Build Back Better Includes Expensive Giveaway to Auto Unions

The House of Representatives voted Friday to approve the Build back Better Act. It is the signature legislation of President Joe Biden. The bill, although smaller than the original proposal, is full of Democratic wish-list items. This includes policies on immigration, climate change and child care. It is likely that the bill will face opposition from some senators and be subject to pruning. The obvious choice for the chopping blocks is one proposal.

Biden’s plan for reducing carbon emissions includes a provision in the bill that provides a $7500 tax credit to anyone who buys an electric vehicle (EV) including all-electric or plug-in hybrids. This amount will increase by $4,500 for cars manufactured in unionized U.S. factories, and by $500 for vehicles that contain a U.S.-made lithium battery.

This provision appears to be part of Biden’s “Buy American” policy, which incentivizes or mandates purchases made within the country. In reality, however, this order has merely carried on the Trump trade policies and raised costs for taxpayers. The EV credit proposal however is far more reprehensible. It not only encourages a certain type of product but also incentivizes specific brands.

The bonus of $4,500 worth of EV credits would only be available to vehicles made by Ford, General Motors and Stellantis (previously Fiat Chrysler) if it is enacted in its current form. A driver wants to buy a Toyota Camry hybrid. U.S. News & World Report If the vehicle is not manufactured in Kentucky, it will still be rated “Great” for reliability. However, if the same customer purchases a Chevrolet Bolt (which was stopped production recently because of battery fire), they will receive an additional rebate. Out of the more than 50 EVs on the current market, only the Bolt is eligible for the rebate. OnlyThere are currently two Bolt variations that will allow you to get the extra cash for your vehicle.

The worst thing about this policy is that it doesn’t just give American companies a general advantage (which would be terrible enough), but also gives the United Auto Workers (UAW) a huge benefit. In October, when Biden visited a UAW job training center, he bragged about the EV proposal, saying “I want those jobs here in Michigan”—rather than in states like Tennessee or Kentucky, where UAW membership is less of a certainty.

In reality, the Union aspect of the policy is more significant than the consumer incentive. It is evident that the union aspect of the policy was more important than actual consumer incentive. The Wall Street Journal Last week it was reported that Rep. Dan Kildee, a Democratic-Mich., co-authored the provision, said that he added the bonus funding following being advised by General Motors’ and UAW about the importance of adding a pro-union component.

While it’s a good step to reduce not just carbon emissions but also exhaust pollution, switching to EVs is not a magic bullet. It is possible to undermine the whole goal if the transition happens by executive fiat and not through consumer choice or market incentives. Customers are being manipulated for political reasons, a kickback to Biden’s key constituency.