Stimulus spending on environmentalist policy is a green albatross around the neck of President Barack Obama. Inspectors General are having a field day auditing stimulus-funded programs for so-called “green jobs,” and the media LOVES stories about wasted taxpayer money. What started as a sop to his environmentalist base, now threatens to become a slow-drip nightmare of negative press. The timing couldn’t be worse for the President. It takes time to disburse scores of billions of dollars, so we are only now starting to scrutinize stimulus spending. By November 2012, we’ll be able to account for most of the money, and unless the current trend changes radically, the Executive in Chief is going to look conspicuously incompetent.

Here’s the back-story: In early 2009, the Executive and Legislative branches of government had a popular mandate to defibrillate America’s moribund economy with a huge injection of taxpayer dollars. Instead of limiting this “stimulus” to state bailouts and infrastructure spending, the Obama administration (led by climate “czar” and former EPA administrator Carol Browner) and the Congressional majority (led by House Energy and Commerce Chair Henry Waxman (D-Beverly Hills)) also sought to advance environmentalist policy.  As a result, the American Recovery and Reinvestment Act, a.k.a. the stimulus, included almost $70 billion in spending for green jobs and renewable energy infrastructure.

Every single link along the green energy supply chain was showered with subsidies. There was funding for green jobs training, funding for factories to make green products, and funding to incentivize demand for green goods and services. It was as like a green Gosplan!

Most of the money went to the Energy and Labor Departments. Budgets ballooned. To cite a typical example, in 2008, the Department of Energy’s weatherization program budget went from $450 million to $5 billion. Making matters worse, federal bureaucrats were told to spend the stimulus as fast as possible, in order to jumpstart job-creation. Exploding budgets and a mandate to rush money out the door—that’s a recipe for poor stewardship of taxpayer dollars. This is borne out by an increasing number of watchdog reports concluding that stimulus spending for green goals was wasteful. Here’s a laundry list of what they’ve found so far:

• 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.

Gross fiscal mismanagement by government attracts media like flies to dung. So far, most coverage is by local papers reporting on local failures. (See “Seattle’s Green Jobs Program a Bust,” by the Seattle Post Intelligencer and “Stimulus Funds Provide Training, But Openings Few in State,” by the Detroit News.) However, even the New York Times, whose editorial board supports green energy subsidies, published a story titled, “Number of Green Jobs Fails to Live up to Promises.” Expect many more of these types of articles as the watchdogs continue to do their work.

As the negative press mounts, the President will become ever-more burdened by his foolish bet on green energy.

Two weeks ago, my colleague Chris Horner and I coauthored an oped about the renewable energy industry’s dependence on taxpayer subsidies. To make our point, we listed a number of examples of renewable energy executives warning that massive layoffs were imminent, unless the Congress passed or renewed green energy giveaways.

-Biomass Power Association President Robert Cleaves (February 2010): “Thousands of jobs in the biomass power industry could be lost if Congress fails to extend the production tax credit.”

-American Wind Energy Association CEO Denise Bode (July 2010): “Manufacturing facilities will go idle and lay off workers if Congress doesn’t act now” to impose a federal mandate for electricity produced by AWEA members.

-Solar Energy Industry Association President Rhone Resch (September 2008): “Unless Congress promptly returns to complete their unfinished business, the solar industry will suffer with the loss of 39,000 jobs.”

-Renewable Fuels Association CEO Bob Dinneen (November 2010): “Allowing the tax incentive to expire would risk jobs in a very important domestic energy sector and across rural America.”

Currently, the Congress is deliberating whether or not to extend a particularly generous subsidy that was established by the American Recovery and Reinvestment Act, a.k.a. the stimulus. It’s called the Treasury Department section 1603 tax credit, and it allows renewable energy projects to receive up to 30% of their capital costs up front. The Congress created this subsidy because the 2008/2009 financial crisis rendered ineffective the production tax credit, which had been the renewable energy industry’s primary means of remaining economically viable. The production tax credit was based on corporations having profits and therefore a tax liability. The financial crisis, of course, wiped out corporate profits. So the Congress included the section 1603 program in the stimulus. Now, the renewable energy industry wants to keep both subsidies alive. When it comes to government goodies, the more the merrier.

In this context, the American Wind Energy Association yesterday issued a press release that lends further credence to the point made by Chris and me in our oped. Consider,

TENS OF THOUSANDS OF LAYOFFS IN AMERICAN WIND ENERGY SEEN AT STAKE IN TAX EXTENDER PACKAGE

In the process of preparing year-end numbers on the industry, the American Wind Energy Association reports that tens of thousands of Americans could lose their jobs or not get called back from layoffs without the 1603 investment tax credit for renewable energy that hangs in the balance as Congress and the White House work to settle a tax package.

“We have people being laid off right now, and we expect to see more without fast action on the tax extenders now being negotiated,” said Denise Bode, CEO of AWEA. “The 1603 tax credit extension would help bring them back as soon as possible.” According to the trade group’s research, there are over 15,000 jobs in the manufacturing pipeline alone. “We are risking those jobs by not sending a clear signal that America remains open for business in wind energy,” Bode said.

The 1603 tax investment credit saved 55,000 jobs in wind energy, as estimated by Lawrence Berkeley National Laboratory. Overall employment has reached 85,000 in the American wind industry, as installed capacity has grown 40 percent in each of the past two years. Wind now generates 20 percent of the electricity in Iowa; and on Oct. 28, high winds pushed wind power to 25 percent of the electrical generation in Texas.

As Chris and I conclude,

Of course, it is only natural for aid-dependent industries to warn that they would suffer without the continuation of aid. Employing this circular logic, taxpayer funded renewable power has remained the “energy of the future” for decades. But American taxpayers simply cannot afford to subsidize industries that are forever-nascent.

Back in February 2009, when everyone thought a deep depression was imminent, Keynesian economists and their political boosters demanded big government spending. According to their calculations, a “timely, targeted, and temporary” infusion of taxpayer money would defibrillate our moribund economy, the growth of which would make the trillion-dollar price tag seem like small potatoes. It was elementary!

So the White House pushed, and the Congress passed, a gigantic trillion-dollar stimulus, the American Recovery and Reinvestment Act. It was, however, anything but “targeted.” Instead, it was a grab bag of special interest handouts.

About $90 billion of those taxpayer funded giveaways went to “green” energy, which is about as trendy a cause as there is right now. Today, on the thirtieth of June, almost a year and half after the stimulus passed, the Department of Energy has awarded a scant 15% of its “green” energy stimulus funds. So much for “timely.”

Despite the fact that so little of the stimulus has yet been spent, House leadership already wants more. This week, powerful chairman of the House Ways and Means Committee, Michigan Representative Sandy Levin (D) is pushing a bill that would extend Stimulus green energy tax incentives, to the tune of $20 billion. So it seems that “temporary” was also a sham.