The economy remains weak and the administration’s stimulus has been a bust. To counter the growing unpopularity of his economic policies, the president is traveling around the country handing out government checks to anointed industries.
Downsizing Blog
Cost Overrun Incompetence at Energy
OMB Director Peter Orszag is blaming the inefficiencies of the federal government on outdated personal computers. That is hard to understand given that federal IT spending amounted to $200 million a day last year.
Stifling Innovation with Subsidies
A couple of weeks ago I wrote about a story in Wired regarding the Department of Energy’s Advanced Technology Vehicles Manufacturing Loan Program. The gist was that government subsidies to particular manufacturers are putting non-recipients at a competitive disadvantage in obtaining private capital. The author, a former Tesla Motors official, noted that “this massive government intervention in private capital markets may have the unintended consequence of stifling innovation by reducing the flow of private capital into ventures that are not anointed by the DOE.”
Stifling Innovation by Subsidizing It
In 2007, the Advanced Technology Vehicles Manufacturing Loan Program was created in the Department of Energy to support the development of advanced (i.e., “green”) technology vehicles. Last year Congress appropriated $7.5 billion to support a maximum of $25 billion in loans. So far, the subsidies have been dished out to Ford ($5.9 billion), Nissan ($1.6 billion), Tesla Motors ($465 million), and Fisker Automotive ($528 million).
Government Electric
The recession has given the government an excuse for major interventions into markets, and the word “bailout” is found in business section almost daily. While there are justified concerns over government bailouts of large corporations, big businesses cashing in on the economic stimulus plan have flown below the radar.
Central Planning at Energy
The U.S. Department of Energy recently awarded $2.4 billion in stimulus money to develop and manufacture electric vehicles. The ostensible purpose of the government’s effort is to set the nation on a path toward more environmentally friendly transportation. But as the USA Today notes, electric cars might not provide the environmental benefits that proponents cite:
Energy Secretary Alarms Biofuels Lobby
Biofuels lobbyists have been successful in securing federal funding and regulatory support. As an industry that thrives on federal subsidies, any threat to its privileged status is a cause for alarm. This week Energy Secretary Stephen Chu set off such alarm when he told a group of alternative energy developers that “if it were up to me, I would put every cent into electric cars.”
Failures Mount on Cash for Clunkers
It didn’t take a Ph.D. in economics to recognize that the federal “Cash for Clunkers” program would put upward pressure on used-car prices. In nominating it “the dumbest program ever” back in August, Chris Edwards noted that “low-income families, who tend to buy used cars, were harmed because the clunkers program will push up used car prices.”
Government Moonshine in Trouble
Yesterday the Wall Street Journal took a lengthy look (subscription required) at the deteriorating financial situation of domestic biofuel producers. According to the Journal:
Energy Mismanagment
Try as they might, supporters of big government spending cannot make federal programs work very well. The Department of Energy, for example, has been plagued by mismanagement, cost overruns, and scandals for decades.
Today, the Washington Post reports on the poor performance of DoE’s environmental clean-up programs. As I reviewed in the linked essay, these enormously costly programs have been plagued by mismanagement for at least 25 years. Last week, Lou Dobbs lambasted DOE’s National Ignition Facility in California for its huge cost overruns (Hat Tip: Harrison Moar).
I summarize these costly projects and other DoE boondoggles here. With bipartisan support for increases to energy subsidies, we can expect a raft of bipartisan boondoggles developing over coming months and years.
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