When it comes to the liberals’ relentless, foolhardy mission to promote green energy technologies and electric cars at great expense to taxpayers, it can truly be said that they are penny wise and dollar foolish. What’s happening with the Chevy Volt is a perfect example of this.
The Chevy Volt might not be burning through as much fuel as an SUV— although you’ll only save about a gallon a day as compared to another fuel efficient car in a scenario where the car is driven over thirty miles per day— but it’s burning a hole in taxpayers’ pockets.
The Congressional Budget Office has come out with an analysis of the cost to the government (and consequently to taxpayers) of subsidizing electric cars, primarily through tax credits. What did they find? Not only are these subsidies extremely costly to taxpayers and consumers. They are also very ineffective at accomplishing the stated goal of protecting the environment.
Even with $7,500 taxpayer-funded rebates for electric vehicles, people still are not buying them. CBO explains that despite the tax credits, electric vehicles have a higher lifetime cost for consumers. In fact, in order to be cost-competitive with a conventional vehicle, the vehicle would require a tax credit of more than $12,000.
Today the House will be voting on the “No More Solyndras Act,” which, if it becomes law, will protect taxpayers by prohibiting any new loan guarantees from Title XVII of the Energy Policy Act of 2005.
Heritage Action has continually called for an end to futile and wasteful energy subsidies, recognizing that what is best for consumers and taxpayers alike is to allow the market to decide which companies will succeed.
The “No More Solyndras Act” is a good place to start in the process of reforming our nation’s market-distorting energy policy. Heritage’s Nick Loris has outlined the additional steps that are necessary to ensure energy policy continues to improve:
“Ensure that recipients pay the full cost of the subsidy as determined by an independent, private financial risk assessor. Currently, loan recipients are responsible for paying the subsidy costs—a determination of the long-term liability to the federal government of the loan guarantee… Instead of relying on government entities to determine the loan guarantee costs, a condition of future loan guarantees should be that the actual subsidy cost be determined by an outside, private financial risk assessor. This will protect the taxpayer by providing the best, independent information to determine the actual risk of providing the loan guarantee and ensure that the loan guarantee recipient is actually paying the subsidy cost as required by law.”
Over the course of the 112th Congress, Heritage Action has been at the forefront of an ongoing effort to end the market-distorting subsidies in the energy markets. Whether it is loan guarantees, various forms of tax credits, or mandate structures that skew the economic landscape, we believe that the ball game of picking winners and losers is a losing one and there are plenty of examples of its failures.
In the last two years, we have watched as lawmakers’ efforts to pick preferred energy and technology fields result in failure, as those “investments” do not become market competitive or fail completely (see Solyndra).
Representatives Mike Pompeo (R-KS) and Jeff Flake (R-AZ) have been two warriors in calling for an end to these subsidies. Recently, they began pushing an important letter on the expiration of the wind Production Tax Credit (PTC).
Their position is that should the House consider any package of tax extenders, it should not include any kind of extension of the wind PTC. Heritage Action strongly supports this letter and encourages members to sign.
One would think that Solyndra’s massive failure would leave little doubt in lawmakers’ minds about the viability of subsidizing energy companies, especially those that cannot compete in the free market. But sometimes logic goes out the window when political motivations come into play for members of Congress. Needless to say, this has been a bipartisan problem.
Fortunately, the tide is turning.
This week, the No More Solyndras Act (H.R. 6213) is up for a vote on the House floor. In July, Heritage Action advised Congress to reign in reckless, politically motivated spending on energy projects by passing this act; the message remains the same today.