Government "Investments"

Former Illinois Senator Dirksen of Illinois was credited with saying the following about government waste, "a billion here, a billion there, and pretty soon you're talking real money."

I was reminded of that quote while reading about our ongoing wasteful government knows best "investments" like Solyndra along with many other private companies when reading Car Battery Start-Ups Fizzle:

"Since 2009, the Obama administration has awarded more than $1 billion to American companies to make advanced batteries for electric vehicles. Halfway to a six-year goal of producing one million electric and plug-in hybrid vehicles, auto makers are barely at 50,000 cars.

The money funded nine battery plants—scattered across the U.S. from Michigan to Pennsylvania and Florida—that have few customers, operate well below capacity and, so far, have created less than a third of the jobs promised by 2015. . . .

What happened? The U.S. provided grants that tied the battery makers to aggressive timetables, requiring each to achieve production and staffing targets that would supply tens of thousands of vehicles a year. But those production timetables weren't linked to market demand, leading to a shakeout among suppliers.

The mismatch between production and market demand has resulted in one casualty. Ener1 Inc., a battery maker that built a plant in Indianapolis with $54.9 million of a $118 million government grant, sought bankruptcy protection earlier this year. It has since exited Chapter 11 and its plant is operating, a spokesman said, albeit with 250 workers, well short of the 1,700 originally envisioned in 2009.

The Department of Energy, which oversees the administration's advanced battery grants, says it is too early to judge the effort, and believes it will bear fruit when electric cars become a regular sight on American highways.

"We are trying to build the infrastructure for the American battery industry," said David Sandalow, the acting undersecretary of energy, in an interview. "Short-term trends can be important, but let's keep our eye on the medium and long term." The White House deferred comments to the DOE.
Mr. Sandalow said that one or more bankruptcies among companies developing a new technology isn't uncommon or indicative that there isn't promise.

Part of the problem was that strict timetables left little room for the market to mature. A123's $249 million matching grant required it to build facilities that could make at least 500 megawat-hours of lithium-ion battery capacity a year by this November . . . . A123's grant set out a specific sequence for the hiring of engineers and ordering of equipment. The company was required to report on each step to the DOE, according to its August 2009 grant. All funds were expected to be used by Nov. 30. In April, A123, which had to recall some of its batteries, was given a two-year extension.

A123, which has been trying to raise cash through a private debt offering, said in a regulatory filing Wednesday that its losses and cash burn "raise substantial doubt on the company's ability to continue as a going concern."

"The goals that were tied to the grants said you have to ramp up this quickly, and those goals were overly optimistic," said John Gartner, an analyst who follows the electric-vehicle market for Boulder, Colo.-based Pike Research. "The market was never going to develop it as quickly as the DOE expected. It's kind of out of alignment with reality. The whole goal of 1 million electric vehicles [by 2015], there is just no way that is going to happen."

Carter Driscoll, an analyst who specializes in researching alternative energy companies for CapStone Investments, blames the administration's insistence on quickly setting up and staffing these operations for the current troubles. "It was about making jobs in certain areas. It wasn't market driven. There is going to be a [jobs] fallback," said Mr. Driscoll. . . .

All told, the administration awarded $1.26 billion in matching grants toward the construction of these plants with the promise of creating more than 6,400 jobs. To date, the companies have spent about two-thirds of the total and have hired about 2,000 workers."

Summing Up

And that, my fellow Americans, is an example of government doing what government does best---waste taxpayers' money.

There's nothing like plenty of available OPM and a lack of governance accountability, especially when unqualified bureaucrats are those making the "investment" decisions.

They don't need to worry about such trivial matters as market demand, cost control or profitability.

With such a glorious track record, it's no wonder that President Obama now wants to borrow more money, raise taxes and then "invest" more money on our behalf to create jobs and get the U.S. economy growing again.

Wasn't this the same administration that promised unemployment wouldn't get as high as 8% if we passed the ~$800 billion stimulus package a few short years ago?

Well, for those who have been off the planet since then, please be advised that unemployment has exceeded that 8% level for 40 months in a row now, and there are more such 8% months ahead. Today it's 8.2%.

Instead of "a billion here, a billion there," maybe Senator Dirksen should have said "$800 billion here, $800 billion there and pretty soon you're talking real money."

No, come to think of it, that sounds more like what President Obama should say.

But he won't, because even $800 billion is not "real money" to him. It's not even a year's worth of deficits.

"A trillion here, a trillion there" perhaps?

 Thanks. Bob.