Much of the news in the past month has focused on the pervasive corruption in our nation’s capital. Stories such as those about Maxine Waters’ alleged malfeasance have garnered prominent positions in the headlines. But it is odd that the media has ignored an even larger issue of corruption: the government’s self-interested policies regarding General Motors
Maxine Waters is accused of helping to disperse TARP money to the bank OneUnited. Thanks to Waters’ lobbying efforts, $12 million was allotted to OneUnited to ensure its solvency. This would not be wrong or, dare I say, criminal, if Waters’ husband, Sydney Williams, didn’t own a significant amount of stock in the bank and have a position on its board. Prior to the crisis, Williams’ stock was valued at $350,000; it declined to $175,000 after the financial collapse. It is safe to say that Waters was an interested party in the bailout of this particular bank, considering that her husband’s stock would be worthless if OneUnited had gone bankrupt.
Any clear-thinking person can smell the impropriety of such behavior. It is outrageous that a public servant would use her position to reap financial benefits at the taxpayers’ expense. But can’t the same be said of the government?
The government currently owns 60 percent of GM and, therefore, maintains an interest in its re-emergence as a leader in the automaking industry. Its current plan is to promote the Chevy Volt as a new green-technology car that represents the future of industry. Obama even test drove the Volt and remarked that it was “pretty smooth.” Well, considering its $41,000 price tag, it better be “pretty smooth.”
But fear not, savvy consumer. The actual cost to you will be just $33,500, thanks to the thoughtful $7,500 federal tax credit that the government is providing to consumers for the car it is selling. Due to an additional state subsidy, the price drops to $28,500 if you live in the bastion of liberalism known as California.
Are these the only competitive advantages the government has created for the company it owns? Not quite. The government also subsidized the production and design of the Volt to the tune of almost $400 million. This means that the Volt would have been exponentially more expensive had a private company produced it without any external help. Some suggest the cost of the Volt would be as high as $81,000 without subsidies or tax credits. Regardless of the exact number, it is undeniable that without the competitive advantages that come with being a partner of the US government, GM would be selling the Volt at a loss.
It is amazing that anyone would point to this car as an example of how Big Government can improve lives. If anything, the government has acted criminally. It has used taxpayer money to provide financial aid to a company that it owns a majority stake in. Considering the amount of money involved, what the government has done is actually worse than what Maxine Waters is accused of doing. The government should be held to the same scrutiny that Congresswoman Waters is being held to.
When the government acts in this way, it is nothing more than a thief. Its hypocrisy only makes its transgressions worse. I guess the slogan on Congressman Ron Paul’s desk remains true, “Don’t steal; the government hates competition.”
J.D. Thorpe has worked at The Patrick Henry Center for Individual Liberty and at George Mason University’s Institute for Humane Studies.