Once again, Republican presidential candidate Mitt Romney has taken to task the president of the United States. This time, it’s over the federal subsidies provided to A123 Systems, a manufacturer of batteries for electric cars. A123, report Bill Vlasic and Matt Wald of The New York Times, is supposed to be “a centerpiece of his administration’s effort to use $2 billion in government subsidies to jump-start production of sophisticated electric batteries in the United States.”
A123, despite the promise of a new technology it plans to reveal soon, has been losing money — and some of that money has been provided as a subsidy by the feds. There are reasons, of course: a weak economy, lukewarm demand for electric vehicles whose prices have yet to descend to the financial means of the masses, and difficult, complicated issues unresolved by engineers.
President Obama faced a political debacle after Solyndra stumbled and failed. So A123 failure coupled to his desire to use government funding to enhance a new energy economy has provided Romney with a chance to roar again about the power of the free market.
Speaking on Romney’s behalf, campaign spokeswoman Andrea Saul said:
President Obama has turned his back on the free market, putting his faith instead in cronyism and the investment prowess of political appointees and bureaucrats. The results of this strategy are clear – even more Americans are struggling for work and even more taxpayer dollars have been wasted. When Mitt Romney is president, government will stop meddling in the marketplace and start putting real and lasting job creation first. [emphasis added]
In this statement, Romney’s campaign has defined “meddling” in the free market as cronyism, investment prowess in political appointees and bureaucrats, and, presumably, subsidies as a waste of taxpayer dollars.
Cronyism: Has Romney’s performance as a candidate led you to believe that he will not appoint members of his campaign or exemplary fundraisers to executive branch positions? As of April, half of the $43 million raised by the Restore Our Future super PAC came from members of the financial industry. Does that lead you to believe that Romney will not engage in cronyism, also known as political patronage, to consider so-called “super” donors in making executive branch appointments?
Investment prowess: See cronyism. Here’s a list of Romney’s endorsers. It is hardly a surprising list. But as you read it, consider what you know about the competence of these people as potential advisers to a President Romney on investment and budgetary matters. Does that consideration lead you to believe that Romney as president will outperform President Obama in the quality of investment advisers he appoints to his administration?
Subsidies as tax-dollar waste: Romney has repeatedly asserted that Obama’s use of federal subsidies to the new-energy economy represents “meddling in the marketplace.” That means, apparently, that upon taking office he will end federal subsidies to companies like Solyndra and A123.
Does that lead you to believe that he will end other subsidies in other industries because they “meddle in the marketplace”? Do you believe he would seek to compel other industries to cover all external costs they do not now cover?
For example, the nuclear power industry does not cover the entire insurance cost of the risks its technology represents. The Price-Anderson Nuclear Industries Indemnity Act, first passed in 1957, indemnifies the industry against all claims above $12.6 billion. Those costs would be paid by the federal government. That’s a subsidy. Does Romney’s rhetoric lead you to believe he will seek repeal of Price-Anderson? And there’s that little issue of nuclear waste and who covers that cost.
Estimates of the federal government’s annual subsidy to the fossil-fuels industry range from $10 billion to $52 billion. Numerous attempts in Congress to cut even minor subsidies have been rebuffed. This is a mature industry. Surely, according to Romney’s posturing, continuation of these subsidies would represent “meddling in the marketplace.” Does his rhetoric persuade you that he would indeed end fossil-fuels industry subsidies?
And, of course, there are farm subsidies — more than $95 billion over five years, according to The Washington Post. Has the Romney campaign’s positions led you to believe that he will end these subsidies, too, as “meddling in the marketplace.”
Each time Mitt Romney attacks an Obama-inspired federal subsidy as “meddling in the marketplace,” ask yourself just one question.
Has Romney convinced me that he will hew to his position consistently and not allow a new subsidy and end all current subsidies?
photo credit: A123 Systems, battery module for hybrid vehicles