As Oil Companies Announce $24B in Profits, Rep. Stearns Says, “When Somebody Is Successful Then You Give Them Subsidies”
"As Oil Companies Announce $24B in Profits, Rep. Stearns Says, “When Somebody Is Successful Then You Give Them Subsidies”"
So far this week, four of the world’s top five oil companies have announced more than $24 billion in third quarter profits. And by the logic of Florida Congressman Cliff Stearns, that should mean those oil companies deserve more subsidies, not less.
Speaking at a town hall meeting last weekend in his home state of Florida, Stearns displayed a very sketchy grasp on how subsidies should work, explaining to Climate Progress that incentives should be given to mature companies, not early-stage companies.
“When somebody is successful, then you give them the subsidies and the tax credit,” explained Stearns, talking to Climate Progress. In short, the rich get richer. This is how the 1% operate. No wonder income inequality is growing in this country.
Stearns has backed that up with hearty government rewards to the most profitable, successful companies on the planet — voting multiple times to continue billions in tax breaks to oil companies while voting against shifting those incentives to the nascent clean energy industry.
As Chairman of one of the House subcommittees investigating the Solyndra loan, Stearns has railed against government loan guarantees, saying they “pick winners and losers.” But when talking to Climate Progress about the topic of loan guarantees, Stearns completely misunderstood how the policy works, saying it’s “where the government gives you money outright.”
In fact, a loan guarantee is exactly the opposite. It is simply an agreement with private lenders that the government will back a loan in case of default. The government is not actually giving any money outright — it only provides federal funds through a loan guarantee in a worst-case scenario. In order to qualify for the program, recipients must prove that they’ve raised adequate private capital. And in the case of power-plant developments, companies must have a long-term agreement to sell the energy.
To round out his mind-bending logic on subsidies, Stearns calls for more federal support of nuclear, an industry he admits has gotten “a huge amount of subsidies.” However, no nuclear power plants have been built in the U.S. in more than 30 years — and none would likely get built in this country without government-backed insurance and loan guarantees.
Watch the video:
A loan guarantee is where the government gives you money outright —they print out the money and give it to you— before you’ve even manufactured. Before you even start. Where as the subsidies are provided as incentives. You have to go out and take the risk as an energy company and drill and if you do well then you get the subsidies and you get the tax credits.
So what I’m trying to do is say, the government should not be picking winners and losers, let the private sector determine the winners and losers, and then…when somebody is successful, then you give them the subsidies and the tax credit.
For example, some of the money that’s been given to the nuclear business — there’s a huge amount of subsidies to help build nuclear. Well, nuclear has been proven and nuclear is not competing with China, it’s for electricity here in this country. So that would be a better investment than trying to sell solar panels throughout the world when we’re trying to compete with China. Where as with nuclear, we’re building just for us.
Putting aside the fact that new solar PV plants can be cheaper than new nuclear plants, Stearns seems to think that nuclear is a domestic industry. Actually, most of the equipment manufactured for power plants would be coming from international companies — in some cases financed by national governments.
Stearns’ stance on government involvement is one long series of contradictions that inherently favors subsidies for oil, gas and nuclear, while disadvantaging renewables. That’s something to keep in mind during the Solyndra investigation, as he continues to rail against government investments in clean energy.
Thanks to Tyce Herrman, who contributed to this story.
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