The Stimulus: Are "Green Jobs" Corporate Welfare?

We've examined how Obama has sold "green jobs" spending in the stimulus as a way to jolt some life into the entrepreneurial sector. This is a very timely topic to reexamine as the Senate debates what to shave off from the stimulus.

Washingtonwatch.com had a contest on who can find the best and worst things about the stimulus, and here is the winner for "best":

As economist Gary Becker points out, many of the well-intended infrastructure investments mandated in the stimulus bill are probably going to end in wasteful spending. I am hardly ever an advocate of increased government intervention. However, I want to argue in favor of a subsection in Title IX appropriating increased funds for green job training. The Apollo Alliance reports that approximately three million jobs will be created over the next decade in the green energy industry. Most of these jobs would be middle-skill work (think electrician-cum wind turbine technician). Additionally, the Workforce Alliance cites a current gap between supply and demand of middle-skill labor that will widen by 10 to 15 percent by 2014 in favor of demand. Here is an opportunity for the government to make a productive investment in a sector that has a diminished argument for private sector investment, especially in the absence of high gas prices.

So this would be the case for why at least some of the green jobs spending in the stimulus package really will kickstart industries that can become profitable without government largesse.

But there's another side to the story. Tim Carney, writing in the DC Examiner, details the background of new Treasury Chief of Staff Mark Patterson as a "green" lobbyist. What Patterson has successfully lobbied into previous energy bills might suggest the reality of green "investment," rather than what we hope it will look like.

Patterson worked as a lobbyist for Goldman Sachs, which had invested money into Canadian alternative energy firm Iogen. Here, according to Carney, were the results of Patterson's efforts:

Sure enough, the next year, Bush’s Energy Department announced a grant of up to $80 million for Iogen to build a plant in Idaho. Later that year, Congress passed the 2007 energy bill, which ramped up the federal mandate on renewable fuels, with a special set-aside for cellulosic ethanol, requiring gas companies to buy a quantity of the stuff that increased annually. The bill also included millions for cellulosic ethanol research and development.

So now you see how it works: A well-connected company invests in a technology that is currently unprofitable. That company then uses its high-dollar lobbyists and friends inside government to subsidize or mandate that product into profitability. Goldman similarly invested in — and lobbied for —  greenhouse gas credits, which are literally worthless without climate change legislation that caps emissions.

There's no doubt that grant for Iogen created jobs. But it did so in the form of corporate welfare. That helps a few established businesses, not the entrepreneurs trying to create things from the ground-up. Like these energy bills, the stimulus package is a flypaper for special interests.  Check out David Boaz on how the stimulus has become a lobbyist feeding frenzy.

Here's something for the Senate to consider as it repackages the stimulus: if you want spending on green jobs to help the economy as a whole, and not a few corporations, target the money at general R&D, instead of specific firms.