President Donald Trump’s budget eliminates a pair of Department of Energy (DOE) green energy loan programs on track to lose taxpayers billions of dollars.
The budget entirely eliminates the Advanced Research Projects Agency-Energy and the Title 17 Innovative Technology Loan Guarantee Program. The DOE used these programs to issue roughly $16 billion in loan guarantees to 26 different projects over the years. Several of the companies that got taxpayer-backed loans went bankrupt.
These green loan programs lost $2.2 billion dollars between 2008 and 2015, according to a Government Accountability Office (GAO) report. As of 2015, the GAO concluded that taxpayers were securing $28 billion in loans for 30 different green energy projects.
These loan guarantees allowed borrowers to receive a privately financed loan with the federal
government assuming the risk. If the recipient of the loan defaults, they have the U.S. Treasury as an effective co-signer which often takes on up to 80 percent of the loan’s costs.
“The Budget for DOE demonstrates the Administration’s commitment to reasserting the proper role of what has become a sprawling Federal Government and reducing deficit spending,” states the budget summary. “The private sector is better positioned to finance disruptive energy research and development and to commercialize innovative technologies.”
Trump’s 2018 budget cuts DOE funding by $1.7 billion compared to 2017, a 5.6 percent decrease.
President Barack Obama gave numerous taxpayer-subsidized green energy loans to large corporations capable of getting their own private financing. U.S. taxpayers are currently on the hook for roughly $18 trillion in loans, loan guarantees and subsidized insurance from 150 different federal programs. Thirty-five of these programs provide taxpayer dollars to green energy projects.
A solar power project backed 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.The Obama administration also 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.
Big companies 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.
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