President Barack Obama gave taxpayer-subsidized green energy loans to large corporations capable of getting their own private financing, according to a witness at a Wednesday congressional hearing.
“The Department of Energy routinely uses taxpayer’s dollars to finance projects which benefit wealthy investors and titans of industry,” Diane Katz, a regulatory policy researcher at the conservative Heritage Foundation, told House lawmakers.
“With a market cap exceeding $573 billion dollars, Google does not need loan guarantees from the Department of Energy,” she said. “Neither does British Petroleum, Chevron, or Morgan Stanley, but they benefit from them none-the-less.”
A solar power project backed, in part, by Google requested a $539 million federal bailout in 2014 to help pay off part of a $1.6 billion federal loan it got from the Obama administration. Katz said examples like this show the waste in Obama’s green energy loan program.
Katz said U.S. taxpayers are on the hook for roughly $18 trillion in loans, loan guarantees and subsidized insurance from 150 federal programs. Thirty-five of which provided taxpayer dollars to green energy projects.
Roughly 61 percent of all liabilities throughout the U.S. financial system are either implicitly or explicitly backed by taxpayers.
Big companies by their very nature are generally much better at lobbying the federal government and getting loan guarantees than small companies. Economists think that it costs a lot of time, manpower and money to comply with the regulations to get a government-backed loan. Giving away loans to big companies may make the market much more difficult for smaller firms to compete, even though smaller firms are generally more innovative.
“Since large companies with the resources to lobby on behalf of their projects often have an advantage in the loan application process, the DOE loan guarantee program pushes capital away from the start-ups and entrepreneurs that often have the most innovative ideas,” Texas Republican Rep. Randy Weber, chairman of the House subcommittee on energy, said during the hearing. “We need to be opening doors for these small innovators – not closing them by pushing investors towards federally backed, risk-free investments.”
Weber noted that the DOE issued roughly $16 billion in loan guarantees to 26 different projects, putting taxpayers on the hook. Congress thinks that the political pressure to give out loans quickly prevented the DOE from effectively evaluating them.
“Easy money combined with political pressure to issue loans before the temporary subsidy program expired led DOE to rush loan applications,” Weber continued. “Both the DOE Inspector General and Government Accountability Office found that DOE did not have the necessary expertise or metrics to effectively evaluate these loans.”
The Obama administration repeatedly bypassed steps meant to protect taxpayers in a rush to approve an energy loan guarantee to a politically-connected California solar power startup, ABC News learned in 2011.
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