Congressman Tom McClintock

Representing the 4th District of California

Getting Government Out of the Energy Subsidy Business - Amendment to H.R. 2354

July 11, 2011

M. Chairman:  This amendment would save roughly ten percent from this appropriations bill, or $3 ¼ billion, by getting the federal government out of the energy subsidy business.

       For more than 30 years, the Department of Energy has squandered billions of dollars subsidizing research and development that no private investor would touch – with the promise it would make our nation energy independent.  Every year we have spent untold billions on these programs and every year we’ve become more dependent on foreign oil.

       We are now running a deficit that threatens to bankrupt our country, and this requires us to cast a critical eye on every expenditure that has failed to achieve its objectives.  And none has failed so spectacularly as the Department of Energy’s subsidy of energy research which has left us billions of dollars poorer and stuck with mediocre technologies that only survive on a lifeline of public subsidies.

       The opposition will attempt to depict this amendment as a Luddite reaction to “green technology.”

       It is exactly the opposite.  By stopping the government from doling out dollars to politically favored industries – by stopping it from picking winners and losers among emerging technologies competing for capital – we restore the natural flow of that capital toward those that are the most economically viable and technologically feasible.

       For example, this amendment cuts funding to the Energy Efficiency and Renewable Energy Program, which functions as an R&D department for every solar, biomass, geothermal and wind energy company in the country.  

       We’re not funding the most viable research in these technologies.  Private capital beats a path to the door of viable technology.  These expenditures are for research considered so dubious that no private investor in his right mind would risk his own capital.  And yet this Congress has been more than willing to risk our constituents’ capital in the form of their tax dollars.  And it shouldn’t surprise us that those investments have not paid off.

       This misallocation of resources not only destroys jobs in productive ventures in order to create jobs in subsidized ones, it ends up reducing our energy potential instead of expanding it and destroying wealth instead of creating it. 

       Politicians love to appear at ribbon cuttings and issue self-congratulatory press releases at government-supported “alternative energy” businesses, but fall strangely silent when asked to actually account for the billions of our dollars they’ve wasted.  

       The best thing we did for shale oil and gas technology was to have gotten the government out of the business of funding it.

       Guess what happened?  Once we got the government out, it took the productive sector just a few years to develop remarkable new drilling techniques that have unleashed a cornucopia of American energy into the market.  Is there really a question as to which of these models actually work?

       This appropriations act proposes to spend $200 million for vehicle technology research.  Isn’t that what auto manufacturers should do, and used to do, with their own capital?  And if they are not willing to risk their own capital, what right has this Congress to risk our constituents’ earnings?

       These amendments move the government out of all sectors of subsidizing research – biomass, nuclear, solar, wind, fossil fuels – all across the board.

       Does that mean that research and development will stop on all these technologies?  On the contrary.  It means that all of the distortions that government intervention has made in the energy sector can be corrected, and that private capital can once again flow freely to those technologies that offer the greatest return at the lowest cost.

       Thirty years of government energy subsidies promised to reduce our dependence on foreign oil, and yet our dependence has become vastly greater.

       All we have done is to squander billions of dollars of our nation’s treasure and distorted and impeded the natural flow of investment dollars that could have produced far greater returns in viable technology.  

       We are left with a bankrupt and energy deficient and dependent nation while propping up a few politically well-connected interests producing ethanol and solar panels at a staggering expense – an expense we have hidden from consumers with their own tax dollars.

       Our energy policy over the last thirty years simply proves that Thomas Jefferson was right when he observed, “were we directed from Washington when to sow and when to reap, we should soon want bread.”  For thirty years, we have been directed from Washington how to develop our energy.   It should surprise no one that we now lack energy.

 # # #

This amendment to H.R. 2354 (Energy and Water Appropriation Act) was offered by Congressman McClintock and supported by the Republican Study Committee (RSC).