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Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking
By Jeff Spross on May 7, 2013 at 5:16 pm
Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking | ThinkProgress
wow, really?
By Jeff Spross on May 7, 2013 at 5:16 pm
Loan Program Made Infamous By Solyndra Has Created 20,000 Jobs While Its Cost To Taxpayers Is Shrinking | ThinkProgress
The Department of Energys Loan Guarantee Program was started in 2005 under the Bush Administration, but ramped up thanks to the 2009 stimulus passed by President Obama and the Democrats. It has gotten a bad rap ever since the high-profile failure of Solyndra, one of the solar tech companies the program invested in.
But, of course, a certain amount of failures and losses just come with the territory of investments in new technology. And The Atlantic Wire reports that the latest numbers reveal the programs successfully shepherded 28 companies with various renewable energy projects, while creating over 20,000 jobs. Throw in the Advanced Technology Vehicles Manufacturing loan program, and the total created jobs come to around 60,000.
The purpose of the program, which is no longer handing out new loans, was to help companies cross the valley of death the point when a companys debt is at a maximum, because its already spent money investing in capacity and research and development, but hasnt yet seen enough success in the market to have the revenue to begin paying those loans back. The government guarantee then encourages private investors, who must ultimately make up at least 20 percent of the investment pool under the programs rules, to take the risk of backing the company. The governments own contributions are also structured as a loan, meant to be paid back over time.
As The Atlantic Wire notes, that last point is especially important to remember. The loan program has paid out $26 billion in total, resulting in a less-than-impressive ratio of $1.2 million per job created. But thats with the governments expenditures all out the door, and the returns from the companies yet to come in:
The loan guarantee is often considered a cost, which it isnt. Some programs like that wind farm out in Hawaii, are already repaying the loan, though its not clear how much. Others, like NextEra Energy, never received the full loan amount. We are currently at the high point of the dollars-for-jobs-created ratio. Given the nature of the program, the amount the government is out is reduced gradually over time.
The calculation is only temporarily that 0.8 jobs were created for every $1 million spent. It is nearly as fair to say that the ratio is 20,000-to-zero.
wow, really?