October 13, 2011

DOE’s Bipartisan Love for Big Business

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I don’t have as big an aversion to government loan guarantees as Megan McArdle, but after running the numbers on the loan guarantees that went through the Department of Energy over the past couple of years, she makes a good point:

I have highlighted what jumped out at me: most of the money has gone to enormous companies that should have no trouble accessing capital. Established utilities, large multinational auto manufacturers, a global warehouse owner. The bulk of these funds are not going to rectify some gap in the capital markets. They’re straight subsidies to huge corporations. Even some of the smaller firms/deals are owned by large corporations like Total SA.

There were three DOE loan guarantee programs. Program #1 was funding for alternative vehicles. 81% of its $9.1 billion went to Ford and Nissan. Program #2 is the 1703 loan program. 97% of its $10.3 billion dollars went to two big nuclear power companies. Program #3 was the 1705 loan program. It’s a little harder to parse, but it looks as if a fair chunk of its $16.1 billion also went to big, established corporations.

The manufactured outrage over the Solyndra bankruptcy has mostly been pretty fatuous. But if there’s a reasonable criticism to be made of these programs, this is probably it: if you’re going to shovel federal money into risky new technologies that private funders won’t touch, shouldn’t you shovel your money into risky new technologies that private funders won’t touch? Why bother with subsidies to Ford and Georgia Power and NextEra? They’ve got plenty of access to bank capital if their projects make sense.

Part of the reason, of course, is that subsidies to big corporations are bipartisan winners. John Boehner is a big backer of loan guarantees to allow the United States Enrichment Corporation to build a uranium enrichment facility in Ohio. USEC is a $2 billion corporation. Johnny Isakson and Saxby Chambliss were strong supporters of the loan guarantees to Georgia Power, a subsidiary of Southern Company. Southern Company is a $17 billion corporation. Pretty much everyone in Michigan supported loan guarantees to Ford, a $129 billion corporation.

Now, like I said, this doesn’t bother me all that much. The actual cost of the $36 billion in DOE loan guarantees will probably run around $2-4 billion over the next decade or so. That’s not all that earth shattering. Still, if we’re going to do something like this, I’d be pretty happy to end the loan guarantees to big companies and concentrate our firepower on smaller startups that can’t find alternative financing but might be worth some taxpayer risk anyway. The big guys ought to be able to rely on the free market they spend so much time claiming to revere.

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WHO DOESN’T LOVE A POSITIVE STORY—OR TWO?

“Great journalism really does make a difference in this world: it can even save kids.”

That’s what a civil rights lawyer wrote to Julia Lurie, the day after her major investigation into a psychiatric hospital chain that uses foster children as “cash cows” published, letting her know he was using her findings that same day in a hearing to keep a child out of one of the facilities we investigated.

That’s awesome. As is the fact that Julia, who spent a full year reporting this challenging story, promptly heard from a Senate committee that will use her work in their own investigation of Universal Health Services. There’s no doubt her revelations will continue to have a big impact in the months and years to come.

Like another story about Mother Jones’ real-world impact.

This one, a multiyear investigation, published in 2021, exposed conditions in sugar work camps in the Dominican Republic owned by Central Romana—the conglomerate behind brands like C&H and Domino, whose product ends up in our Hershey bars and other sweets. A year ago, the Biden administration banned sugar imports from Central Romana. And just recently, we learned of a previously undisclosed investigation from the Department of Homeland Security, looking into working conditions at Central Romana. How big of a deal is this?

“This could be the first time a corporation would be held criminally liable for forced labor in their own supply chains,” according to a retired special agent we talked to.

Wow.

And it is only because Mother Jones is funded primarily by donations from readers that we can mount ambitious, yearlong—or more—investigations like these two stories that are making waves.

About that: It’s unfathomably hard in the news business right now, and we came up about $28,000 short during our recent fall fundraising campaign. We simply have to make that up soon to avoid falling further behind than can be made up for, or needing to somehow trim $1 million from our budget, like happened last year.

If you can, please support the reporting you get from Mother Jones—that exists to make a difference, not a profit—with a donation of any amount today. We need more donations than normal to come in from this specific blurb to help close our funding gap before it gets any bigger.

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