Politico would like us to believe that the Obama administration’s green energy loan program through the Department of Energy has a mixed record:
It’s too early to tell whether most of the projects are successes or failures. DOE finalized 11 of the loan guarantees just last September as it was hurrying to sign off on billions of dollars before the program expired, so many of the efforts are in their early stages.
Whether or not you believe government has a role in providing financing to fledgling industries, finalizing billions of dollars in loans at the last minute is clearly not the way to do it. Perhaps that explains why the later loans, such as Desert Sunlight, Genesis Solar, and Topaz Solar (whose deal collapsed after evidence of insider trading surfaced) were some of the most incestuous.
It’s an error of omission tantamount to journalistic malfeasance to leave out the fact that the cost per job created of these programs is somewhere in the multi-million dollar range. Veronique de Rugy, using the figure of 2,378 jobs created, works it out to $6.7 million per permanent job. The intrepid Politico reporters asked the companies receiving the loans for their employment figures–who in the absence of solid data have, of course, no incentive to exaggerate–and they estimate 4,000 jobs created. Either way, it’s not an efficient use of taxpayer money.
They issue this caveat about the obvious discrepancy between the job creation numbers cited by the administration (which include temporary jobs) and the actual impact of the program:
And the ultimate job gains from the program, while real, are unlikely to match the boom in temporary jobs that constructing the projects creates. For example, Sempra Generation’s Mesquite Solar 1 generation facility outside Phoenix has supported about 350 temporary construction jobs but will sustain just 10 permanent jobs once the plant is finished, the company says.
Yet they go on to uncritically report the success of the thousands of workers granted the estimable privilege of working on a government contract for a couple of months. Nearly all of the DOE’s loan guarantees have a ratio of construction to permanent jobs similar to the one above.
Or how about this doozy:
For one thing, the projects’ woes don’t appear to be evenly distributed. They’ve largely been concentrated in the solar manufacturing industry that has been battered by competition with cheap panels from China.
This is the kind of pseudo-analysis on which Politico has built its brand. Yes, competition has played a huge part in the upheavals in the solar industry recently. Yes, China makes cheap solar panels, so one would think a president committed to green energy would favor doing business with them. Barack Obama, on the other hand, favors tariffs on Chinese solar panels to protect the patronage industry he’s built through the DOE program, a fact the reporters fail to mention. But the other huge factor contributing to the decline of companies like First Solar, is European nations pulling back on green energy investment in the face of economic trouble.
And the only mention the authors make of the astonishing connections between loan recipients and the administration, is in the context of Republican criticism of the same:
But other companies have stumbled into bankruptcy court, layoffs or the baleful glare of GOP-led House investigations.
The best-known example is Solyndra, which laid off 1,100 workers when it went under in September. But the program has also witnessed the bankruptcy filing of energy storage company Beacon Power, layoffs and furloughs totaling hundreds of workers by at least four companies and a $520 million loss by loan guarantee recipient SunPower. Republicans have also raised questions about how real estate company Prologis obtained a $1.4 billion partial guarantee for a nationwide rooftop solar installation effort.
Those questions that Republican politicians so forgettably raised about the collusion between the DOE and private companies go beyond partisan posturing. Nowhere in the article is it mentioned that the GAO, a nonpartisan body, has criticized the loan program’s lack of oversight and transparency. It’s clearly legitimate to ask why the CEOs of the companies providing the primary private financing (Goldman Sachs submitted the proposal, Citigroup was a co-lead arranger) and operating the Desert Sunlight site (NextEra Energy) sit on the President’s Council for Jobs and Competitiveness. Somehow this fact eluded Politico.
The authors say it’s “too early to tell whether most of the projects are successes or failures,” but it’s as clear now as it ever will be. They’re successes for a small privileged class, and an utter failure for taxpayers.