Obama’s astonishing takeover of the automobile industry, unlike his health care takeover, occurred without even a vote of Congress. Yesterday, to much fanfare, the administration announced its astonishing ratcheting up of vehicle fuel economy standards to 54.5 miles per gallon by 2025. These regulations — I call them “ObamaCar” — were accomplished not through open debate in Congress, but through corrupt backroom deals in which our elected officials had no voice.
ObamaCar will, according to the administration’s own estimates, add over $2,900 to the price of a new car. This low-ball estimate was created by using a brand-new cost-estimating methodology that uses arbitrary factors to produce a cost estimate for a vehicle considerably lower than the total cost of its individual parts.
An analysis by the National Automobile Dealers Association (NADA), which followed the government’s usual methodology, found the cost impact would be $4,800 per vehicle. But NADA also found that even the usual methodology has historically underestimated the actual cost impact by an enormous factor. NADA suggests a worst-case scenario of a $12,349-per-vehicle price jump.
Even using the EPA’s official low-ball estimate, NADA’s analysis found that “6.8 million licensed drivers will no longer qualify for a loan on that least expensive new vehicle.” So people will buy used cars, or drive their old cars longer. There will be less efficient, dirtier vehicles on the road, and reliable, affordable transportation will be much less accessible.
And if you can afford a car under ObamaCar, will it actually be a car you want to drive? Even the vaunted hybrids only get around 35 to 40 miles per gallon — if you’re light on the gas. Cato scholar Pat Michaels has observed that the third-generation Prius maxes out at 50 miles per gallon, but its vehicle weight is too heavy to get much more than that. At 54.5 miles per gallon, cars will be smaller, lighter, less crash-worthy, less powerful, and less comfortable than you can even imagine. A nice-sized family vehicle? Good luck.
Obama is trying to save the environment. So what if your cars cost more? So what if lighter cars don’t protect you as well as a heavier car? You peasants shouldn’t be driving a car at all – cars are only for your betters in government! It’s Obamanomics.
President Obama’s electric car vision is off to a hot start. First the heavily subsidized Chevy Volt started catching fire. Then government-backed Fisker Automotive had to recall all its cars due to a fire hazard.
Late last month, Fisker, the electric car startup that is busy spending its $529 million in Department of Energy loans, announced a recall of its entire fleet of luxury Karmas because of a faulty battery that posed a fire risk.
The battery maker at fault — A123 Systems — is another Obama grantee, having gotten $380 million in taxpayer support to make advanced car batteries.
Fisker says it’s already fixed the problem, but this is just the latest in a series of troubles plaguing the new car company.
Although it once promised to be profitably churning out 1,200 cars a month by now, Fisker has so far sold only about 240 — at a price almost 14% higher than promised. And the more moderately priced electric sedan it says it will build in an abandoned Delaware plant is still nowhere to be seen.
Bad as this is, Fisker’s troubles are just a taste of the expensive and dangerous mess in store for car buyers should Obama succeed in forcing the industry to bend to his green dreams.
In May, a Chevy Volt caught fire three weeks after a government crash test of the car. In follow-up tests in November, a second Volt caught fire after a test crash, and a third began to smoke and emit sparks.
[…]Volt sales came in about 30% below GM’s forecast for 2011 — in a year when overall retail car sales beat industry analyst forecasts by almost 12% — earning the Volt third place on 24/7 Wall Street’s list of worst product flops of 2011.
And that’s despite the substantial tax break to Volt buyers and the hundreds of millions in grant money to its suppliers.
Obama is spending a lot of taxpayer money on his Solyndra-style boondoggles. Taking money away from employers and families and just throwing it in the trash. We are now officially over 100% debt-to-GDP. We are entering a Greece-style debt situation and this dingbat is throwing our money away on Peter Pan energy policies.
To start with the obvious, even though Obama denies that he will manage the companies, we have all learned by now that he has no problem doing the very thing he is denying. (In ordinary life this political artfulness is called lying). He fired one CEO, forced Chrysler to accept Fiat (WSJ.com 6/5/09), told GM that it cannot move its headquarters out of Detroit (WSJ.com 6/3/09), and may have ordered that whoever buys GM’s European auto maker Opel must agree not to export cars to the U.S.. (WSJ.com 6/1/09) These decisions were made in secret with no Congressional oversight, by a man with no training or experience of any kind in business, never mind the auto business. The companies will be run by politicians, who will make decisions for the benefit of political agendas rather than on sound business principles. The result will be that the auto companies and the union will not make the deep changes required to make the companies profitable, so we can anticipate many more cash infusions.
Gary Jason writes about how Obama is intervening in the free market to screw creditors and take care of his union supporters with taxpayer bailouts.
I will argue that the unprecedented action by the current administration in manipulating the bankruptcies of Chrysler and GM, and in effect nationalizing the companies, is egregiously unethical by every one of these major ethical perspectives. For this reason, I believe that this action makes it morally imperative for Americans to boycott these socialized companies.
… the Obama administration spent tens of billions in taxpayers’ dollars to take control of the companies and force the outcome it wanted. Obama, who received millions in contributions from the United Auto Workers union, has forced a settlement that will give UAW far more equity in the companies when they come out of bankruptcy than it was due compared to the secured debt holders.[i] Obama’s agents used threats and intimidation (calling holdout bondholders speculators and hedge funds at one point) to get the creditors to accept being shafted. (WSJ.com 5/11/09)The result is that the vast majority of the two companies will be almost clearly owned by the federal government and the UAW, and the UAW arguably controls the federal government.
The result is drenched in irony. The UAW was a major reason why the companies hit the wall, and now the UAW will be rewarded with major control and ownership. It is as if a rape victim were forced to marry her rapist. The result makes the crony capitalism we saw in Russia look clean by comparison; it, at least, was a kind of capitalism.
And what are the long-term consequences?
…To start with the obvious, even though Obama denies that he will manage the companies, we have all learned by now that he has no problem doing the very thing he is denying. (In ordinary life this political artfulness is called lying). He fired one CEO, forced Chrysler to accept Fiat (WSJ.com 6/5/09), told GM that it cannot move its headquarters out of Detroit (WSJ.com 6/3/09), and may have ordered that whoever buys GM’s European auto maker Opel must agree not to export cars to the U.S.. (WSJ.com 6/1/09) These decisions were made in secret with no Congressional oversight, by a man with no training or experience of any kind in business, never mind the auto business.
The companies will be run by politicians, who will make decisions for the benefit of political agendas rather than on sound business principles. The result will be that the auto companies and the union will not make the deep changes required to make the companies profitable, so we can anticipate many more cash infusions.
Worse yet, we can foresee that now that the UAW and feds have control of Chrysler and GM, they won’t stop there. Their natural instinct will be to achieve monopolistic control. The UAW has helped drive Chrysler and GM to the wall and is now co-owner with the government of most of the equity. They will likely next target Ford, to get equity ownership of it. Then look for the UAW and the administration it controls to attempt to force the employees of foreign auto makers in this country to join the UAW, or use environmental and other regulatory laws to put those companies out of business.
Obama and the Democrats are willing to use threats and intimidation to ram through their socialist policies. Here is a long list of unconstitutional interventions. (H/T 4Simpsons) He does not care about laws and rights – he wants power over your liberty. He wants to control your life.
The Road to Serfdom
For those of you who did not know before, the greatest economics book of the 20th century was Nobel-prize winning economic F.A. Hayek’s “The Road to Serfdom“, which is analyzes the history of socialism and fascism in Nazi Germany and Russia. This book is #1 on Human Events’ Top 10 books every Republican should read.
Human Events writes:
Friedrich Hayek (1899-1992) was an Austrian economist awarded the Nobel Prize in 1974. He defended capitalism and individual liberty against collectivism. In “The Road to Serfdom,” he describes how government planning of the economy leads to tyranny. President Reagan cited Hayek as one of his favorite economists. “To decentralize power is to reduce the absolute amount of power, and the competitive system is the only system designed to minimize the power exercised by man over man,” wrote Hayek. “Who can seriously doubt that the power which a millionaire, who may be my employer, has over me is very much less than that which the smallest bureaucrat possesses who wields the coercive power of the state and on whose discretion it depends how I am allowed to live and work?”
When Michele Bachmann stands up on the floor of the House and advocates against government intervention in the free market, she is literally standing between the American people and mass-murdering, rights-trampling, faith-destroying communism.
And by the way, Obama means to do the exact same thing with the health care and energy sectors.
Time for practice. Time to pile into the…Toyota Prius? Maybe the Yaris. Or surely the Smart Car will do. Those are three of eleven cars that meet President Obama’s new emissions standards that include “nothing larger than a midsize sedan, even when you include hybrids.”
Eleven choices of vehicle? The soccer moms will not be liking that.
But it gets worse. It’s going to cost another 50,000 jobs added on to Obama’s massive count.
See Table VII-1 on page 586 of the NHTSA analysis. NHTSA estimated that the TC=TB option, which I’m using as a proxy for the Obama plan, would result in the following job losses among U.S. auto workers:
Compared to the Bush draft final rule, this is 37,000 more jobs lost.
Since I know this table is inflammatory, I will anticipate some of the responses:
This is an estimate for the job loss from the TC=TB option analyzed by NHTSA in 2007. This is the closest proxy for the Obama rule, and I’m convinced it’s a good proxy until someone demonstrates otherwise. But technically, it’s not a job loss estimate for the Obama proposal.
This estimate was done in a different economic environment (late 2008), and before the U.S. government owned 1.5 major U.S. auto manufacturers. My guess, however, is that these changed conditions should push the estimated job loss up from the above estimate, rather than down.
There’s a false precision in the above table. It’s just what NHTSA’s model spits out. …I don’t put any weight on the precise annual estimates.
The Obama administration’s proposed mileage standards that will be announced today may kill more Americans at a faster rate than the Iraq War — his signature issue in the 2008 presidential campaign.
Obama’s standards will require automakers to meet a 35 miles-per-gallon standard by 2016 — four years earlier than the same standard imposed by the Energy Security and Independence Act of 2007.
As discussed in my new book Green Hell, the only way for carmakers to meet these standard is to make smaller, lighter and deadlier cars.
The National Academy of Sciences has linked mileage standards with about 2,000 deaths per year. The National Highway Traffic Safety Administration estimates that every 100-pound reduction in the weight of small cars increases annual traffic fatalities by as much as 715.
In contrast in the more than six years since the Iraq war began, there have been 4,296 deaths among American military personnel.
The Iraq war cost 550 billion and 4300 lives. And for this we got more liberty and security. Obama is spending trillions and trillions of dollars, and he wants to kill 2,000 Americans per year? I am not even talking about his subsidies to kill more unborn babies at home and abroad. This is on top of that!