Should Taxpayers Back Cars Only the Rich Can Afford?

theodp writes "The NY Times questions the $400M in low-interest federal loans requested by Tesla Motors as part of the $25B loan package for the auto industry passed by Congress last year. 'The program is intended to encourage automakers to improve fuel efficiency, but should it be used for a purpose like this, as the 2008 Bailout of Very, Very High-Net-Worth Individuals Who Invested in Tesla Motors Act?' Tesla says it is assembling about 15 cars a week and has delivered about 80 of its $109,000 base-price Roadsters to date, many of which have gone to the Valley's billionaires and centimillionaires who are Tesla investors as well as early customers. We discussed the company's financial difficulties last month."

Comments

Taxpayers shouldn't be bailing out any of these

[Anonymous Coward]

Let the market decide, not a group of politicians paid off by lobbyists from the money they're lobbying to get.

Re:Taxpayers shouldn't be bailing out any of these

[BrentH]

It's socialism if it's what the majority of citizens want. It's fascism if it's only a small minority wants it.

These bailouts have nothing to do with socialism, it just good ol' fascism at work, the way we're used to in the United States. Corporate greed, lobbyists and a puppet government under the megacorps and all that.

Now, a bit of real socialism, that's what would be a refreshing change in the US...

Re:Taxpayers shouldn't be bailing out any of these

[Bught_42]

If I understand it correctly the $25 billion fund is for advanced technologies not a bailout. It would be hard to argue that Tesla isn't using some rather advanced technologies. And when a technology is new it's expensive, however with enough research and mass production prices drop and the technology becomes a viable alternative.

I find this interesting after there was a story on Digg yesterday about Tesla complaining that the car companies wanted this $25 billion to bail them out rather than use it for what it was intended for. I think it's pretty shifty since this fund was set up last year and in no way was meant to be a bailout.

Here's the link to that story:

http://gas2.org/2008/11/28/tesla-says-money-shouldnt-be-diverted-to-bailout-car-makers/

Re:Taxpayers shouldn't be bailing out any of these

[mweather]

Let the market decide, not a group of politicians paid off by lobbyists from the money they're lobbying to get.

Tesla agrees. They've been very public about their opposition to the bailout. But if there is going to be one, Tesla should get money too.

Re:Taxpayers shouldn't be bailing out any of these

[john82]

America's rate of corporate tax is among the highest in the world.

I wouldn't say that's entirely correct.

Go back and look at that graph again. Note the magenta line designating corporate income tax. The rate in the US is the second highest in the world. So yes, the parent post is correct.

Re:Taxpayers shouldn't be bailing out any of these

[mi]

I hear that bogus line so many times, it's a Rush Limbaugh talking point with no basis in reality.

There is nothing bogus in it — the tax rate is very high, and those, who don't pay any simply have no net income left. Read your own link carefully and you'll see:

some corporations reported zero income before deducting expenses while others said they had zero net income after deducting expenses. Either way, those companies reported no tax liability, the GAO said

and, even easier to understand and feel:

But many of the companies the report found had paid no tax were likely small businesses that pay other taxes. Generally, many small firms, because they do not have shareholders, are able to shift corporate income to individual income.

Being an owner of one such small business, I can confirm this — at the end of each year, whatever is left on the business account, is paid to me as salary/bonus: from which I pay income tax. This leaves the corporation with zeroed-out income. Leaving money on the business account makes no sense — the corporation would have to pay tax on it first, and then, if it ever decides to pay employees (or shareholders) with it, those people would have to pay income tax on these same monies. Better to dispense with it right away. And if you need money later, you can borrow, because interest rates are much lower, than taxes (unless we are in a credit-crunch).

Yes.

[Trillan]

Who else is going to improve the technology? If it was one of the companies already in the industry, it'd be done by now. Don't give the entrenched guys anything. Give it to new companies.

Just because the rich get it first doesn't mean we won't get it, too. Look down at the device under your hands as you flame me for proof.

Re:no

[Yvan256]

I don't know how it works in the USA, but here in Canada we don't measure electricity in gallons.

Mischaracterized

[It doesn't come easy]

To say that a low interest loan to Tesla is a bailout for billionaires is to seriously ignore what Tesla is doing. While everyone else is either developing low-speed electric cars (e.g. cars that can't run on the highway and don't have to pass all of the safety regulations) or estimating that their electric hybrid will run AT MOST 40 miles off the battery, Tesla has developed the first practical all electric car that can run 200 plus miles on a charge using (mostly) existing technology. You know, something that the big three for the last 20 years has said couldn't be done.

In addition, Tesla is continuing to work to engineer a pure electric car for the masses. This is where most of the money would be applied. It's not to bail out the roadsters already being built/already on order.

Plus, the established auto makers research is primarily still into improving ICEs, which is inherently, horribly inefficient. We've had over a hundred years of research and development into improving the ICE and it's still AT BEST only 25% efficient. We don't need any more ICE development, thank you very much. Considering that the Tesla roadster gets 4 times the fuel efficiency as the best ICE, the money would be applied exactly as it is intended (something that would probably not be the case for GM and company).

Lastly, if we're talking about bailouts, why should taxpayers bail out the Big Three? Their officers are responsible for pitifully shortsighted business decisions for the last 30 years, culminating in the current state of the US auto industry. If we reward businesses for bad business decisions, what's the incentive to do better? Let them be bought out by Toyota, et al. Good riddance, I say.

Spreading the wealth

[Waffle Iron]

many of which have gone to the Valley's billionaires and centimillionaires

Usually, a centimillionaire only has enough cash to buy a used car. Making this high-end car available to these people sounds like a huge benefit to me.

Hooray for class warfare!

[Penguinisto]

Seriously, folks - this has less to do with protecting the Rolls Royces of this world, and more to do with encouraging alternate means of locomotion.

Where would you rather give your money (if you're a US taxpayer, it is your money)... to a bunch of failing and backwards-looking automaking corps, or to a young and hungry company that is looking to change the very way we fuel up our cars?

Forget the politics - the Big Three are in thrall to a wage and compensation plan that is simply unsustainable and way above market value, no matter how the mathematics are applied. Not blaming the unions per se (the corps agreed to it, after all) but seriously - add it up yourself.

Coupled with the dragging and tooth-pulling required to get the likes of GM and Ford to go all-alternative (or to even jack up the fuel efficiency to something near what the competition has right now)? Why bother? They'll simply make a lot of noises about having changed their ways, and 10 years later they'll be right back in Congress again, begging for more money.

This may sound trollish, but screw that - let the innovators of this world get a leg-up, if we're going to be throwing around money in the first place. Let the collapse of the Big Three be an object lesson to those who think they're somehow entitled to continued existence just because they happen to be a big corporation.

/P

More than all of Detroit combined

[MaizeMan]

I agree completely.

The best way to develop the technology and bring the cost down to something affordable is to have it in production. And right now Telsa is producing 15 MORE zero emission cars a week than all of the Detroit automakers combined.

Re:Not Really

[TooMuchToDo]

Frankly, it is his money, and my money, and everyone else's money. Welcome to a democracy. Going to war on my dime to the tune of $1 trillion+? That's immoral. Lying why we went and having tens of thousands of people die because of it? That's immoral. Lending half a billion dollars to a company that's jumpstarting the electrification of transportation? Well that's just good sense right there. So take your libertarian viewpoint to a country that cares.

Re:Not Really

[jcr]

Going to war on my dime to the tune of $1 trillion+? That's immoral.

Yes, that's immoral too.

Lending half a billion dollars to a company that's jumpstarting the electrification of transportation? Well that's just good sense right there.

You were doing so well, and then you went off into the weeds.

If electric cars (or ethanol, or any other possible replacement for gasoline-powered vehicles) makes sense, it won't take tax money to get it into widespread use.

-jcr

Re:no

[An Onerous Coward]

It's the energy you can get from as many 9v batteries as you can fit in a gallon milk jug. It's about 4% smaller than the imperial electrogallon, which uses a gallon-sized pail. You may remember the story a few years back when an MIT mathematician proved that an ideal battery configuration would hold two additional batteries, without stretching the jug, and we all had to recalculate our electricity bills.

But we stick with it, because we true Americans (as opposed to people in New York, California, and -- in a shocking turn of events -- Indiana) know that the metric system is the first step down the path to socialism.

Re:Not Really

[TooMuchToDo]

If electric cars (or ethanol, or any other possible replacement for gasoline-powered vehicles) makes sense, it won't take tax money to get it into widespread use.

Bullshit. The market is manipulated by interests to make investing in renewable energy and electric vehicles infeasible. Price of oil goes up, investment in renewables and electric vehicles shoots up. Price of oil drops, investment dries up. An unregulated market is rarely the answer, as shown by the deregulation in the financial sector.

You may disagree with me, but I'm fairly confident as an American that the new US policymakers in play are going to make the correct decision to push electric and plug-in hybrid electric vehicles.

Re:no

[TooMuchToDo]

My business partner and I both reserved '09 Tesla Roadsters. Why? Not because it's a hot car, or it drives like a rocket, but because we want to see electric car research pushed faster. And it was the next best thing to investing in the company. It drives me nuts when some fool comes out and says "Tesla can have help when their car is priced for the average person". They won't need help by than. They need help getting to that point.

Re:Not Really

[zolltron]

Contemporary libertarians remind me of children who never learned to share. Or more on point, people who never learned the difference between possession and ownership.

John Locke, who was one of the first to defend property rights, required that privatizing natural resources required that you leave "as much and as good" for others. He recognized that allowing individuals to monopolize particular types of property would be disastrous. Ironically, monopolies are exactly what would result if contemporary libertarians were to succeed at achieving the "free" markets they desire.

Regarding "your" property. While you happen to currently possess lots of it, it's not clear that it is necessarily yours. Given the history of property acquisition in the US, I'm guessing it probably isn't. Do you currently possess land? Likely that land was owned by native Americans before it was stolen by someone. That money you "own"? There is a good chance it was acquired by someone at sometime through some practice that would void their right to property (recall the 20s, slavery, theft from natives, war, etc.).

Personally I would be surprised if even 10% of the stuff you currently possess isn't tainted by some action in the past that would void one of the previous "owners" right to property. Which, according to Locke, voids your right to property as well since the object is currently the property of the person from whom it was stolen.

Fascism vs. Socialism: false dichotomy

[mi]

That's not socialism that's evidence of fascism

If you read about fascism from the horse's mouth, you'll see, that there is no difference. Here, I picked the most familiar-sounding items put forth 88 years ago:

THE COMMON INTEREST BEFORE SELF-INTEREST - THAT IS THE SPIRIT OF THE PROGRAM. BREAKING OF THE THRALDOM OF INTEREST - THAT IS THE KERNEL OF NATIONAL SOCIALISM.

....

• 7. We demand that the State shall make it its primary duty to provide a livelihood for its citizens.

  ....

• 10. It must be the first duty of every citizen to perform physical or mental work. The activities of the individual must not clash with the general interest, but must proceed within the framework of the community and be for the general good.

  We demand therefore:
  ...

• 11. The abolition of incomes unearned by work.

  The breaking of the slavery of interest

• 12. ... personal enrichment from war must be regarded as a crime against the nation. We demand therefore the ruthless confiscation of all war profits.
• 13. We demand the nationalization of all businesses which have been formed into corporations (trusts).
• 15. We demand the extensive development of insurance for old age.
  ...
• 16. We demand the creation and maintenance of a healthy middle class
  ...
• 18. We demand the ruthless prosecution of those whose activities are injurious to the common interest. Common criminals, usurers, profiteers, etc., must be punished with death, whatever their creed or race.
  ...
• 20. The State must consider a thorough reconstruction of our national system of education (with the aim of opening up to every able and hard-working German the possibility of higher education and of thus obtaining advancement). The curricula of all educational establishments must be brought into line with the requirements of practical life. The aim of the school must be to give the pupil, beginning with the first sign of intelligence, a grasp of the nation of the State (through the study of civic affairs). We demand the education of gifted children of poor parents, whatever their class or occupation, at the expense of the State.
• 21. The State must ensure that the nation's health standards are raised by protecting mothers and infants, by prohibiting child labor, by promoting physical strength through legislation providing for compulsory gymnastics and sports, and by the extensive support of clubs engaged in the physical training of youth.
• 22. We demand the abolition of the mercenary army and the foundation of a people's army.

Had it not been for Hitler's bizarre obsession with genocide — which, as Franco and Mussolini demonstrated, is not an inalienable part of Fascism — the Left would've considered Hitler as a perfectly respectable source of quotes and inspiration, along with Lenin, Mao, and Karl Marx.

Re:Fascism vs. Socialism: false dichotomy

[Anonymous Coward]

Did you even read what you posted? That document is a conservative dream come true.

We demand that the State shall make it its primary duty to provide a livelihood for its citizens.

"The government's primary role is to keep the economy strong, not to provide social programs."

It must be the first duty of every citizen to perform physical or mental work. ... The abolition of incomes unearned by work.

"No welfare for anyone. If you can't do work then you starve."

... personal enrichment from war must be regarded as a crime against the nation.

"Only those with special connections in the government will get war contracts."

We demand the ruthless prosecution of those whose activities are injurious to the common interest. Common criminals, usurers, profiteers, etc., must be punished with death, whatever their creed or race.

"The Death Penalty shall be used frequently. We're tough on crime."

I see nothing in there about liberal ideals: human rights, equality before the law, right to conscientious objection, freedom of religion, freedom of thought, environmentalism, peace. Read some Marx.

Re:No

[philspear]

Counterpoint: Yes, we should be bailing them out.

This has been "completely unjustified point-counterpoint" theater. Tune in next week when we look at whether or not global warming is real. A preview

Point: Yes, it is.
Counterpoint: No, it's not.

Re:Not Really

[Roblimo]

I live in Manatee County, Floriduh, one of the places Real Estate Madness hit hardest and that has, hence, been hit hardest by its end.

I do not recall seeing a whole lot of poor and/or minority taxpayers pulling mortgage frauds in order to buy little houses for themselves in not-great neighborhoods like East Bradenton.

I do, however, recall seeing lots and lots and lots of speculators and slumlords, the vast majority of them good white Republicans, bidding up the prices on little working-class houses to the point where none of the people who actually do the Real Work (trash collection, policing, teaching, retail sales, etc.) could possibly buy them. And oh weren't those white Republicans just so proud of the Free Market System and big on boasting about how much money they were making and on laughing at the suckers who actually worked at jobs like teaching or writing for newspapers or cleaning the streets or doing carpentry instead of being Investors, as if Investors were the highest possible form of life and should be bowed down to by all others.

'Course then a local mortgage company called Brasota went broke because it was essentially a ponzi scheme -- and shockingly, it was not run by poor and/or minority working liberals but primarily by (I know this is hard to believe) Rich White Republicans, hardly any of whom lived in the neighborhoods where they loaned mucho bucks to "investors" who didn't live in them, either.

And some local banks have failed, and a lot of local businesses, and now all the Rich White Republicans who ran their ponzi schemes and created their silly tulip-bulb bubble, except with houses, are running around blaming Democrats and liberals who thought that, just maybe, it might be a good idea to stop Rich White Republicans from discriminating against poor and/or minority workers when it came to making home loans.

The CRA (Community Reinvestment Act) that is being blamed by the Rich White Republicans for the collapse of their house of cards was all about ending discrimination in mortgages. Those Free Market Rich White Republicans had long had a bad habit of happily approving loans for white people in white neighborhoods while denying loans to black people in black neighborhoods even if the black people happened to have more stable jobs and wanted to borrow less than their white equivalents.

Listen, Rich White Republicans (and libertarians/Somalians and the rest of your crowd), if you want to see who created the current economic crisis, get a mirror and look in it. Don't keep trying to blame your problems on the blacks or the Jews or the liberals or whatever other group you're in the mood to victimize this week. It wasn't a "homosexual agenda" that created the obviously-insane (and unregulated) derivatives market, and it wasn't pro-choice agitators who ran the rating companies that assigned silly-high values to "bundled" mortgages.

Y'all ran our country for a good while, and basically you screwed it up big-time.

Quit whining. You had your chance. A lot of you got rich, and many of you will stay that way.

But don't try to pass your failures off on others. Man up, and face the fact that most of you got most of your money from some sort of scam, and that you have no right to complain now that you've been caught out.

And now, I need to get back to work. No government bailout for the likes of me, y'know.... GM, Ford, Citi, Chrysler and maybe Tesla -- and one can hope perhaps some other innovative car companies and a whole lot of "financial service" operations will get money. My tax money. Sucks, don't it? But otherwise, I suppose things might even be worse.

Can't win for losing, can we? (sigh)