Mitt Romney made numerous bogus claims in the Oct. 3 debate about the $90 billion in grants, guaranteed loans and tax breaks for energy projects in the stimulus bill:
- Romney falsely claimed “about half” of the clean-energy companies that received U.S.-backed loans “have gone out of business.” But 26 companies received loan guarantees under a loan program cited by Romney, and three of those have filed for bankruptcy. The three firms were approved for about 6 percent of the loan guarantees.
- Romney incorrectly claimed the “$90 billion in breaks to the green energy world” was provided “in one year.” It was two.
- He stated at one point that Obama put $90 billion “into solar and wind.” But only $21 billion went for renewable energy projects, “such as the installation of wind turbines and solar panels,” according to a White House document cited by the Romney campaign. The spending also included $18 billion for transit projects and $10 billion to upgrade the nation’s electrical grid.
- He falsely claimed the $90 billion was equal to “about 50 years’ worth of what oil and gas receives” in tax breaks, which he estimated at $2.8 billion. By his own figures, it would have been 32 years’ worth. But it’s even less than that. The administration estimates that eliminating oil and gas tax preferences would raise about $3.9 billion a year (23 years’ worth). The industry itself says the administration would increase its taxes by $8.5 billion a year (10.5 years’ worth).
- He falsely claimed Obama “put $90 billion into green jobs … that would have hired 2 million teachers.” But that $90 billion included loan guarantees, not just grant money, and the government can’t hire teachers with loan guarantees.
Putting $90 Billion ‘Into Wind and Solar’?
The $831 billion American Recovery and Reinvestment Act of 2009 — better known as the stimulus — has long been derided by Republicans as wasteful. A favorite target is the clean-energy programs — particularly the $535 million invested in Solyndra, a California solar company that announced in August 2011 that it would file for bankruptcy.
Romney repeatedly made references in the Oct. 3 debate in Colorado to the $90 billion contained in the stimulus for energy projects. He claimed, falsely, at one point that Obama had “put $90 billion … into solar and wind.”
Romney: But don’t forget, you put $90 billion, like 50 years’ worth of breaks, into — into solar and wind, to Solyndra and Fisker and Tesla and Ener1. I mean, I had a friend who said you don’t just pick the winners and losers, you pick the losers, all right?
We asked the Romney campaign about the $90 billion, and it referred us to a July 14, 2010, administration report on the economic impact of the stimulus. But that report said only about $21 billion went “for Renewable Generation, such as the installation of wind turbines and solar panels.”
The seven other sub-categories of “clean-energy” projects identified in the report were:
- $29 billion for energy efficiency, including $5 billion for the weatherization of low-income homes;
- $10 billion to modernize the nation’s electric grid;
- $6 billion for domestic manufacturing of advanced batteries and other components of alternative vehicles and fuel technology;
- $18 billion for transit projects, including high-speed rail;
- $3 billion for researching and developing clean-coal technology;
- $3 billion for job training;
- $2 billion in manufacturing tax credits.
So, clearly, the $90 billion wasn’t just for wind and solar projects.
We note, too, that Romney said during the debate that he likes “clean coal,” which got $3 billion from the stimulus.
“And, by the way, I like coal,” Romney said, “I’m going to make sure we can continue to burn clean coal.”
‘Winners and Losers’
As part of his statement we cited above, Romney criticized Obama for wasting money on Solyndra and other wind and solar projects — saying “you don’t just pick the winners and losers, you pick the losers.” He expanded on that by falsely saying that “about half” of the companies that received federal help “have gone out of business.” He also made a bogus claim about how many teachers could have been hired with the $90 billion.
Romney: But you make a very good point, which is that the place you put your money just makes a pretty clear indication of where your heart is. You put $90 billion into — into green jobs. And I — look, I’m all in favor of green energy. $90 billion, that would have — that would have hired 2 million teachers. $90 billion.
And these businesses, many of them have gone out of business, I think about half of them, of the ones have been invested in have gone out of business. A number of them happened to be owned by people who were contributors to your campaigns.
We were surprised by the claim that “about half” of the companies went out of business. As we have written before, an independent review of the Department of Energy loan and loan guarantee programs found that the failure rate was lower than Congress had expected.
When we asked the Romney campaign for information on this claim, we were told that it refers only to companies that received so-called section 1705 loans — a program created by the stimulus. A second program — the so-called section 1703 loan program — was created under the Bush administration, but loans were approved by the current administration. Also, Romney counted only section 1705 loan guarantees approved in the Obama administration’s first two years — ignoring the past two years.
Romney did not say any of that during the debate.
By limiting his scope to just the first two years of the program, Romney arrives at seven companies and three of them — including Solyndra — have filed for bankruptcy protection. The others were Beacon Power, which received a loan guarantee of $43 million, and Abound Solar, which was approved for a $400 million loan but borrowed only $70 million against that. So, combined the three companies were approved for a total of $978 million in U.S.-backed loans and borrowed $648 million of that.
But there were a total of 26 companies that received approval for $16 billion in loan guarantees under the section 1705 program. So, 11.5 percent of the companies — not half — have filed for bankruptcy. And those companies were approved for a little more than 6 percent of the $16 billion in total loan guarantees.
Two other companies were awarded a total of $10.3 billion in loan guarantees by the Obama administration under the section 1703 program. So, if you count them, the bankruptcy rate would fall to under 11 percent, and the money at risk drops to about 4 percent.
The money loaned to Solyndra is largely lost, and it is unclear how much if any the U.S. will recover of the $70 million borrowed by Abound. However, as we wrote before, the government expects to recover as much as 70 percent of the $43 million it guaranteed to Beacon Power.
Also, as part of that same statement above, Romney said that the $90 billion “would have hired 2 million teachers.” (That means the teachers would receive a total compensation of $45,000 — including benefits, and are hired for only one year. The median pay for elementary teachers is about $51,000.)
But here’s the problem with Romney’s math: The $90 billion isn’t all grant money. Some of it is in the form of loan guarantees, which are loans obtained through private financing but guaranteed by the government in the event the borrower defaults.
You can’t pay teachers in loan guarantees.
There is a cost to the government for guaranteeing loans, as the Romney campaign was quick to note. But it is only a fraction of the value of each loan.
Clean Energy vs. Oil and Gas
Romney made three false claims in this single statement:
Romney: And in one year, you provided $90 billion in breaks to the green energy world. Now, I like green energy as well, but that’s about 50 years’ worth of what oil and gas receives. And you say Exxon and Mobil. Actually, this $2.8 billion goes largely to small companies, to drilling operators and so forth.
First, the $90 billion was not given out “in one year.” The administration document cited by the Romney campaign said it was over two years: “$7 billion through the end of the second quarter of 2009 to $86 billion through the end of the second quarter of 2010.”
Second, he compares the “breaks to the green energy world” ($90 billion) with “what oil and gas receives” (which he put at $2.8 billion). This is problematic on a couple of levels.
Let’s set aside the fact that the “breaks” are not comparable — the clean-energy “breaks” included money for infrastructure projects, such as rail and the electrical grid — and look at his math. Fifty years of $2.8 billion would be $140 billion, not $90 billion (and that’s unadjusted for inflation). It would be more like 32 years. So, he’s wrong by his own accounting.
But also the $2.8 billion is a low estimate for how much the oil and gas industry receives in tax breaks.
The Obama administration in its proposed budget for fiscal year 2013 estimates that eliminating tax preferences for fossil fuels would raise $38.6 billion over 10 years, or about $3.9 billion a year, according to a Congressional Research Service analysis of the administration’s tax proposals for the industry. The industry itself says that the administration’s proposals would cost it $85 billion over 10 years, or $8.5 billion a year.
Clearly, the $90 billion would cover far less than 50 years’ worth of tax breaks by anyone’s account, including Romney’s.
In summary, Romney said a lot about the $90 billion in stimulus spending on clean energy — and very little of it was accurate.
– Eugene Kiely