By Phil Mattera, Dirt Diggers Digest
A war of words is raging over the impact of the Obama administration’s $787 billion stimulus program, which is now one year
old. Conservative members of Congress are mounting a relentless assault
on what they see as an abject failure, even as many of them unabashedly
promote and at least implicitly take credit for individual American
Recovery and Reinvestment Act (ARRA) projects in their home districts.
Meanwhile, the office of Vice President Joe Biden has issued a report
insisting that ARRA has created or saved 2 million jobs and has brought
many states back from the brink of fiscal disaster. The stimulus
effort, Biden insists, “is going well.”
The debate boils down to an age-old disagreement between those
opposed to allegedly wasteful social spending and those who believe
government has to reinforce the social safety net during a time of
economic distress.
Both sides are ignoring the fact that ARRA, to a significant degree,
is a rescue plan not just for unemployed workers and struggling state
governments, but also for parts of corporate America. This goes far
beyond the roughly $50 billion in business tax breaks that Republicans
last year insisted be part of the plan.
The Recovery Act represents a big step in the direction of what was
once called industrial policy. Billions of ARRA dollars are being used
by the federal government to encourage the development of new
industries in areas such as renewable energy and health information
technology that are seen as the foundation of future economic growth.
Billions more are being spent on traditional procurement contracts to
boost private-sector activity.
Here are some examples of larger injections of ARRA funds going directly to the corporate sector:
ADVANCED ENERGY MANUFACTURING TAX CREDITS
Hemlock Semiconductor, a joint venture of Dow Corning (itself a joint venture of Dow Chemical and Corning Inc.) and two Japanese companies: $141 million for the production in Michigan of polycrystalline silicon used in solar panels.
Wacker Polysilicon North America LLC, a subsidiary of the German chemical company Wacker Chemie: $128 million for a plant in Tennessee that will produce polysilicon for solar cells.
United Technologies Corporation, the big military contractor: $110 million for new equipment at its Pratt & Whitney plants to help produce more energy-efficient jet engines.
Alstom, the big French power and transportation equipment firm: $63 million for a Tennessee facility that will produce the world’s largest steam turbines for nuclear power plants.
GRANTS FOR DEVELOPMENT OF ADVANCED BATTERIES FOR ELECTRIC VEHICLES
Johnson Controls: $299 million for work on nickel-cobalt-metal battery cells
A123 Systems Inc.: $249 million for work on nano-iron phosphate cathode powder and electrode coatings.
General Motors: $105 million for production of high-volume battery packs for the GM Volt.
“CLEAN” COAL POWER INITIATIVE
American Electric Power Company: $334 million for the development of a chilled ammonia process to capture CO2 at a power plant in West Virginia.
Southern Company Services: $295 million for the retrofitting of a CO2 capture installation at a coal-fired power plant in Alabama.
BROADBAND EXPANSION
ION HoldCo LLC, a partnership led by Sovernet Communications: a $39 million grant to expand fiber-optic broadband in rural areas of upstate New York.
Biddeford Internet Corp. (dba GWI): a $25 million grant to extend a fiber-optic network to rural and disadvantaged parts of Maine.
ENERGY LOAN GUARANTEES
Solyndra Inc.: a $535 million
loan guarantee to support the construction of a commercial-scale
manufacturing facility for cylindrical solar photovoltaic panels.
PROCUREMENT CONTRACTS
Lockheed Martin: $165 million to work on the crew vehicle for NASA’s Project Orion.
Clark Construction Group: $152 million to design and build a new headquarters for the U.S. Coast Guard in Washington, DC.
General Motors: $104 million to supply light trucks, station wagons and alternative fuel vehicles to the General Services Administration.
GlaxoSmithKline: $62 million from the Department of Health and Human Services to do research on the H1N1 flu vaccine.
To this list can be added the thousands of contracts that states
have awarded to private companies to carry out ARRA-funded activities
such as highway repair, school construction and environmental
remediation.
It is surprising that there has been so little debate on the
relative merits of all these projects and programs — as well as on the
wisdom of providing direct subsidies to profit-making entities. Are
these grants, contracts, tax credits and loan guarantees a smart
investment in the future or nothing more than business boondoggles?
With a significant portion of the Recovery Act going to aid
corporations, we also have a right to ask why they are not creating
more jobs with the taxpayer funds they have received. It would also be
helpful to know — though the limitations of ARRA data collection make
this difficult — how good are the jobs that have been created (in terms
of wages and benefits) and whether those jobs are being equitably
distributed among different portions of the population.
If we are ever going to reach any meaningful conclusions about the
whole stimulus endeavor, we’ve got to go beyond tired debates about Big
Government versus the Free Market. Like the bailout of the banks and
the auto companies, ARRA is changing the relationship between the
public and private sectors. Now we need to know whether the new
arrangement is working and who is reaping the benefits.