

Do you really think that James Madison intended for the US government to become the biggest automaker in the world? How do you think Thomas Jefferson would react if next fall’s GM lineup included the 2011 Jefferson Jettabout?