If You Want to Know What Congress Values, Watch the Supplemental Vote
It’s not enough that the wars in Iraq and Afghanistan have topped one trillion dollars. Now there is a supplemental appropriations bill awaiting a vote in the House of Representatives that will add $37 billion more, plus some other odd bedfellows.
This so-called supplemental allows other “emergency” spending issues to be added; Members of Congress know it cannot fail because it’s for the wars. Up for consideration is millions for the Gulf Coast oil spill response and billions to keep teachers, police and firefighters on the job as communities dig out of the recession. Oh, and $9 billion in loan guarantees for new nuclear reactors.
Wouldn’t you love to see all these items separated? Wouldn’t you love to know how your elected representatives would vote on the wars, the oil spill response, teachers, police and fire, and also nuclear reactor loan guarantees? These are separate issues with different values attached.
You might want your rep to vote for teachers, firefighters and police protection, but not for the wars, for example. And you just might be confused about why any loan guarantee is in there at all. What? Nuclear loan guarantees constitute an urgent and unanticipated spending need?
Providing loan guarantees for nuclear power projects is not an emergency. A design for a new reactor hasn’t even been certified by the Nuclear Regulatory Commission; that’s at least a year away. After that, the construction and operating license process will take another year or more. The project most likely to seek the $9 billion contained in the appropriations bill is still scrambling to find investors – probably because the estimated cost of the South Texas project, as it is known, has skyrocketed from $5.4 billion in 2006 to $18.2 billion today.
Second, there’s already money available for loan guarantees. The Department of Energy has at least $10 billion in authority. In February, DOE offered the Southern Company $8.3 billion in loan guarantees for two reactors to be built in Georgia. Southern is still mulling over whether to accept the money. If it declines, then the DOE will have a whopping $18.5 billion to dole out. What’s the rush?
Third, new reactors are highly risky investments and the private market isn’t interested. Wall Street wants taxpayers to take the hit if things go sour. Private companies love the idea of federal loan guarantees because they subsidize the cost of capital. Rather than pay the market rate for a loan – especially one deemed high-risk – the borrowers get a lower interest fee because the Treasury (meaning U.S. taxpayers) will pay back the loan if the borrower defaults.
If the government is going to get into hedging Wall Street’s bets, then wouldn’t it make sense to start small (although small is a relative term when it comes to anything involving reactor costs) and see what happens? But that’s not how the nuclear industry and its friends in Washington are thinking these days. Indeed, there’s talk about increasing the program to $54 billion or even providing a blank check for guarantees before we’ve had a chance to see how much risk – and cost – there actually is. Americans are justifiably gun-shy about bailouts.
Fourth, this just looks wrong. Attaching a bailout for the nuclear industry to a “must pass” war and disaster-spending bill seems a lot like wrapping a controversial plan in the American flag. It’s that sort of deal-making that fuels public dissatisfaction with Washington these days. If this is a wise and appropriate use of public funds, then open it up for full consideration and debate.
A legislative vote for money for Iraq should be separate from money for Afghanistan. The issue of helping states to keep teachers, police and fire should be a separate issue. And loan guarantees for new nuclear reactors should stand or fall on its own.