A waste of taxpayer funds

Harrison Price captures the "rent-seeking" of large automotive firms and their government enablers perfectly:

Chevrolet received about $52 billion from the U.S. taxpayer and another $9.5 billion from the Canadian taxpayer. The company is still a mess and its newest product – touted by Liberals everywhere and driven for ten feet by President Obama – is the Volt… an electric car. The car will be sold (at huge losses) for about $41,000.00. each.

During the height of the bailout, President Obama touted the Volt as a symbol of how Chevy was going to “make it” thanks to the help of great products like it and the wallets of the American taxpayer. The Volt’s batteries are made by a South Korean company (which received $150 million in U.S. taxpayer monies).

Now, it turns out, the Volt isn’t even an electric car… it’s a fancy hybrid like the Civic or Prius.

What?

Must read articles on fascism

Our friend Jeff Perren over at Shaving Leviathan has written eloquently on fascism, General Motors, the Chevy Volt, and federal press subsidies. Please take some time out and read these fine articles.

I'm sorry, but this is still a waste...

According to this story on CNN, this one stimulus program is popular with Republicans because it puts people back to work:

There's at least one stimulus program that's creating jobs and winning praise from both sides of the political aisle.

A little-known Recovery Act initiative is expected to put more than 200,000 unemployed people back to work in 32 states and the District of Columbia. It's called the Temporary Assistance for Needy Families Emergency Fund, and it subsidizes jobs with private companies, nonprofits and government agencies.

But the $5 billion it receives runs out on Sept. 30, even though employers and state officials administering the money say there's lots more demand out there...

The "program will provide much-needed aid during this recession by enabling businesses to hire new workers, thus enhancing the economic engines of our local communities," Barbour said when the initiative launched last year.

While this program sounds promising at first, it essentially subsidizes hiring until taxpayer funds run out. Does that sound like an efficient way to run an economy? This is a perfect example of how people are fooled by short-term results while the long term ramifications are not even explored. CNN thinks this program is putting people back to work but this program is taking funds out of the private economy and having it redistributed by federal bureaucracy. How efficient is that?

Electric Sheep

Hey taxpayer, did you know that your government has decided that some of your hard earned money needs to be funneled to boutique electric car makers? That's right, it's for your own good too. You see, these electric cars are being hailed by everyone within earshot as the next big thing that will save us from the evils of fossil fuels. Oh, electric cars have been around for about a hundred years you say and will never really catch on because of their limited range and long recharge time? Well, too bad because there's nothing you can do about it. And if you complain be sure to know that you'll be attacked as insensitive to the environment, disdainful of technology, and uncaring about our dependence on foreign oil. What's the matter with you? Why these electric sports cars boast an impressive roster of celebrity customers that have shelled out $109,000 each for their eco-bling. Oh, did I forget to mention that they get a nifty federal and state tax credit for their selfless purchase? Yes, yes, our government knows winners when they see them. Especially if you're one of the owners of this company or someone holding one of their IPO's.

It must be fun to have access to other people's money and also be able to decide how to spend it.

It must be nice.

Creating more problems...

Ever wonder why that McDonald's salad costs more than the Big Mac? Well, it's no surprise that our government has something to do with it.

John Stossel on alternate energy subsidies

Is Boone Pickens "rent seeking?" I say yes.

ACORN=Waste

Thought of the day: One of the hidden costs of subsidies is monitoring the process. Of course, politicians never bring this dirty little fact to light when they are pushing a program that will "benefit" society. ACORN is just such a program. No one bothered to check on their practices because like many government programs that are essentially political patronage the cost of monitoring is rife with costly political risk. Even if a Republican had, out of the blue, pushed against funding for ACORN--a hydra headed operation with a massive network--without the scandal now brewing, I believe that he would have been rebuffed by his own party. Heck, even Bush funded ACORN without any protest.

This is a lesson. Beware of government funding any program that proposes to fix society's ills. They always have very expensive hidden costs.

Price Controls And Government Handouts Strike Again

From the WSJ:

Dairy farmers created traffic chaos in Berlin, blocked milk-processing plants in France and protested at the European Union's headquarters in Brussels on Monday, seeking more aid to cope with a drop in milk prices...

...Dairy farmers say price declines of as much as 50% over the past year have forced them to sell milk below cost. EU farm ministers began two days of talks Monday and were expected to discuss ways to increase dairy farmers' incomes. France and Germany have promised to coordinate support action to boost milk prices.

The above is another stellar example of price controls and the ills they bring. Price controls have negative consequences because price ceilings/floors mean a refusal to pay the true costs of a resource. It also illustrates how government, by choosing to subsidize and support one group over others, creates a sense of entitlement and dependence that is ultimately counter productive to the society that ventures down that path.

Welfare For Farmers

The majority of federal tax dollars used as subsidies for farmers ends up in the pockets of multi-billion dollar agri-business.

HT: Liberty Pen

"Passing gas" tax for bovine

I saw this clip on MSNBC. Farmers may be taxed for the methane escaping out of their cows because it is detrimental to the environment. Take a guess on how this will affect dairy prices at the local supermarket? As if food prices weren't high enough already during a recession. I would feel a little bit sorrier for the dairy farmer in this clip if he and the rest of the farming industry didn't already receive a huge federal subsidy.

The danger of subsidizing renewable energy

Reason.tv has a great video on the fiasco that Bio-fuels made from corn ethanol has brought on the world.

When government ends up subsidizing an industry or a program that ends up having poor unintended consequences, like we have experienced with corn ethanol, my trail test to those that favor deep government subsidies for projects that they deem essential to society is what happens if that program or policy turns out to not work as initially expected? Since Democrats, environmentalists, and even some Republicans continuously call for subsidizing “renewable” energy or “alternative” energy, what happens if government picks a loser and ends up wasting billions of taxpayer funds chasing a viable technology? I find it difficult to imagine that many of these groups would be comfortable with such a waste.

Now that many national and international organizations and government bodies have acknowledged the problems with corn ethanol, how long will it take our government to fix the problem? I bet that it will take at least a decade before subsidies for corn ethanol bio-fuels are reversed.

Fannie and Freddie: Ron Paul called it in 2003

The whole ugly mess that has slowly revealed itself over the last week regarding GSE’s Fannie Mae and Freddie Mac were carefully foretold by Ron Paul in 2003:

The connection between the GSEs and the government helps isolate the GSE management from market discipline. This isolation from market discipline is the root cause of the recent reports of mismanagement occurring at Fannie and Freddie. After all, if Fannie and Freddie were not underwritten by the federal government, investors would demand Fannie and Freddie provide assurance that they follow accepted management and accounting practices.

While Dr. Paul wasn’t the first or the only one sounding the alarm on Fannie and Freddie, it sure is nice to know that there is someone in Congress that is sharp enough and honest enough to see a train wreck in the making.

Secret Report: bio-fuel caused food crises

Environmentalist groups pushed the idea of bio-fuels for decades and now that it has been implemented and turned into a global food crisis, you hardly hear a peep from any of them. This Guardian article relating to an unreleased World Bank report claims that bio-fuels have caused food prices to increase by 75%. While I do believe that bio-fuels have some responsibility for higher food prices, I think the 75% figure sounds rather high. In any case, it looks like the report makes U.S. policy to be less than desirable.

But here is my thought on all of this: Now that the world knows, and our government knows, that corn ethanol production is expensive and causes food shortages, how long will it take our federal government to correct this problem?

Rich actor’s pocket taxpayer funds

In another example of the “unintended consequences” of trying to subsidize industry in order to create jobs and a viable economy:

When [Massachusetts] Governor Deval Patrick signed legislation a year ago to expand state tax subsidies for the film industry, he predicted it would help lure new movies to Massachusetts and pump millions of dollars into the economy.

But a new government study suggests much of the money will go to high-paid Hollywood actors, raising questions about the value of the incentives. (Read More)

Senate votes to privatize it’s failing restaurants

From the Washington Post: Year after year, decade upon decade, the U.S. Senate's network of restaurants has lost staggering amounts of money -- more than $18 million since 1993, according to one report, and an estimated $2 million this year alone, according to another.

The financial condition of the world's most exclusive dining hall and its affiliated Capitol Hill restaurants, cafeterias and coffee shops has become so dire that, without a $250,000 subsidy from taxpayers, the Senate won't make payroll next month.

The embarrassment of the Senate food service struggling like some neighborhood pizza joint has quietly sparked change previously unthinkable for Democrats. Last week, in a late-night voice vote, the Senate agreed to privatize the operation of its food service, a decision that would, for the first time, put it under the control of a contractor and all but guarantee lower wages and benefits for the outfit's new hires.

Sen. Dianne Feinstein (D-Calif.), chairman of the Rules and Administrations Committee, which oversees the operation of the Senate, said she had no choice.

"It's cratering," she said of the restaurant system. "Candidly, I don't think the taxpayers should be subsidizing something that doesn't need to be. There are parts of government that can be run like a business and should be run like businesses."

Comment: The free-market trumps the welfare statists yet again. Finally, taxpayers won’t be footing the bill to feed these blowhards.

HT: Mark J. Perry

Trade barriers blamed for high food prices

It’s becoming more popular in the U.S. to consider trade protectionism in the name of “fair” trade and alleged worker protection; The Democrats have justified a block a of free trade deal with Colombia under such dubious reasons. Yet, even the U.N. has recently admitted that trade barriers, and in a particular-- food prices, have an adverse effect on world food prices and the world’s poor. In the long run, trade protectionism and government subsidies to hand picked industries do more harm than good.

Obama supports the Farm Bill

Small government types shouldn’t be surprised by Obama’s endorsement of the massive Farm Bill; if Obama does become President, don’t expect a small, efficient and less costly government.

Venezuela: Land of 12-cent gasoline

From Business Week

Global oil prices zoomed up to $135 a barrel this past week. But that doesn't worry Roberto Morales, a 33-year-old Venezuelan businessman. Morales, who drives a compact Volkswagen Gol, still pays only $1.32 to fill up his car with 11 gallons of high-octane gasoline, thanks to Venezuela's subsidized fuel price.

"This is crazy but I'm not complaining," says Morales. "Gasoline here is cheaper than water."

Comment: If countries like Venezuela, China, Saudi Arabia and many others ended their subsidizing of gasoline for their respective populations, I’m sure that it would curb global demand with current crude oil prices. Of course, that would also mean big problems for the ruling regimes in these countries. Let’s just say that subsidies for gasoline in these countries aren't going to be dropped anytime soon.

The House passes the farm bill

Cha-Ching!! Congratulations my fellow Americans! We get to subsidize big agricultural companies and millionaires for another five years! Woo-hooo!

They passed it with a veto proof majority, 318-106

HT: Andrew Roth

American taxpayers about to get shafted again!!!

From The Club For Growth:

A vote in favor of the Farm Bill will be a permanent stain on the lawmaker’s record and on the 110th Congress. The bill’s terrible features include:

• Subsidies to millionaire farmers without a hard, meaningful cap on a farmer’s qualifying income
• The elimination of key limits on annual commodity payments
• Spending gimmicks that disguise over $10 billion in spending increases
• An increase in subsidy rates despite sky-high crop prices and record farm incomes
• Direct payments for crops that are not based on a farmer’s income, crop prices, or any standard of need
• The creation of a new, permanent disaster aid program, creating incentives to grow the wrong crops on bad land in bad weather
• Tax breaks for special interests like race horse owners and timber companies

My Comments: This bill is a high example of the waste and graft that exists in our government. Have you seen any local coverage on your news channels? probably not. BTW, most food and grain producers are doing VERY well right now with commodity prices at all time highs. And the usual excuse that I hear for the high food prices being that "it's because of oil prices," isn't a good enough reason for taxpayers to subsidize these big businesses.