Cronyism and Green Energy

The Wall Street Journal reports a more nuanced “attack” on green energy subsidies is underway.  Last week, Republican vice presidential nominee Paul Ryan explained conservatives opposed the 2009 economic “stimulus” in part because the law apportioned $90 billion for various clean energy projects.  The inefficiencies of taxpayer-backed energy gimmicks is well-documented and an increasingly common argument in the political sphere, but Ryan added that there are myriad criminal investigations under way regarding how the stimulus money was spent.

Although the WSJ takes issue with the figure of 100 companies that Ryan referenced, explaining that it was from a “somewhat outdated” 2011 congressional testimony from the Department of Energy’s inspector general, Gregory Friedman, the pervasive cronyism remains. 

While the 100 companies figure was  somewhat higher than the current number of companies being investigated, which is currently 80 companies, that is only because 20 companies have already been dealt with in the form of “criminal convictions, administrative actions, decisions not to prosecute or no further action was required,” according to a spokeswoman for Mr. Friedman.

There are indeed energy companies that have used their funding in a way that merits criminal conviction or administrative actions.  For example, “in November 2011, Mr. Friedman said his office’s investigations into misuse of stimulus funds had resulted in five criminal prosecutions and more than $2.3 million in monetary recoveries.” Since then, the number has increased to 10 criminal convictions.

Conservatives have been pointing out that subsidies for favored energy project is always a misuse of taxpayer funds, regardless of whether that misuse is also criminal, which is of course even worse.  Case in point: Solyndra.  Even if Solyndra did not use its funds in a criminal way, or if giving this “preferred” energy source a massive loan could somehow be construed as not cronyism, backing the Solyndra loan with taxpayer money is foolish and contrary to free market principles.

Joe Biden claimed that congressional investigations of Solyndra “found no evidence of cronyism.”  Even if that were the case, the problem is that the company resulted in massive failure and taxpayers were left with the $535 million check!  And to be clear, it makes no difference whether it is solar, wind, natural gas or a cardboard eating battery, the taxpayers should not play a role in subsidizing the commercialization of these technologies.

According to The Examiner, another loan that came down the pipes was a $325 million loan for SolarCity, a company owned by  Elon Musk, a leading Obama donor.  The loan was made possible by President Obama’s stimulus, which “transformed a long-standing tax credit for renewable energy investment into a direct grant from Treasury, worth 30 percent of a company’s investment in a renewable project.”

We now know the company is being audited by the Internal Revenue Service because of recent Securities and Exchange Commission filings.  What’s in question is whether the Obama Treasury Department “inappropriately [gave] stimulus money to Musk’s company.”

What did they find?  “SolarCity repeatedly overstated the value of its investments.”  The Examiner sums up the cronyism:

Musk is the paradigmatic political entrepreneur, launching businesses that seek to capitalize on government favors and lobbying clout rather than provide goods or services that consumers demand.”

And while Musk gladly accepts taxpayer money in the form of government loans, he still finds himself willing and able to donate more than $100,000 to Obama’s reelection campaign.

So yes, conservatives’ gripe with funneling taxpayer dollars to green energy projects is multifaceted.  We don’t like cronyism – no taxpayer does – we don’t like ignoring free-market principles, and we don’t like throwing away other people’s money on foolhardy projects that are destined for failure just because it’s beneficial to some lobbyist group.  None of these complaints are trivial, none of them are new, and they all go hand-in-hand.

Read More: Ending Energy Subsidies

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