In his statist manifesto Who Stole the American Dream? New York Times vet Hedrick Smith says “government has to be much smarter in picking the companies it funds, and much tougher overseeing their performance.” Smith’s only example of un-smart funding and oversight was Solyndra, president Obama’s favorite solar energy firm, which transformed more than $500 million in federal stimulus funds into bankruptcy and failure. Now Solyndra and other stimulus busts such as Fisker have new company.
ECOtality, builder of electric car charging stations, received a $99.8 million stimulus award. But now the U.S. Department of Energy (DOE) has suspended stimulus payments to the company, which according to one report “is having trouble finding financing and may have to declare bankruptcy.” The company has hired FTI Consulting to find financing, improve profitability and “potentially manage the sale of the company or its assets.” So apparently $100 million from taxpayers was not enough.
According to some observers, ECOtality’s business model “is explicitly geared towards currying political favor in an effort to obtain taxpayer funds” and its board includes Steven Chu, former federal Energy Secretary. What a cozy world. Trouble is, according to the DOE’s inspector general, the problem is poor demand for ECOtality’s products.
The federal government wants consumers to buy electric cars, and even offers tax breaks, but the public is at odds with that policy. The Chevy Volt, built by General Motors, still partly owned by the federal government, has not been a hot seller. Neither have other electric cars, and even if they wanted one, few consumers can afford the upscale Tesla models from yet another stimulus recipient. Meanwhile, conventional cars with internal combustion engines have been selling briskly.
With no apology to Hedrick Smith, federal energy policy is not very smart, so no surprise that handouts of $100 million turn out to be stupid, wasteful and blatant abuse of embattled taxpayers. And there’s a back story here. Hedrick Smith won a Pulitzer Prize for his reporting from the USSR in 1971-1974 but that stint apparently raised no cautions about a command economy. In fact, Smith now wants a government “industrial policy” for the United States. If national leaders want a Soviet-style basket case, that’s the path they should take.