For a government $15 trillion in debt running an annual budget deficit of $1.3 trillion, a government now with a select committee of legislators meeting in secret to find $1.2 trillion in savings, $16 billion doesn't sound like much. As troubles in that committee show, however, any move toward fiscal health deserves consideration.
All the government has to do is cancel further spending on energy projects under the American Recovery and Reinvestment Act of 2009. This should not be difficult. Spending money on politically preferred energy so far has proven to be a challenge. Some call it wasteful. Why not cut losses?
Spending money should be easy, especially when the money, like all government money, comes from the toil of others. Above a certain amount, though, the chore becomes onerous.
Spending billions apparently has proven especially difficult for the Department of Energy. Gregory H. Friedman, DOE inspector general, made that clear in testimony Nov. 2 before the Subcommittee on Regulatory Affairs, Stimulus, Oversight, and Government Spending of the House Committee on Oversight and Government Reform.
Friedman described problems DOE has had spending funds allocated to it by the American Recovery and Reinvestment Act of 2009, the law that was supposed to rescue the economy with $840 billion of federal largesse. The law made DOE the mechanism for distributing $35.2 billion in various ways, from an expanded weatherization program to loan guarantees for nonfossil energy. That sum exceeded DOE's budget for fiscal 2011 by $8 billion. According to Friedman, the mission "overwhelmed" DOE and the state and local bureaucracies downstream in the money sluice.
IG investigations found the effort to use recovery act money as economic stimulus to be "more challenging than many had originally envisioned," Friedman said in written testimony. "The concept of 'shovel-ready' projects became a recovery act symbol of expeditiously stimulating the economy and creating jobs. In reality, few 'shovel-ready' projects existed." Programs at DOE and at state and local governments that received sudden new funding needed more planning, organizational adjustment, staffing, and training, Friedman said. "Despite a major effort in a high-pressure environment, the department struggled to obligate and expend recovery act funds on a timely basis."
Friedman didn't fault DOE. He summarized the problems not as misfeasance at the department but as "massive funding, high expectations, and inadequate infrastructure," resulting in, "at times, less than optimal performance."
Those problems are the work of Congress and the White House, committed as they were in 2009 to spending the US out of recession and unemployment and into energy bliss. Now the country has a government choking on debt, a sputtering economy, and stubborn joblessness. And after the high-profile bankruptcy of a California solar-panel manufacturer named Solyndra, which had a federal loan guarantee worth half a billion dollars, new scrutiny has befallen outlays dedicated to uneconomic energy.
It's about time. Taxpayers are spending too much money on energy that can neither compete economically nor contribute enough to supply to warrant the expenditure. Politics guides too many decisions about where the money goes. The distortions create costs and make the agenda unsustainable. They might prematurely condemn energy forms that would have more hope if allowed to develop under the rigors of markets instead of the pressures of politics.
Broader lessons abound here. The government can't solve national problems simply by heaving money at them. Friedman's testimony and fiascos like Solyndra, which isn't alone, make failure of the approach clear at one federal department. Surely, the failure doesn't end there. Wasteful spending by government hardly confines itself to energy.
The US can't afford this. Friedman said nearly 45% of DOE's recovery act funds haven't been spent. So not spending it would save $16 billion. Relieving an overwhelmed DOE of the need to spend the money would represent more than a step, however small, toward fiscal health. Taking that step would be a welcome and important sign of responsibility.