There’s been a lot written, much of it by me, about the destructive nature of the current liberal strategy, led by President Obama, of engendering highly divisive class warfare. In particular, the so-called 1% has taken it on the chin pretty badly of late. Never mind that the top earners in this country pay basically all of our nation’s bills, including the interest on the debt Obama is piling up at a record pace. The 1% is still the last unprotected class. I owe you all a much more detailed blog on my statement in a prior blog post that we are becoming a nation of payers and takers. It’s an unstable situation I see very clearly developing, but I haven’t had time to write the detailed piece. So, let’s just put it on hold.
I’ve also written extensively about liberal hypocrisy and it’s this aspect of the class warfare debate I’d like to address today. Throughout the 2012 election and beyond (Obama knows no mode other than campaign mode), liberals have done their best to paint conservatives as “the party of the rich.” Amazingly, they are able to use this ruse to get large groups of people to vote against their own basic self interest. For example, as I pointed out previously, the first black president in history has driven black unemployment to record levels. Yet he continues to advocate for policies, like an increased minimum wage, that have decades of published studies showing an adverse impact on unemployment and a disproportionally adverse impact on black unemployment. But, give the lefties credit. Their strategy of throwing their own electorate under the bus has gotten them reelected.
I read a story today (copied below) that made me realize just how preposterous it is (have you noticed how much I love the word preposterous?) for liberals to pretend like conservatives are the party of the rich. One could start with the basic facts of who donates where, but that’s not much fun. Let’s look at where they spend our tax money. The failures of the Obama green energy policy are very well known, with Solyndra as the poster child for wasted tax payer money and failed government intervention into the venture capital market. But, if one were to dig deep and try to find a positive note in the Solyndra debacle, I suppose it would be this. Had Solyndra been a wild success and somehow magically produced low-cost, high-efficiency solar panels, perhaps they might have had a positive net effect on U.S. energy production. It’s about as likely as pigs flying, but it was at least their fantasy business plan.
The story I read today was about Fisker Automotive, an electric car company that was financed with, among other instruments, $529 million of United States taxpayer money. It’s now on the brink of bankruptcy and the taxpayers will lose another half billion dollars. Pause button – when you hear Obama whining that we can’t afford the sequester cuts, keep in mind that he spent ONE BILLION DOLLARS on just two failed green companies.
Are you familiar with the Fisker Karma? You ever ride in one? Are you picturing something that looks like a Toyota Prius? Well, here’s what a Fisker Karma looks like:
It’s a $100,000 electric sports car. Now, can you afford a $100,000 car? I can’t. That’s not even a car for the 1%. That’s more like a 0.01% car. Seriously, folks, how much money do you have to have before you’re willing to drop $100,000 on a car? I can’t answer because I’m not there. Of what possible value is a car like this to U.S. energy strategy? It’s not like you’re going to pull a bunch of gas guzzling Ford Explorers off the road and replace them with electric Fiskers. No, this is a straight transfer of taxpayer wealth from middle class folks (and the 1%) to the 0.01%. And, it was all spearheaded by the man who claims to represent the middle class and who constantly debases the conservatives for being the party of the rich.
It’s not only an abject waste of taxpayer money. Frankly, it’s downright shameful.
U.S. Aid Drove Fisker To Overreach
By Yuliya Chernova and Mike Ramsey | Anaheim, Calif.
For a few months in 2012, Bruce Simon, the chief executive of gourmet food retailer Omaha Steaks International Inc., drove an $100,000 plug-in hybrid electric car known as the Fisker Karma. No longer.
Mr. Simon says his car broke down four times over the span of a few months. Each time, Fisker Automotive Inc. picked it up and sent it by trailer from his home in Omaha, Neb., to a dealer in Minneapolis.
The Karma was “so vulnerable to software errors, and the parts used were of such poor quality that eventually I insisted they take the car back and return my purchase price, which they did,” he says. “It’s a real shame, the car itself was beautiful.”
The near collapse of the Anaheim, Calif., company–it missed a loan payment on Monday, earlier dismissed most of its staff and has hired bankruptcy advisors–comes as affluent buyers like Mr. Simon have turned away from the once-promising startup and falling gasoline prices have chipped away at demand for electric cars.
Barring a last-minute rescue, Fisker is poised to become another DeLorean Motor Co. or Tucker Corp., a symbol of the difficulties of creating entirely new car companies. Unlike those others, it also represents one of the most prominent failures of the government’s use of public funds to wean American industry from fossil fuels–and of how that government interest pushed Fisker to reach too far.
Originally, Fisker wanted to start small. But, says investor David Anderson, the U.S. asked it to think big. “‘We can’t loan you money to make a low volume car [in Finland],'” he said the U.S. argued. “‘But if you wanted to bring forward in time your idea of the small car to be produced here in the U.S.,’ then, they’d say ‘OK,'” Mr. Anderson said.
A spokesperson for the Department of Energy declined to comment.
At its peak, tiny Fisker was one of the largest U.S. venture-capital-backed companies ever. Its founders raised more than $1 billion from highly regarded Silicon Valley venture funds including Kleiner Perkins Caufield & Byers. It also recruited a roster of prominent backers including former Vice President Al Gore and former Oracle Corp. president Ray Lane.
Its biggest single investor was the U.S. In 2009, the Obama administration’s interest in cultivating electric cars got the untested Fisker loans totalling $529 million, more than the company had initially requested, and an amount that encouraged private backers to chip in more funds. At one point, backers valued the company at $1.8 billion.
The company had applied in 2009 for a $169 million loan from a $25 billion program set up in the wake of the financial crisis to boost alternative-energy vehicles. Energy Department officials recommended that if Fisker was willing to build in the U.S., the agency would fund the development of the Karma and the company’s proposed second, less expensive model, according to people familiar with the matter.
Fisker executives agreed to acquire a shuttered General Motors Co. assembly plant in Wilmington, Del., where it hoped to build a $60,000 sedan.
Today, Fisker looks headed toward a bankruptcy restructuring. The U.S. could wind up owning all or part of the company’s assets because its loans were backed by Fisker assets. So precarious is the company that the U.S. seized $21 million this month from Fisker in anticipation of a default.
How did the wheels come off so quickly? Fisker got its start in 2007, a year before U.S. gasoline prices hit $4.11 a gallon and seemed headed to $5 a gallon. The fuel spike and global cash crunch helped put General Motors and Chrysler Group in government-led bankruptcies. Its co-founder, Henrik Fisker, was a highly regarded designer for luxury brands Aston Martin and BMW and armed with an idea ripe for the times.
He lured investors with a hand-sculpted clay model of his dream car and the promise of an high-tech answer to what then was seen as an inexorable rise in fuel prices. Fisker and its promising Karma luxury plug-in appeared as the opposite of Detroit’s plodding big car makers.
In September 2009, the Energy Department gave preliminary approval to a $529 million in loans for the company. The amount was more than the $465 million it had earlier agreed to loan to rival electric-car startup Tesla Motors Inc. The DOE also awarded Ford Motor Co. and Nissan Motor Co. $5.9 billion and $1.4 billion, respectively, to fund their electric and hybrid vehicle programs. The DOE’s decision to increase the Fisker loan will be a topic of a hearing scheduled on Wednesday before a House committee.
Even with its wealthy backers, Fisker had plenty of problems. Troubles with suppliers and regulatory requirements added months to the Karma’s release. Its engineers expressed concerns the software that ran the Karma’s display screens and phone connections wasn’t ready, people familiar with the situation say. Still, the Karma went out to customers. The company said that its problems were expected of any new model.
In May 2011, the Obama administration, under pressure from critics of its alternative-energy spending and after the high-profile failure of U.S.-backed solar panel maker Solyndra LLC, froze disbursements to Fisker, citing delays in the Karma’s rollout.
Nonetheless, Fisker kept ordering parts to build Karmas, piling up costs even as the company struggled to fix software and other problems that prompted complaints from early buyers, and led to critical reviews in auto publications.
In the fall of 2011, Fisker’s battery supplier, A123 Systems Inc., was informed Fisker had run out of cash and wouldn’t be able to take more deliveries.
A123, which also received a government grant to finance U.S. factories, had shipped about 3,000 battery packs to the company. The Waltham, Mass., company was ready to ramp production to 15,000 packs annually for its top customer. Its own market miscalculations and quality problems led A123 to seek bankruptcy protection last fall. Fisker stopped production of the Karma at a factory in Finland in July 2012 in an attempt to negotiate a cost-saving contract. The following month, Fisker recalled its cars for a second time to fix a cooling system flaw that was linked to battery fires. It hasn’t built a car since.
Write to Yuliya Chernova and Mike Ramsey at firstname.lastname@example.org and email@example.com