A pair of years-old anecdotes, recently revisited, show that top economists in the White House and Obama’s cabinet expressed serious doubts about the White House’s emphasis on and approach to green jobs. Three top economic advisers, on at least two occasions, have sounded alarms about that agenda.
In October 2010, Treasury Secretary Tim Geithner and then-director of the National Economic Council Larry Summers warned that the oversight of the Energy Department’s loan guarantee programs – one of which financed defunct solar company Solyndra – was too lax, the Los Angeles Times reported:
At a White House meeting in late October, Lawrence H. Summers, then director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, expressed concerns that the selection process for federal loan guarantees wasn’t rigorous enough and raised the risk that funds could be going to the wrong companies, including ones that didn’t need the help.
The economists in that meeting were worried. The physicist, on the other hand, saw little cause for concern. “Energy Secretary Steven Chu, also at the meeting, had a different view,” according to the Times. “Under pressure from Congress to speed up the loans, he wanted less scrutiny from the Treasury Department and the Office of Management and Budget, or OMB.” He reportedly voiced those opinions in talks with the president.
In retrospect, Summers and Geithner had a point, and the cavalier attitude that Chu and others took towards DOE’s loan programs gave us Solyndra. Heritage’s Nick Loris writes that such results are the inevitable consequences of the subordination of economic considerations.
This is precisely why the Department of Energy should not be engaged in loan guarantees or any other sort of private capital allocation. It is not a financial institution. Its leadership is political, by design, and it has no experience in assessing financial risk as it relates to commercial projects. Instead, to the extent that DOE is engaged in any potentially commercial energy development activities, it should focus on basic R & D and basic technological development, rather than trying to force technologies into the market place. Even the basic R &D should not be micro-managed from Washington, but rather carried out by America’s national laboratories and federal research institutions.
While Washington’s intimate involvement in financing for green energy companies was problematic, even its complete success would not have yielded the administration’s hoped-for economic boon, another top Obama economist reportedly warned. In 2007, Austan Goolsbee, who would become the chairman of the White House’s Council of Economic Advisors, warned Obama, then a candidate, that his emphasis on green jobs would not be the boost to employment he hoped, according to Ron Suskind’s new book Confidence Men:
[T]he group burst into a debate about where ten million low-to-moderately skilled male workers might go. Obama mentioned his energy policy, the current core of his domestic platform.
“Tops, we’d be producing just two million jobs, in all the areas: wind, solar, all renewables,” Goolsbee said. “And some of that will be offset by expected job losses in the oil sector, if we ever get that far.”
That fact prompted Obama, throughout the campaign and into his presidency, to de-link the renewable energy sector from his rhetoric surrounding “green jobs” to the point where not even his own Labor Department could define the term. When it got around to the task, the definition had come to include, according to Sen. Charles Grassley (R-IA):
“arbitrators, mediators, and conciliators,” “financial analysts,” “financial quantitative analysts,” “investment underwriters,” “marketing managers,” “personal financial advisers,” “public relations specialists,” “wholesale and retail buyers,” and “reporters and correspondents.”
The president used that expansive definition to tout the 5 million green jobs that his policies would supposedly create, as Heritage President Ed Fuelner noted in his Tuesday Washington Times column. Had he stuck to jobs in the renewable energy sector itself, the 5 million number would have been laughable.
But Goolsbee was right: green jobs have boosted employment to such high levels only to the extent that one accepts Labor’s dubious definition – i.e., to the extent that the “green jobs” rubric is far more expansive the green energy sector itself.