Detroit, Mich. — If they are reading today’s auto news, Americans must think Washington has gone stark raving mad.
With the Obama Treasury Department in the midst of committing a combined $57 billion in taxpayer money to General Motors and Chrysler to save the U.S. auto industry and advance Detroit’s investment in alternative-technology vehicles, the same administration’s Department of Energy (DOE) just gave $1.6 billion in loans for developing electric cars to . . . Nissan.
Washington is at war with itself — the inevitable result of getting too deeply involved in the U.S. auto market while trying to save the planet and Detroit automakers at the same time. And the farther that D.C. goes down the rabbit hole, the weirder things become.
This sordid tale began last fall when $25 billion in green DOE loans was designated to help automakers meet Washington’s onerous 35-mpg-by-2015 fuel-efficiency rules by helping auto plants retool. But as GM and Chrysler went into a nosedive, the Bush administration cut a deal with Democrats to redirect the money to keep Detroit afloat. Determined GOP fiscal conservatives — led by Tennessee senator Bob Corker — demanded that the loans come with conditions that GM and Chrysler draft viable business models. But when Big Labor refused, the deal died, and the DOE money was left on the table. Desperate for bailout cash, the Bush administration plundered $17 billion in TARP funds in order to keep Detroit alive.
Six months and dozens of applications later, the DOE announced this week that Japan’s Nissan would be among the first recipients (along with Ford and Tesla) of its $25 billion in prizes. As a result, Nissan, which — along with Hyundai, Kia, and Volkswagen — has been carving chunks out of GM and Chrysler market share, will now receive U.S. taxpayer money to do further damage to U.S. companies that U.S. taxpayers are paying to keep afloat.
This mess is probably best illustrated by the predicament of Sen. Corker, whose state of Tennessee stands to benefit as Nissan uses the federal largesse to retool its Smyrna plant in his home state.
Nissan’s DOE investment will result in “good paying jobs that move our state and country ahead and help us become more energy secure. This means 1,300 jobs for the area, it secures Tennessee’s position as a leader in America’s energy future, and it continues to tell the world that Tennessee is THE place to do business,” said Corker as he accepted the spoils.
In an interview, Corker acknowledged the irony of the Senate’s most prominent critic of government-meddling accepting auto subsides, saying he has “a healthy degree of skepticism” that government programs can drive market results. Still, he expressed confidence that Nissan, unlike Chrysler, was a healthy concern that would ultimately pay back the loans.
Nissan’s health aside, that is a leap of faith given that government’s track record at picking successful technologies is nonexistent, and that no mass market for electric vehicles has yet been proven to exist. Inevitably, the DOE’s loans will be augmented by more U.S. taxpayer subsides to try and help sell the vehicles that the original subsidies helped to build. After all, it’s worth remembering that the Obama administration’s Treasury arm (as opposed to its DOE arm) has judged that GM’s own electric car effort, the Chevy Volt, is not “commercially viable.”
Curiouser and curiouser. Better that the U.S. government never dragged taxpayers down this rabbit hole in the first place.
– Henry Payne is a writer and editorial cartoonist for The Detroit News.
EDITOR’S NOTE: This article has been amended since its initial posting.