On the first day of 2012, the New York Times published an editorial, “Where the Real Jobs Are,” that is uniformly backwards. If the federal government did the exact opposite of every recommendation made by the New York Times editorial board, Americans would benefit the most.
According to the Times, President Barack Obama should reject the shovel-ready Keystone XL Pipeline, because it would carry “conventional” oil from Alberta to the Gulf Coast. The editorial board then suggests that “real” jobs are those in the sector of the economy responsible for the production of “alternative” energy, like wind and solar power. Instead of allowing the private sector to create 6,000 (presumably fake) jobs by permitting the Keystone XL, the Times argues that the President should “lay out the case that industry, with government help, can create hundreds of thousands of clean energy jobs.” In the Times’s mind, Europe has shown the way:
“Europe has encouraged the commercial development of carbon-reducing technologies with a robust mix of direct government investment and tax breaks, loans and laws that cap or tax greenhouse gas emissions. This country needs a comparably broad strategy that will create a pathway from the fossil fuels of today to the greener fuels of tomorrow.”
Not coincidentally, the Times fails to mention the American Recovery and Reinvestment Act, a.k.a the Stimulus, a.k.a. the Porkulus, which contained almost $60 billion in green energy direct government investment, tax-breaks, and loans. These subsidies are exactly what the Times advocates in its New Year’s Day editorial. The Stimulus was passed in February 2009, but it takes a while to squander scores of billions of dollars, and the results are only now coming in…and they are awful for proponents of taxpayer handouts to politically favored industries.
Solyndra’s spectacular collapse is only the most publicized green flop. As I explained in a previous post, inspectors generals are having a field day unearthing wasteful and corrupt green Stimulus spending:
- On November 2, Eliot P. Lewis, the Department of Labor’s IG, testified before the House Oversight and Government Reform Committee that the Labor Department received $435 million to train 96,000 people in the renewable energy trade. The goal was to create 80,000 green jobs. Through June 30, according to Mr. Lewis’s testimony, the Labor Department had spent $130 million, which is 30% of the program budget, and created a scant 1,336 jobs, which is 2% of the program target.
- During the same Congressional hearing, the Department of Energy IG Gregory Friedman said that he had launched more than 100 criminal investigations into green energy spending. Each one is a potential scandal.
- GreenWire’s (subscription required) Annie Snider has reported on a series of IG investigations by the Department of Defense faulting the military for wasteful stimulus spending on green energy projects. The report titles say it all: “American Revoery and Reinvestment Act Wind Turbine Projects at Long-Range Radar Site in Alaska Were Not Adequately Planned”; “The Departmnet of the Navy Spent Recovery Act Funds on Photovoltaic Projects That Were Not Cost-Effective”; “U.S. Air Force Academy Could Have Significantly Improved Planning Funding, and Initial Execution of the American Recovery and Reinvestment Act Solar Array Project”; and “Geothermal Energy Development Project at Naval Air Force Station Fallon, Nevada, Did Not Meet Recovery Act Requirements.”
- On November 7, the Department of Energy Office of the Inspector General issued a “management alert” regarding the Western Area Power Administration’s $3 billion, stimulus-created loan program to facilitate the transmission of electricity from renewable energy projects in the west. According to the IG alert, “Western had not implemented the necessary safeguards to ensure its commitment of funding was optimally protected.”
- In October, Resources for the Future released a report suggesting that the $3 billion, stimulus funded “cash for clunkers” program, whereby the government subsidized the purchase of fuel efficient cars for consumers that agreed to junk their less fuel efficient cars, was an economic and environmental failure.
- Since February, the Energy and Commerce Committee has been investigating Solyndra, the California solar panel manufacturer that declared bankruptcy in September, leaving the taxpayer on the hook for a $535 million stimulus-funded loan guarantee from the Department of Energy.
Why is the green stimulus failing? As I note above, ballooning budgets and a mandate to spend fast are conducive to waste.
More fundamentally, central planning of the economy is a loser. Invariably, politics corrupts the process. Members of Congress are less concerned about the economic viability of the industries into which they invest taxpayer money, and much more concerned with getting pork to their districts. Civil servants, no matter how disinterested, know that their political overlords are watching their decisions carefully, so as to ensure that taxpayers give-aways reach their constituents. (For an archetypical example of a Member of Congress browbeating a civil servant, see this post about Sen. Al Franken shaking down Energy Secretary Steven Chu).
When parochial politics isn’t interfering, crony capitalism is. According to “Throw Them All Out,” a new book by Peter Shweizer, $16.4 billion of the $20.5 billion in loans granted by the stimulus-created loan guarantee program (whence the Solyndra debacle) “went to companies either run by or primarily owned by Obama financial backers.” Of course, political payback is a poor substitute for sound financial analysis.
The Stimulus record on green energy spending appears clear: Subsidies to politically favored sectors engender political interference and crony capitalism, both of which make for poor investments. Such misguided outlays waste taxpayer money. In contrast, approving the Keystone XL Pipeline would create 6,000 jobs, and it would cost taxpayers nothing. (As is explained by my colleagues Iain Murray and David Bier in a recent Washington Times oped, there are other benefits to approving the pipeline.) In supporting green subsidies and opposing the Keystone XL, the New York Times has drawn conclusions that make sense only on opposite day, or in bizarro world.
The New York Times’s advocacy for wasteful green energy spending stands in stark contrast to positions adopted by the Washington Post. Post reporters Joe Stephens and Carol D. Leonnig have been far out front in reporting on Solyndra. The Post also employs Charles Lane, who frequently disparages regressive tax breaks to electric car owners. Most strikingly, on the same day that the New York Times published “Where the Real Jobs Are,” the Post editorial board published “Overcharged,” a New Year’s toast to the demise of subsidies to ethanol and electric vehicles. The piece concludes,
The ethanol credit was on the books for 30 years before it finally died. Let’s hope Congress can start unwinding the federal government’s bad investment in electric vehicles faster than that.