When it comes to spending exorbitant amounts of taxpayer dollars on subsidies and bailouts for private companies, most politicians (regardless of party) will run to the nearest microphone to boast of how they are “investing in America” and “creating jobs.”
For example, during his 2011 State of the Union address, President Barack Obama used the phrase “winning the future” to propagate the lie that spending billions on his wasteful spending proposals would benefit Americans. Of course, Obama needed such “hooks” to sell his gimmicks to the public, given the failure of his 2009 stimulus bill and other wasteful spending activities.
One of the best examples of these wasteful “investments” is the subsidies that have been so freely given to automakers to produce more “fuel-efficient vehicles” — the Holy Grail of contemporary public policy. While automakers and the Obama administration claim that such cars are the wave of the future, consumers have not been so easily convinced.
Earlier this week, the Associated Press noted that auto sales rose by 10% in 2011, which is a welcome and positive sign for the economy. For their part, however, consumers remained largely uninterested in the more fuel-efficient vehicles being pushed by the government. In December, for example, Chrysler’s sales were driven in part by “strong demand for the Jeep Wrangler” — hardly among the industry’s “greenest” products. Similarly, Ford’s sales were strong due to sales of its Explorer SUV.
The market for fuel-efficient cars is relatively weak by comparison. American consumers do not like these non-traditional vehicles, and the reasons are neither hard to discern nor hard to understand. Electric vehicles have shorter ranges, poorer acceleration, lower high-end speeds and higher price tags than their internal-combustion counterparts (which also happen to come with designs and many “bells and whistles” not offered by their electric cousins).
It’s no surprise, then, that the Chevy Volt, a hybrid rolled out by General Motors (GM) to much fanfare in late 2010, has been a clear flop.
Obama used the Volt project to paints himself as the nation’s car-salesman-in-chief, most prominently during a photo op at a GM plant in July 2010. The leader of the free world got behind the wheel of a Volt, drove it about 10 feet, and proclaimed the car “pretty smooth.” This photo-op stunt was hardly a test drive that would convince the average consumer to spend tens of thousands of their hard-earned money on a new car, but it appeared good enough for the country’s “driver-in-chief.”
GM has set high corporate hopes for the car, anticipating at least 10,000 sales in its first year on the market. But the Volt’s prestige quickly faded once it hit showrooms. It was recently dubbed one of the “worst product flops of 2011” by the blog 24/7 Wall St, which noted that “[o]nly 125 models were sold in July 2011” at a time when GM was disingenuously claiming the vehicle was wildly popular.
Despite a $7,500 taxpayer credit for buyers, Volt’s hefty $39,000 price tag is beyond the reach of many middle-class drivers. As a result, only 7,671 were sold — many of which were purchased by the federal government. The actual number sold to parties not connected to the taxpayer-funded entities was somewhat lower.
According to James Holman at the Mackinac Center, a Michigan-based free-market think tank, taxpayers have now subsidized the Volt to the tune of $250,000 per car — or $3 billion in total subsidies. Meanwhile, many Americans are unable to purchase the new cars and trucks that they need for their families and small businesses.
If there was ever a perfect example of why the government should not be using taxpayer dollars to create markets for products based on bureaucrats’ perceptions of what the markets should look like and how consumers should respond, it is the story of the cute little Chevy Volt. Still, the odds are high that in 2012 neither Obama nor those in his administration who share his “green” vision of the American economy (especially his transportation and treasury secretaries) will admit that last year’s Volt debacle was anything but a great success that should be encouraged, not defunded.
Henry Ford Jr. had the fiasco with the Edsel, which he introduced in 1959 and had to discontinue less than two years later. But at least Ford used stockholders’ money for the project and not taxpayers’ money. The Volt is Obama’s Edsel, but it’s being paid for by you and me, without our permission.
Bob Barr represented Georgia’s Seventh District in the U.S. House of Representatives from 1995 to 2003. He provides regular commentary to Daily Caller readers.