Taxpayers Taken for a Ride?
Justin Bieber has one. So does Leonardo DiCaprio. These celebrities can afford the Fisker Karma, a $108,000 luxury plug-in hybrid car. That’s fine for them. But was lending money toward the development of this high-end car a wise investment for the U.S. taxpayer?
Maybe not. The company is now described in press reports as “troubled.” The federal Department of Energy approved a $529 million loan to the Fisker Automotive Corporation, made part of the loan, then froze the rest. Promised jobs in Delaware did not materialize. Vehicle production has taken place in Finland, not the United States.
All of this raises questions about whether the company was vetted properly in the first place. The government is responsible for minimizing risk to taxpayers. It’s important to know what went into the Energy Department’s decision to fund the production of expensive luxury vehicles. The riskiness of loans to companies that may or may not be able to pay them back deserves scrutiny. The taxpayers can’t and shouldn’t have to subsidize these decisions.
With Sen. John Thune, I wrote to the Energy Secretary and asked a series of questions to try to gauge what went into the department’s decision-making and whether it will be able to recover the millions of tax dollars lent to the company so far.
The Energy Independence and Security Act of 2007 required the creation of a direct loan program from the federal government to car companies through the Advanced Technology Vehicles Manufacturing Incentive program. In addition to the Fisker Karma at $108,000, the company’s second planned vehicle would sell for $50,000. The high retail prices seem to indicate the vehicles would be out of reach for most Americans, thereby seeming like a questionable choice of investment for a federal program. And the company’s vehicle production in Finland diminishes the goal of developing advanced vehicle technology to create jobs in the United States.
The government has to do a better job of choosing projects developed with tax dollars.
April 30, 2012