One of the hidden gems of the Republican budget plan is the elimination of the Department of Energy’s clean energy loan program.
The program was set up by the Energy Policy Act of 2005. It allows clean tech companies to borrow money at cheaper rates by extending a government guarantee over their loans. And it’s been a scandal from the start. Here are a few reasons why:
- Political corruption. An investigation by the Center for Public Integrity and ABC News found that many of the guarantees go to companies whose executives were backers of Obama’s presidential campaign.
- Sloppy paperwork. Just last month, an audit by the GAO discovered that out of 18 loans or commitments, the Department of Energy only had adequate documentation for three.
- Unreasonable risk. There’s a reason the market won’t lend to these projects without a government backstop: they’re too risky. The CBO estimates that 50 percent of the loans will default.
Unfortunately, the corporate welfare clients who are getting these guaranteed loans are unlikely to let them go without a fight. And since many of them have ties to the Obama administration, expect Obama to push to have the loan program restored.
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