Fisker Failure was Easy to See Coming
While hindsight may always be 20/20, foresight should be pretty clear in many instances as well. The Fisker failure was one of these times. Many saw the folly in spending hundreds of millions of taxpayer dollars to support the green debacle. In fact, the Associated Press has reported that even the Obama Administration had warning of the Fisker loan risks back in April of 2010 when the Energy Department began emailing their concerns.
Congress will be holding hearings starting today to address the scandalous waste of taxpayer money on Fisker. Reuters states one of the goals of the hearing, "'The Obama Administration owes the American taxpayer an explanation as to why this bad loan was made in the first place, and what they are going to do to minimize the loss that taxpayers face,' said Ohio Republican Jim Jordan, chairman of the subcommittee holding Wednesday's hearing." Perhaps we should also question why these types of fiascos go unchecked by Congress itself, or the media for that matter.
A simple look at what Fisker's only vehicle (the Karma) offered for the money should have been enough for any venture capitalists to run the other way. But when the US Government plays venture capitalist, cronyism and ideology trump business common sense.
I weighed in on the Fisker rip-off back in October of 2011 (NLPC Associate Paul Chesser has been a long-time critic) when I spelled out what taxpayers were getting for their money in the Karma. We paid to produce a car that could serve as a toy for the rich. The vehicle cost $97,000, making it inaccessible for us 99 percenters. Yet that didn't stop the Obama Administration from having all of us pay for what would never benefit us. What we got was a car that could go about 30 miles on an electric charge before getting approximately 20 miles per gallon on good old gasoline. Performance was unimpressive, considering the price of the car, with a 0 to 60 time of about 6 seconds. Surely only the wealthiest and naïve green extremists would buy this car.
It turns out that the Fisker Karma is not all that green either. There is a huge carbon footprint resulting from the manufacturing of the volatile lithium-ion based batteries used in cars like the Karma. And only going 30 miles on a charge (provided by mostly coal-burning power plants) and then getting 20 mpg is hardly going to save our planet or end our oil dependence.
So, given the obvious lack of feasibility for the Fisker business plan, we get back to Washington's more likely catalyst for funding the company. That is cronyism and pay-backs. ABC reported on the political ties of Fisker's primary venture capital group, Kleiner Perkins. Not only was green energy charlatan Al Gore a partner, but another partner, John Doerr, served on Obama's Council on Jobs and Competitiveness. According to the ABC report, Doerr hosted President Obama at a February (2011) dinner for high-tech executives at his secluded estate south of San Francisco. Doerr and Kleiner Perkins executives have contributed more than $1 million to federal political causes and campaigns over the last two decades, primarily supporting Democrats.
The question is not why the Obama Administration didn't see the risks in pouring taxpayer money into a company like Fisker (which had a slim realistic chance to succeed) but why was the waste allowed KNOWING that the money was not well-spent? Why doesn't the mainstream media report the obvious inept stewardship of taxpayer money? Why are hundreds of millions of dollars allowed to be thrown away on a green scam like Fisker, only to be questioned in hindsight when the outcome was so obvious?
There are lessons to be learned from Fisker. It is now time for Americans to question the wanton waste of their money on supposedly green initiatives that are benefiting no one other than cronies. We shouldn't continue to spend billions of dollars supporting lithium-ion based, plug-in electric cars without a real analysis of feasibility. Spending the money in the form of tax subsidies to wealthy purchasers of cars like the Fisker isn't helping anyone other than the wealthy recipients.
President Obama has presented a budget that will see the federal electric vehicle tax credit rise from $7,500 to $10,000. Let's be clear, this is a subsidy for the rich to encourage them to purchase vehicles that utilize a questionable technology. The lithium-ion based technology is finally being scrutinized by some who question the feasibility, yet the Obama Administration is trying to double-down and force unwanted vehicles on the public by raising the subsidies.
Maybe it is time for our government to slow down when it comes to spending billions of taxpayer dollars to support industries that should be left to fend for themselves in the free markets. Democrats and Republicans alike should be held accountable if they continue to let the waste continue. The mainstream media should do its job and bring stories like the Fisker scandal into the limelight. And Americans should be paying a little more attention to how their money is being spent.
Mark Modica is an NLPC Associate Fellow.