By on January 2, 2012

An op-ed piece in  The Washington Post praises the wisdom of Congress that refused to renew the 45-cent-per-gallon tax credit for corn-based ethanol and the 54-cent-per-gallon tariff on imported ethanol, thereby exposing alcohol to the rough treatment of the market. Also not extended was the tax credit for installing a charger at home or in a commercial location.

The WaPo thinks killing the $6 billion incentive to turn corn into fuel, and letting EV owners buy their own charger was righteous, but only a half-measure. Congress should have finished the job and should have finished handing out $7,500 tax credits to buyers of EVs. The WaPo thinks it’s a waste, and the technology is going nowhere.

 “Evidence is mounting that President Obama was overly optimistic to pledge that there would be 1 million EVs on the road by 2015. Electric cars are not likely to form a significant part of the solution to America’s dependence on foreign oil, or to global warming, in the near future. They simply pose too many issues of price and practicality to attract a large segment of the car-buying public. More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.”

 What say you? Kill the credit or let it live?

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107 Comments on “WaPo: Kill The EV Tax Credit!...”


  • avatar
    acuraandy

    ;:If I can’t write off a non EV’s loan interest, then I don’t think EV (and even as a former TDI owner, ‘clean’ diesel) buyers should get a subsidy.

    If you want to waste your money on these glorified golf-carts, go ahead and spend your own. Me, your ‘neighbor’ shouldn’t have to spend a penny.

    :)

    • 0 avatar
      axual

      Go drive a Chevy Volt. They are not glorified golf carts, though I agree the tax credit is unfair. But then so it your comment that they are glorified golf carts.

    • 0 avatar
      Dr. Kenneth Noisewater

      You can have your money back when I, as a single renter, get the money I spent on your kids and mortgage deduction back.

      • 0 avatar
        CJinSD

        I’m a single renter too, and I have no interest in buying someone a second car.

      • 0 avatar
        darkwing

        Let’s clear up one misunderstanding right away — tax cuts, deductions, etc. are not spending. Asking for them “back” is just an underhanded way to claim other people’s money.

        Now, if you want a refund of all that money you’ve wasted on other people’s kids — and I have a sneaking suspicion your definition of that is going to be hilariously expansive — I’m fine with that, provided you sign away any future claims to entitlement programs you didn’t fund yourself. But somehow I don’t think you’ll do that…

      • 0 avatar
        28-cars-later

        I would happily give up stake to all ‘entitlements’ in exchange for my all of my money back and exemption from futures taxes to support them. I don’t see these existing in 2041, and in the mean time I could invest in my own retirement through real estate, gold, stocks, etc. But the problem is, the powers that be know this, and would never allow anyone to willingly escape the Ponzi scheme.

  • avatar
    dvp cars

    …….I knew I shouldn’t have bought those Tesla shares. On the positive side, the waiting list for the first ones just got a bit shorter.

    • 0 avatar
      ckb

      You sure about that? A huge gripe from all over the place is that tesla cars are for rich people who are going to buy them subsidy or not. Even without the subsidy I think the sedan (…pending I know) is absolutely worth a $56k base price. From what I’ve seen its looking to be every bit as nice as an E class, 5 series or LS.

      • 0 avatar
        CJinSD

        The half a billion dollar subsidy they already received does a nice job of that. Don’t bother saying it is a loan guarantee, as real businesses get loans without government backing. Sometimes they even pay back those loans. Check out Fisker’s prices. They’ve miraculously delivered a very complex low volume car for a price that is in the ballpark with simpler conventional cars from established makers. Those 20 mpg whales are subsidized before the income tax deduction.

      • 0 avatar
        darkwing

        And having seen a Karma or two roaming downtown Chicago, I’d say the premium is worth it for the extra sex appeal alone. Holy crap, that’s a stunning car.

        The one thing I’ll give Tesla credit for is battery design; it’s not cheap, and it’s not the lightest, but they’ve done an excellent job of making it workable while also making it very safe.

      • 0 avatar
        dvp cars

        ….ckb……this is one case where I wish you were right. Unfortunately the market must read the Washington Post (and most of TTAC’s posts), as TSLA-Q is down about 3% today in an otherwise buoyant session. Apparently the feeling is that, as much as those rich capitalists hate the idea of subsidies, they will like it even less when a subsidy that suited them gets snatched back. The rich didn’t get that way by gleefully accepting $7500 price bumps on eagerly awaited new toys. On the other hand, self interest makes me hope I’m wrong (again).

  • avatar
    Pch101

    Credits are useful for stimulating demand when the consumer inaccurately perceives the risks of a new technology as being too high, or when they like the product but can’t afford to buy it due to the initial lack of scale.

    That isn’t the problem with EV’s. The issues with EVs are obvious — the ranges are too short, the recharge times are too long. Fixing that problem requires an improved product, not a subsidized purchase price. Consumers are wise to show little interest in them, since the existing vehicles suffer from technological handicaps that limit their usefulness.

    If I was operating the policy, then I would subsidize the R&D that improves or replaces the battery. If that battery replacement is ever invented, that’s the point when I would offer a temporary credit so that consumers become aware of the technology and allow the early adopters to prove that it works. But at this point, EVs are not really ready for the mass market, and selling a few more of them won’t get them there any faster.

    • 0 avatar
      stuki

      “Credits are useful for stimulating demand when the consumer inaccurately perceives….”

      While some self aggrandizing ‘expert’, on account of noble birth, some multiletter title awarded by an institution of suitable pompousness, or unusual luck at suckering fools into casting a vote for him, accurately perceives differently, I assume?

      Some sort of case can be made for credits as a “reverse tax”, where the products not receiving the credit are being made to pay for externalities they cause. For example, “everyone” drives cars, hence pay for a bloated military presence in the Middle East to “secure” oil. Something predominantly nuke and coal fueled EVs kinda shouldn’t have to. Sane people in sane societies would, of course, be better of paying for externalities in a more direct and properly allocated fashion; but the era, if ever, when any Western society fit that description, is long since gone.

  • avatar
    carguy

    Kill all energy subsidies – oil and electric cars included.

    • 0 avatar
      dwford

      +1

    • 0 avatar
      Dan

      Energy is the most basic infrastructure of industrial society. Keeping all forms of energy as cheaply, widely and redundantly available as possible is a top 5 national interest and you could make the case for top 1.

      Buying toy cars for hollyweirdos doesn’t build infrastructure. Taking that out of the energy budget should be criminal.

      • 0 avatar
        Dr. Kenneth Noisewater

        No, either all get subsidies or none do: I prefer none. Live within our energy means, and let private companies pay for the security of their oil shipping, and pass the full cost onto the consumer. Of course, we could have unbelievably cheap energy from thorium LFTRs for thousands of years, and use them to create fuels as well as power and fresh water, if there weren’t entrenched energy interests (both carboniferous and uranium-based) and so-called greenie retards out there.

      • 0 avatar
        jco

        @ Dr Kenneth:

        I am seeing more information and doing my own research about Thorium recently. This is a concept I hope catches on. sure there are potential downsides and risks, but it really seems like this could completely shift our current energy paradigm. should that ever come about, it is foreseeable that the kind of energy they could put out on the grid could open the door to a more electric-car friendly infrastructure. but in the world today, yes EVs are just toys. and if not electrics, than hydrogen. it seems that hydrogen may be the better solution. it isn’t now, because hydrogen is the energy store, not a source of energy. but those thorium nuclear plants could easily power the hydrogen conversion process.

        you cannot sell a car that will go roughly 200 miles (under ideal conditions) before needing hours at home or work to be able to do it again to a public that is used to being about to go 200 or 2000 miles any time they want, knowing their next energy fillup is on the next block or interchange and it will take all of 5-10 minutes. if you’re buying an EV now, you’re doing nothing to help anything. the energy for your transportation is still coming from fossil fuels. or outdated nuclear energy. and you get a more expensive car you can’t even use like a normal car.

  • avatar
    Lokki

    Wow! Who slipped the truth-serum in the Wash-Po’s drinks on New Year’s Eve?

    They ‘re completely right. Corn has not worked well as fuel, the Volt and Leaf are interesting but really makr zero sense (particularly compared to the Prius) and as much as I admire the Fiskar, I’m still having trouble with the idea of giving them $500 M of taxpayer money.

  • avatar
    TonyJZX

    $32,000 volts and $50k+ teslas/fiskers and such… these are rich people’s 2nd car toys anyway

    first fisker goes to leonardo dicaprio? says it all really

    the credit is not bringing EVs to middle class people… not that they want them anyway

  • avatar
    dwford

    Subsidizing EVs is like subsidizing coffee makers that only make a 1/2 cup at a time, with an hour before you can get the other 1/2 cup. Consumers recognize the uselessness of the product, and even with subsidies, don’t buy.

    • 0 avatar

      You get today’s comment prize. I definitely feel the pain

      • 0 avatar
        Southerner

        I second that motion, con gusto. A long time ago, in a society far away, our “representatives” began nudging “we the benighted” into government “sanctioned” economic activities via the tax code. It sure seemed like a good idea at the time to open Pandora’s Box. After all, a tax break to encourage home ownership is a good thing, right? Power! Skipping ahead and yada yada: A small business owner shall not pay an employee less than the government decrees; a shower head shall not deliver more water, nor shall a toilet flush more water, nor shall a light bulb use more power, nor— etc., etc,… than the government decrees. Now? “You will buy health insurance,” Uncle Says! Doom.

  • avatar
    mdub523

    In what instances has the government been successful in “creating” demand for a product? I’m not being snarky, I’m genuinely curious because the argument is made that the government can kick-start demand for EVs and whatnot quite often that there must be instances where it has worked.

    There are tens of thousands of gas stations (I realize this does not parallel EVs exactly) in this country, as far as I know they were privately financed because people who were investing their own money did the calculus and realized it was a worthy investment. Was gas station construction subsidized by the government in the very beginning because investors couldn’t see past tomorrow?

    • 0 avatar
      400 N

      Oh that’s too easy.

      Your national highway system was a massive government project that created demand for automobiles.

    • 0 avatar
      mkirk

      Outside of illicit drugs I can think of none. And as to the interstate highway system, If I remember correctly it was created to ensure rapid deployment of troops in the event the Ruskies invaded.

      • 0 avatar
        28-cars-later

        You are correct. Incidentally long straightaways were purposely built in them so the highways could act as secondary bomber airstrips in the event of nuclear war.

    • 0 avatar
      Pch101

      In what instances has the government been successful in “creating” demand for a product?

      From the Erie Canal to the Transcontinental Railroad to the interstate highway system, government has been stimulating demand for transportation and goods mobility for 200 years.

      Without a subsidized post office, there wouldn’t have been Rural Free Delivery, which essentially allowed Sears to become what it did.

      Of course, you are using the internet, which was a joint venture project created by the US military and several universities, including some public universities. And so on, and so on.

      But the problem with EVs is that we already have cars that are better suited to the needs of consumers. In order to get large numbers of consumers to switch, EVs have to be at least as good as, if not better, than the internal combustion counterparts. The government can’t force us to like something when there are already alternatives that are superior, at least from the consumer’s standpoint.

      • 0 avatar
        jkross22

        Developing infrastructure capacity is one thing… subsidizing a product that can be bought without any incentive is just plain stupid. This subsidy is an example of government attempting to pick winners and losers.

    • 0 avatar
      fred schumacher

      I farmed land in North Dakota that had been given by the federal government to the railroad, which in turn sold the land to pay for its development. This was a huge subsidy which makes the present subsidy to alternative energy vehicles look like peanuts in comparison. The railroads were given every other square mile in a 20 mile wide corridor.

      Without that subsidy, the U.S. could not have expanded or become a powerful nation as rapidly as it did. After Lewis and Clark came back from their voyage of discovery, President Jefferson thought it would take a hundred generations to settle the west completely. Because of federal subsidies to railroads, it was done in a tiny fraction of that time estimate.

      Saying that the federal government has done nothing to advance society or create economic activity is a trope that is easy to repeat but bears no connection to reality.

      • 0 avatar
        Kendahl

        The back side of the land given to the first transcontinental railroads was that the federal government received preferential freight rates. Over a long time, that more than paid back the value of the land.

        The Erie canal, the transcontinental railroad and the interstate highway system have the same thing in common. They are transportation corridors that engineers already knew how to build. The electric automobile is new technology with severe limitations that make it impractical as a substitute for existing technology.

        Governments do well funding extensions of proven technology that are too expensive for the private sector. Also, it’s wise for the government to fund basic research which is of general value even if the payback is far in the future. What they consistently fail at is picking new technologies. The Japanese tried it in the ’70s and ’80s and produced analog high definition television, which was obsolete on arrival, and were expected to produce home computers with working artificial intelligence, which still hasn’t happened. They also were reluctant to let Honda get into the automobile manufacturing business. Whenever I hear someone proposing a national industrial policy, I want to tell them, “If your IQ can be expressed in less than seven digits, you aren’t smart enough.”

      • 0 avatar
        Brad2971

        Yes, and the land was bought by speculators, at prices which have never fully recovered in inflation-adjusted terms. Makes one wonder what would have happened if the federal government had the economic and scientific tools of, say, the 1950s back during the homestead days. My guess is that, outside the major river valleys, most of the Great Plains would have never been touched by the plow.

      • 0 avatar
        Southerner

        That is a damned good example, Fred. However, though perhaps not an ineluctable result, it was certainly foreseeable that corruption (on a massive scale) would ensue. Hence Credit Mobilier. Think Solyndra, and there will be more, many more Solyndras. The federal government is now so powerful, so intrusive, so cumbersome, so bloated, entrenched, redundant, self-serving, nannyish and(!), so far removed from its intended purpose of preserving each citizen’s liberty that: I despair.

    • 0 avatar
      indi500fan

      The govt has been VERY successful in creating demand for food stamps, energy assistance, free cell phones and hs internet, medical care, section 8 housing, and many other “products”.

      • 0 avatar
        jkross22

        $15.3 million for the infamous Alaskan bridge to nowhere
        $10 million for a remake of Sesame Street for Pakistan
        $764k to study how college students use smartphones for social networking.

        Your tax dollars hard at work…

    • 0 avatar
      VanillaDude

      Dude –

      RFD created Catalog department store shopping that boomed for a Century.

      Online shopping is booming thanks to The Internet.

      The Interstate System opened up new land to develop.

      Geez, even Lewis and Clark’s Expedition was an important development in developing everything west of the Mississippi.

      But the EV Tax Credit is not the same. It would be like President FDR giving out a tax credit on electric toasters that cost $800 each on the market.

      Higher electric consumption via electric cars will simply increase the amount of pollution produced by our nearly 100% coal burning electric plants. Whatever the advantages of the electric car, is offset by disadvantages in other areas.

      Kill the EV tax credit.

      • 0 avatar
        darkwing

        Just so you know, the actual figure, which is quite easily researched, is more like 46%. Did you just make up “nearly 100%” off the top of your head, to bolster your argument?

  • avatar
    forraymond

    Allowing tax credits for R&D makes perfect sense. Also, tax credits for producing products in America makes sense.

    If Brazil is able to produce gasoline from sugar cane, we should have been able to do so decades earlier. I would venture to guess that Big Oil (and paid off politicians) are the reason we are still held hostage.

    • 0 avatar
      Kendahl

      I think Brazil produces ethanol from sugar can, not gasoline. I have read that Brazilians prefer straight gasoline to any ethanol blend. Still, it makes more sense to produce it from sugar can than from corn.

    • 0 avatar
      amca

      I’m part owner of a small business, and let me tell you this: we got the R&D tax credit.

      And we got it for doing work we would have done anyway. We make business decisions based on what we think we can sell, not on the tax break we MIGHT be able to claim.

      We just did our R&D work (most of it fairly basic stuff anyway – new product development) in the normal course of business, and when it came time to do our taxes, we said “hey, nice – a tax break.” Didn’t influence our decisions at all.

      And to claim the credit, we wound up paying a tax firm, in effect, 30% of the savings to prepare the byzantine paperwork and shepard it through the IRS bureaucracy.

      It’s one of the dumbest gimmicks government ever thought of.

    • 0 avatar
      Marvin McConoughey

      Forraymond says “If Brazil is able to produce gasoline from sugar cane, we should have been able to do so decades earlier.” We should, and were, able to produce gasoline from a variety of sources. We used our relatively abundant oil supplies.

      Brazil, unlike the USA, has a much lower population density for its land mass. They optimize their choices for them, we should optimize our choices.

  • avatar
    Sundowner

    Well this is a half-measure. I’m glad that the ethanol nonsense is gone, but I’d rather see gasoline taxed at a fair market value rather than implicitly subsidized by the governemnt in the form of unsustainably low fuel tax rates.

    I don’t like the idea of implictly endorsing Brazil bull-dozing the rainforests by eliminating the tax on the sugar cane they grow in the fertile grounds where the rain forest used to be (or will be)

    • 0 avatar
      tced2

      Gas taxes should be calculated from two numbers. X dollars needed for highway construction and maintenance. Y gallons will (estimated) to be sold. X over Y equals the tax per gallon. No discussion of “you shouldn’t be using so much gas” or “you should shouldn’t be driving so much” or “your car is a gas guzzler”.

      • 0 avatar
        Patrickj

        @tced
        That level of gas tax would be two to three times current tax rates, roughly bringing the U.S. to gas price levels in Canada.

      • 0 avatar
        Dan

        Patrickj, that’s a boldfaced lie.

        The current federal gas tax is already high enough that upwards of 30% of it is diverted to projects that aren’t highways at all.

        At the state level it’s much the same story. My state’s highway budget is a disaster and the governor (D) is demanding a 23 cent gas tax hike, higher registration fees, etc. to fix it.

        The reason Maryland’s highway budget is shot is because upwards of 20% of it has been diverted to the general fund during past 4 years to avoid union layoffs in the downturn. About half of what’s left goes to public transportation.

        You aren’t subsidizing my gas. My gas is subsidizing you.

      • 0 avatar
        Pch101

        Wrong, Dan. For every three dollars that are spent on roads, two dollars are collected from fuel taxes.

        And in any case, the fuel tax was introduced during the Depression as a debt reduction measure. It had nothing to do with paying for roads. There are no stone tablets commanding that fuel taxes only be used for highways.

      • 0 avatar
        Patrickj

        Of course, our roads are getting less than half the upkeep required to keep them from deteriorating.

        The big subsidy to driving hasn’t been mentioned yet. The third to half of the U.S. defense budget needed to keep the oil flowing from the Middle East.

      • 0 avatar
        rpn453

        It is subsidized, but it’s probably paying for the American subsidies itself by providing the U.S. with a net benefit in terms of resources. I don’t think the U.S. would be as wealthy without it. The people of that region are the ones who are truly subsidizing it. Regardless, it’s certainly strategically necessary to have control of the region to maintain status as the world superpower.

      • 0 avatar
        Diesel Fuel Only

        Pch101 is correct, the “trust fund” funded by the gasoline tax is effectively bankrupt and general revenue has been making up the difference for about four years.

        Transit and “non highway” spending is about 15% of the total collected, which is less than the 20 – 40% of the total that has been kicked-in in recent years.

        The federal tax was, adjusted for inflation, the highest it has ever been in 1960, under Eisenhower. It has not been raised since 1993 (to 18.5 cents) and has lost 1/3 of its purchasing power since, a time in which the network has expanded, traffic has increased, and the system – originally designed to last thirty to forty years – has been aging rapidly.

        By way of comparison – most of Europe does collect more in fuel tax than they spend on roads. Fuel tax in Germany is about $2/gallon ($1.50 for Diesel) and in the UK it is about $3.50/gallon + 20% VAT.

        Of course, some states have not waited for the Federal tax to go up. WA and NC have recently had big increases in their state tax and states like NY and CA, which never get as much as they pay in, have the highest state taxes, about 65 cents combined.

      • 0 avatar
        Dr. Kenneth Noisewater

        X dollars needed for highway construction and maintenance.

        I would add in the cost of maintaining security and access to foreign oil sources by the US military to X, as well as any current corporate subsidies to energy companies.

    • 0 avatar
      ciddyguy

      Regarding sugar cane, that’s not quite true, it’s the byproducts of such sugar cane that can be made into ethanol so there is no need to grow sugar cane just to create ethanol. Also, creating ethanol from sugar is much easier to do to begin with than it is from corn so that’s a MUCH more sustainable solution if ethanol is to be done at all.

      • 0 avatar
        Spike_in_Sydney

        There were 32 Million tonnes of sugar produced in Australia last year. You don’t have to clear forests in Brazil to get the stuff. There was even more produced in both India and China.

      • 0 avatar
        mkirk

        “The big subsidy to driving hasn’t been mentioned yet. The third to half of the U.S. defense budget needed to keep the oil flowing from the Middle East.”

        Here here….Don’t believe it, then let the US Navy do nothing if Iran closes the Straights of Hormuz. Maybe we could let the European Navies take care of that.

      • 0 avatar
        Herm

        The whole sugar cane is used to make ethanol.. the juice is refined into sugar and then fermented into ethanol.. the leftover yeast can be fed to animals.. the dry sugarcane husk (called bagasse) is burned at the plant for electricity and heat to distill the ethanol out of the brew. By contrast a corn ethanol mill only uses the starch from the corn.. the leftover protein, oil and yeast residue is a high quality animal feed product. Some ethanol plants are trying to burn corn stover to produce heat, instead of using natural gas.

        The battery EV tax credit is a good idea to stimulate early demand for low cost electric vehicles (Leaf, Volt,iMiev,Focus) and does not need to last forever, battery research has exploded and new announcements are made almost every day.. I would not be surprised if the mythical 1000 mile range BEV is not practical by 2020 at an affordable cost. In truth the credit is not needed because, even if the US gives up, Japan and China will continue.. they have seen the future and it is electric.

  • avatar
    axual

    Tax credits for everything should be eliminated, including mortgage interest. If you want to be fair, then be fair. Implement a flat tax, and eliminate all tax deductions and tax credits. Period, end of story.

    • 0 avatar
      alluster

      Mortgage interest deduction is designed to make people think they are saving money. What it does is increases sales leading to Higher prices, more tax revenue, more money for realtors(the biggest lobby in the US), more money for the banks, increasing prices make the homeowners feel richer, and when people feel richer they splurge more, so more consumption, more tax on the consumption and so on. I wish everyone realizes that they can actually save more money if the mortgage interest tax deduction is killed.

    • 0 avatar
      Skink

      Mortgage interest is not a tax credit. Mortgage interest can be deducted from taxable income, but only if one has paid enough mortgage interest, along with other deductible expenses, to make itemizing worthwhile(when itemized deductions exceed the standard deduction).

      Moreover, it’s important to understand the difference between a tax credit, and a tax deduction. A credit goes right to the bottom line, reducing the tax due dollar for dollar. A deduction, again, reduces the taxable income. So a $10,000 mortgage interest expense at a 30% marginal tax rate would reduces the tax liability by $3,000. If home mortgage interest was a tax credit, in this example the tax savings would be $10,000. I hope this helps those who might have been using ‘credit’ and ‘deduction’ interchangeably.

  • avatar
    ciddyguy

    Here in Seattle, I see Nissan Leafs fairly often and they ARE driven. There is a guy at work who has one and yes, there is a plug (looks like a standard plug and may be a run of the mill 120V but may be the higher 240V socket instead).

    That said, the biggest issue to electric plugin vehicles is the lack of places to plug them in to charge. Especially if you live in mufti-family housing (rented or bought) or have to park on the street, how in the hell can you charge one when there isn’t a socket isn’t in sight?

  • avatar
    alluster

    Subsidies are scams to help big corporations plus the 1% and keep the poor, poorer. They are designed to use our own money to increase consumption and to keep sales up for corporations thus increasing tax revenue too. With increased revenues, the Govt is able to hire more people to the public sector increasing their voter base.

    For example without corn subsidies, beef would be more expensive and McDonalds may only sell 100 Million burgers a year. Instead, the Govt will use our money to subsidize corn, reducing beef prices. McDonalds can now sell 150 Million a burgers a year. The subsidies come from Tax dollars anyway, so we end up paying more in the end.

    • 0 avatar
      fred schumacher

      Corn is a commodity traded on the open world market. Its price is dependent on the relationship between supply and demand, both of the corn itself and of dollars or other currencies looking for a place to be invested.

      The ethanol subsidy is a fuel blender’s subsidy and does not go to farmers. The present subsidy on corn, which was set and passed by a Republican Congress, amounts to about 1/20 the price of corn and is not based on final use.

      Beef prices are also set on the open market and are not coupled to the price of corn or soybeans but on their own supply and demand situation. That is why feedlot operators and corn growers generally find themselves in an adversarial relationship.

      • 0 avatar
        Number6

        ADM profits handsomely from the fuel subsidy.

        And now that the subsidy is gone, they’ll profit directly instead. The cost to add ethanol to gas won’t change because of this; so they’ll just charge more to close the gap. They should have eliminated the E90 mandate.

  • avatar
    400 N

    Other government subsidized industries that have resulted in technological innovations:

    Example #2

    Defense industries which are heavily subsidized by the US taxpayer resulting in development of semiconductors, which made personal computers practical.

    Example #3

    NASA created demand for space travel, satellites, etc. which is increasingly being met by private contractors.

    • 0 avatar
      Diesel Fuel Only

      Add to that, specifically, GPS Satellites & RADAR and – going way back – the prize the English gave to the person who could create a chronometer good enough to measure longitude, which is why Greenwich Mean Time and Zero longitude pass through the Royal Observatory and not somewhere else.

      Much of the aviation industry was subsidized in its early days, often with airmail contracts, and of course airports still are – municipal bonds and federal funds built those facilities, not private capital.

      The Panama Canal.

      Rural Electrification, the hydro power and irrigation schemes in the west & pacific northwest, the TVA that brought that region out of poverty, Nuclear energy, Veterans Administration loans that built suburbia and a consumer economy after WW2, New-Deal era projects like the San Franscisco-Oakland Bay Bridge, the Triborough (Cost more that the Hoover Dam), the Lincoln Tunnel, La Guardian Airport, etc. that were built with federal funds and are still used, inc. the first expressways in the USA twenty years before Eisenhower, the national parks that created a tourism industry in the country long before there was any Disney World, etc. etc. etc.

      Doesn’t anyone know any history anymore?

      • 0 avatar
        colganc

        Especially on the dams, wouldn’the governments own rules make it illegal for a private company to dam such areas on their own? I’ve heard of small streams or rivers where the land was all pricately owned or so remote and inconsequential as to have no downstream proprty issues. The dams in the NW were bemeficial in many ways, but have had drastic downstream consequences. A private entity could be sued into oblivion for such changes. The government is allowed to make those kinds of changes. At the time there were private entities with more than enough money to complete such projects. It really seems like an unfair comparison when governments are allowed to get away with such major emvironmental changes.

    • 0 avatar

      Boy, it’s amazing that as grand and all-seeing and always correct as the government is that the private sector has managed to accomplish even a single thing.

      None of the examples cited, the defense industry’s need for semiconductors (which were first invented with private funding at Bell Labs), NASA, GPS and DARPA>ARPANET>Internet were cases of the government picking a technology for market success. The market successes were all spin-offs from their main objectives, which were military, a constitutional obligation of the federal government.

      Other examples cited, the Erie Canal and the Transcontinental Railroad were not necessarily successful. In some ways the funding of the railroads parallels funding for Solyndra and other green enterprises today. Both railroads involved went broke, even after getting incredibly favorable treatment and land from the gov’t.

      It’s almost humorous and definitely ironic that someone would use the story of John Harrison’s clock and the Royal Observatory to support the notion of government investment in business.

      First off, the 25,000 pound sterling prize offered to the first person to accurately measure longitude was primarily for military purposes. Yes, Britain had a large merchant maritime fleet but the primary need for measuring longitude was for the Royal Navy. All the testing of Harrison’s clocks took place aboard Royal Navy ships. More importantly to this discussion, John Harrison had to fight almost his entire life against astronomers and others with political power. Though he did get lump sums from the Board of Longitude and Parliament, he was never awarded the official prize.

      Picking a technology that has military value has nothing to do with picking winners for the civilian marketplace. There’s much less of a knowledge problem when picking military technology. Military hardware is supposed to perform certain tasks to certain performance standards. Compare that to the market economy which has almost infinite factors involved.

      FWIW, governments have a pretty bad record when it comes to screwing individuals and companies out of intellectual property rights. The Canadian government stole patents from Bombardier and American Bantam got screwed out of IP related to the Jeep design. More recently the US Dept of Justice stole millions of dollars worth of software.

  • avatar
    zenith

    Both ethanol fuel and compact fluorescent lights have been on the market since the mid 70s and have needed government cram-downs (outlawing Edison light bulbs) or tax-subsidy propping-up since day one. How much federal and state money did it take to get people replace LPs and tapes with CDs and CDs with mp3s or to get people to abandon film cameras? If any state felt it had to outlaw cassette tapes or 35mm cameras, I’m unaware of it.

  • avatar
    nissanvehicles

    Nissan Leaf is a fantastic car from any viewpoint. So are most of the other all electric offerings are not just great electric cars, these are all great car. way better in almost every way then their gas or even hybrid counter parts. EV are the most efficient, reliable, log lasting and low cost to own cars ever. every manufacture has or is developing an EV and this tax credit is critical in maintaining this path heading to the electrification of the auto. This includes the essential hybrid growth area that will be the main “second car” that most EV owners will need and as a bridge to full EV. The Grid Solar parity is upon us and soon installed home PV cost will be as low as the cost of the current grid power. EV are not only real they are damn nice cars.

  • avatar
    tallnikita

    kill, absolutely, it did its job, they now have market data, back to regularly-scheduled model development and sales.

  • avatar
    nissanvehicles

    Nissan Leaf is a fantastic car from any veiwpoint. So are most of the other all electric offerings are not just great electric cars, these are all great car. way better in almost every way then their gas or even hybrid counter parts. EV are the most efficient, reliable, long lasting and low cost to own ever. every manufacture has or is developing an EV and this tax credit is critical in maintaining this path heading to the electrification of the auto. This includes the essential hybrid growth area that will be the main “second car” that most EV owners will need and as a bridge to full EV. The Grid Solar parity is upon us and soon installed home PV cost will be as low as the cost of the current grid power costs. EV are not only real they are damn nice cars.

  • avatar
    alluster

    The $7500 tax credit can go away and GM won’t shed one tear. Its ot like the volt making them any money. Whats making GM money is oil subsidies keeping profitable Truck and SUV sales at elevated levels. All the money borrowed to design/develop the volt has been wiped out anyway. Its like i borrow money from a bank to build a fast food restaurant, declare bankruptcy, wipe all of my debts but get to keep the restaurant and the revenue from operating it.

  • avatar
    indi500fan

    The EPA is committed to increasing electricity prices via emission standards that obsolete existing low cost coal burning power plants. I suspect that will be another nail in the coffin of e-cars.

    Right now nat gas looks like a winner for vehicle power.

  • avatar
    GS650G

    Pay full price for your electric cars yourself. Not one penny of tax money should go towards it. No one got paid to buy computers 20 years ago and they advanced just fine. Electric cars aren’t much different.

    • 0 avatar
      mkirk

      Yeah, if we want to improve battery technology the money would be better spent getting the Space Program going again…It would take some pretty impressive batteries to get us to Mars.

    • 0 avatar
      Skink

      Except computers just move electrons around while electric cars have to move themselves, and their passengers, and other payload. Furthermore, electric cars, even if they’re made to be as capable as existing fossil fuel cars, won’t provide to businesses the huge improvement in productivity provided by computers in the last 20 years. Big difference. That said I still agree there should be no federal credit to buyers of electric and clean diesel cars.

      • 0 avatar
        GS650G

        Technical problems are always going to be with us no matter what. The tax give away encourages overpriced products and sticks all of us with the bill. The government likes to limit tax breaks and other giveaways for other things, there should definitely be an upper limit for the free cheese. Or a progressive reduction along the lines of what they do to the middle class with income tax.

  • avatar
    Trend-Shifter

    Kill, baby Kill, the oil subsides! Our number one export is refined oil. (not crude) If we drilled more it would just be exported. Big oil is not doing us any favors. End the subsides now.

    Here are the top U.S. exports for the past six years, according to U.S. Census records.

    ___

    2011 (Through October)

    1 — Fuel: $73.4 billion;

    2 — Aircraft: $70.8 billion;

    3 — Motor Vehicles: $39.6 billion;

    4 — Vacuum Tubes: $37.1 billion;

    5 — Telecommunications Equipment: $33.2 billion.

    • 0 avatar
      mkirk

      Vacuum Tubes? Didn’t see that one coming.

    • 0 avatar
      Sgt Beavis

      Agreed, kill most, if not all, corporate welfare. Especially for profitable companies.

    • 0 avatar
      GS650G

      Big Oil, as you put it, provides a source of high quality energy at reasonable prices wherever and whenever you need it. They make a few pennies a gallon profit, the rest is taxes and markup along the way. Exxon and the rest are hugely profitable because they sell so damn much world wide and are very well managed companies.
      Tech companies like Microsoft and Oracle have huge monopolies, rake in 40% profits, product flaky products and force their customers into twisted use arrangements. Imagine SAP having to use the same tool to provide their product for 30 years like oil companies which are using refineries built in the 1970s.

  • avatar
    mkirk

    oh, and SUUUUUUUCCCCKKKK IIIITTTTTTTTTTTTTTTT!!!!!!!!

  • avatar
    harshciygar

    Kill the tax credit. The people buying the Volt and LEAF will still buy them anyways.

    With those credits dead, when the vehicles STILL sell, the haters will have one less thing to hate on. I believe the average income of a Volt buying is in the $150k range; I don’t imagine LEAF owners are that far behind.

    For my money, I’d go with the Mitsubishi i; even without the tax credit its a sub-30k EV, and my gf’s commute could be done there and back in one charge. Then we’d only need one gas-dependent vehicle. I could live a lot easier like that.

    • 0 avatar
      DrSandman

      Actually, no I won’t. My SAAB was going to be replaced with a Volt in June of this year. At $35k, I’d do it; at $42k, I will buy a Ford Fusion Hybrid instead. Or a Q5 hybrid. Or a Jetta TDI. Or heck… maybe I’ll just get a Jeep SRT8 for giggles.

      I have the ideal commute for a Volt – 8 miles one way 4 days a week. 1 day a 100mile trip in DC traffic, with a house and off-street parking in the suburbs.

      I have the income (above the median Volt buyer) to subsidize a toy, but Jeesh!

      • 0 avatar
        Herm

        “I have the ideal commute for a Volt – 8 miles one way 4 days a week. 1 day a 100mile trip in DC traffic, with a house and off-street parking in the suburbs.”

        The Prius plug in would be a better fit for your short commute, unfortunately a loaded PIP can be more expensive than a Volt..

      • 0 avatar
        DrSandman

        Problem with that: it’s a Toyota. I don’t drive no Steenkin’ Japanese Buicks.

        And how would a plugin get me 100 miles? That’s under ideal conditions, no? What about when I have to stop @ daycare on the way home? Can my 2yr old steer while I push?

        “Electric cars” are toys, not cars. I need a car.

  • avatar
    jkross22

    Sadly, it’s difficult to envision a time when there would be enough elected officials brave enough to end all subsidies. EV tax credits along with all other tax credits ought to be ended. Here’s an idea of how to do it:

    1) Make all campaign contributions felonies punishable with a minimum 5 year sentence for the contributor and a 10 year sentence for the recipient. Since companies are legally individuals, the C-level execs would be held accountable if their companies were found guilty.
    2) Make all political races 100% publicly funded. This would help eliminate the millionaire’s club we now have in the Congress.
    3) Double the pay of all elected officials, but end the publicly funded healthcare plans and absurd retirement benefits they have. If they’re pulling in 250k plus/yr, they can buy their own healthcare plan.

    Hopefully, this fantasy of mine would put the “service” back into public service and hopefully get rid of the pigs at the trough we have now. Sadly, it would require a very different mentality in Congress to get this done, something difficult to imagine unless many of us all of a sudden grab some pitchforks and torches.

    • 0 avatar
      fred schumacher

      and 4) increase Congressional staff substantially, both for civil service positions and political appointed staff, so that Congress would have the ability to write and analyze its own legislation instead of depending on lobbyists to do it for them, as is generally the case now.

  • avatar
    Skink

    Removing these credits and tariffs was a good move, except for the fact that some states enacted ethanol use mandates, requiring production and use of ethanol as a percentage of over auto fuel sales. I hope these mandates will be eliminated by prompt state legislative action.

  • avatar
    gslippy

    9 – 9 – 9!

  • avatar
    MrIncognito

    The problem with subsidies arises when the government tries to make specific products cheaper rather than set goals or encourage behaviors. Subsidies on ethanol are a waste largely because other methods of producing fuel are more efficient. If the government were to introduce subsidies for cars and fuels based on efficiency or lack of greenhouse gas emissions, this would accomplish the social goal much more efficiently.

    Command economies do not work; the government is too slow and susceptible to corrupt practices to manage an economy, and it shouldn’t try to. On the other hand, there are huge costs associated with consuming gas that aren’t currently paid by the consumers of the gas. The price of gas should reflect the cost of production and consumption, and the more the government can do to keep the price of gasoline near it’s real cost, the more efficient the market will be.

    Keeping the price at the pump low is a cheap political ploy. The harder the government works to keep the price per gallon low, the more taxes will have to come from other areas. Let gas rise up to $5/gallon or more and you won’t need to subsidize alternative fuels or electric cars.

    • 0 avatar
      fred schumacher

      Command economies do work. It depends on the situation. The U.S. during WW II operated as a command economy. China developed out of a command economy. The problem with command economies is primarily one of creativity: if too few people are depended upon for creativity, the command economy fails. It can be argued that Clear Channel radio is a command economy, driven by the creativity of a handful of programmers, the result being that music has suffered and on-air playlists have become stultifyingly uniform.

      • 0 avatar
        Dan

        Command economies always work, at destroying efficiency and output. The WW2 command economy worked in the sense that a much larger command economy successfully outproduced much smaller and even more rigid command economies.

        China developed out of a command economy, in that the command economy was dismantled by Deng and China then began to develop.

        A radio monopoly most certainly isn’t a command economy because the defining feature of state management is enforcement at gunpoint.

  • avatar
    Marvin McConoughey

    Congress performed wisely in deleting the ethanol credits. They put upward pressure on food costs, gave car drivers lower quality fuel, and increased auto development and manufacturing costs.

    The subsidies cost money to apply for, money to administer, and money at the gas pump.

    Ethanol subsidies were a transfer of tax dollars to the states with high corn production from the states with little such production.

  • avatar
    Carlson Fan

    “More prosaic fuel-economy innovations such as conventional hybrids, clean-diesel cars and advanced gasoline engines all show much more promise than electrics.”

    Sorry WaPo, but you obviously don’t get it. Non of the things you mentioned will do crap to get the US off imported oil or help global warming in the near future either.

    People drive way too much in the US and high mileage ICE vehicles combined with cheap subsidized fuel only encourages more of that behavior. FAIL!

    EV’s encourage lifestyles that reduce the amount of time(miles traveled) people spend in their cars and run on power produced in the US. WIN!

  • avatar
    FJ60LandCruiser

    So after all the political blustering of energy independence we have lost countless acres of food crops, driving up our food prices astronomically, so that we can pour 10% ethanol (and God knows how much water) into our gas tanks. And let’s not even get started on the “FlexFuel” vehicles that run on E85 but get terrible fuel economy when they do so, so the cost savings of the subsidized ethanol was a total wash.

    As for the Government’s obsession with electric vehicles: if they’re so good, why can’t they be produced and sold at a profit–and why do we need to throw thousands of dollars of tax incentives at the damn things to move them off of the lots. And I’m not buying a manufacturer conspiracy or ignorance on the public’s behalf. Electric cars just suck, and only the Government seems to think they’re a good idea, enough to pour billions of subsidies into them.

    Hybrids are no better, why install thousands of dollars’ worth of expensive batteries strip mined from the earth to make a crappy family econobox no more efficient than powering it with a diesel engine? Oh, that’s right, hybrids with their little green leaves and toxic batteries are much more eco-friendlier than diesels which are powered by Satan’s fuel according to environmentalists.

    I’m going to go out on a limb here and go with the European model of saving fuel: diesel. Hand out a 5000 tax credit to whomever buys a small diesel wagon, throw in another 2 grand if it’s biodiesel friendly and has a manual transmission.

    • 0 avatar
      Pch101

      we have lost countless acres of food crops

      I can only assume that you didn’t bother to actually look at any data prior to making that comment.

      According to the USDA, consumption of corn in the US (excluding booze and fuel) was just under 14 pounds per person in 1967. By 2009, that had increased to 33 pounds. Over the same period, consumption of corn-based sweeteners roughly quadrupled.

      So much for having corn shortage. It’s quite the opposite; we produce massive amounts of the stuff, and use a lot of it as a sugar substitute.

      http://www.ers.usda.gov/Data/FoodConsumption/Spreadsheets/grains.xls

      http://www.ers.usda.gov/Data/FoodConsumption/Spreadsheets/sweets.xls

      • 0 avatar
        FJ60LandCruiser

        We grow ethanol corn on farmland once used for other “unimportant” things… like grains, vegetables, even cotton for our clothes.

        So unless you subside on a steady diet of corn flakes doused in corn suryp washed down with cola mixed with Everclear, the fact is we don’t have a CORN shortage, we have a shortage of FARMLAND that was once used for making food, but is now being wasted. It’s a pretty self-explanatory concept.

        And while you’re on the topic HFCS is leading to obesity and corn is vastly inferior as an animal feed.

      • 0 avatar
        Pch101

        We grow ethanol corn on farmland once used for other “unimportant” things

        You didn’t bother looking at the spreadsheets, I take it.

        Both in absolute terms and on a per capita basis, we produce more grain for food consumption than we did before. We produce more meat. More oils and fats. More fruit and veg. There isn’t a shred of evidence to support your claim, while there is plenty to refute it.

        http://www.ers.usda.gov/Data/FoodConsumption/FoodAvailSpreadsheets.htm#pop


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