When I was younger, I lived on St. Thomas in the U.S. Virgin Islands. Life was good, but we always feared hurricanes. Hurricane Dorian hit St. Thomas this past week. The devastation wasn’t as bad as what happened in the Bahamas, but it was substantial. The East Coast was also affected by Dorian with significant flooding in South Carolina and North Carolina. That’s why we were surprised to see that FEMA has yet to address IT problems that could affect their response to Dorian and future disasters (see report here). This is shameful. Millions of lives depend on FEMA and, by extension, the agency shoring up its outdated, fractured IT. FEMA has known about this for more than 10 years. Yes, they’ve been aware of these problems for more than a decade. So, no more excuses – it’s time for FEMA to fix its IT system and Congress to hold the agency accountable. Our thoughts and prayers are with everybody in the path of Dorian.
Solar Roads Experience Many Speed Bumps
Surprise – solar panels don’t make great roads. The French government recently learned this the hard way after debuting a $6 million solar road in Normandy in 2016. The road generated about half as much power as expected, and costs exceeded any reasonable expectation for a road…or even a solar panel. An American experiment in solar roads fared similarly. In 2016, the Daily Caller reported, “roughly 25 out of 30 panels installed in a prototype solar road in Idaho broke within a week, after the project received $3.9 million in funding [some of which from the Department of Transportation] and 6.5 years of development.” These colossal development failures speak not only to solar roads, but “renewable” projects in general where hype rarely matches reality. Lawmakers around the world should think twice before lavishing “cutting-edge” technology with subsidies and making taxpayers foot the bill for inevitable failures.
Over the past few decades, a predictable pattern has emerged: governments tout cool-sounding renewable energy technologies but promises and funding falls flat because of the biases and inefficiencies of the public sector. In 1991, scholars Linda Cohen and Roger Noll found that, “American political institutions introduce predictable systematic biases to R&D programs so that on balance, government projects will be susceptible to performance underruns and cost overruns.” This trend is especially evident in the billions of dollars in subsidies showered on wind turbines, solar panels, and electric vehicles. The waste permeates at all levels, from initial development of a technology to the financing of the finished product. The go-to example for government funding gone awry is Solyndra, a bankrupt solar start-up that swindled the Department of Energy (DOE), i.e. taxpayers, of $500 million in loan guarantees in 2011. The DOE’s inspector general found, “Solyndra officials provided certain information to the Department that, had it been considered more closely, would have cast doubt on the accuracy of certain of Solyndra’s prior representations… the Department missed opportunities to detect and resolve indicators that portions of the data provided by Solyndra were unreliable.” The Advanced Technology Vehicles Manufacturing Loan (ATVM) program was established in 2007 to aid companies developing “advanced” fuel-efficient vehicles. The ATVM program was authorized by Congress to loan up to $25 billion and appropriated $7.5 billion to subsidize said loans. In all, the program loaned out $9 billion to five companies: Ford, Nissan, Tesla, Fisker Automotive, and Vehicle Production Group (VPG). Fisker and VPG have since gone out of business and defaulted on their loans. Tesla is in serious trouble, compromised by unstable leadership, flawed manufacturing processes, and an exodus of talent.
From solar roads to Solyndra to the ATVM program, government-backed technological endeavors are a dumpster fire of misplaced optimism and systematically skewed incentives. Taxpayers can only watch as the pile-up of wasteful spending grows increasingly large in the rearview mirror. Lawmakers and bureaucrats need to recognize these failures and allow private funds, not taxpayer money, to pave the way for future growth.
Governor Hogan’s Broadband Problem
Gov. Larry Hogan (R-Md.) has been a breath of fresh air in Maryland. He has cut taxes after former Gov. O’Malley raised and instituted new taxes. But, Gov. Hogan may now be looking to squander his hard-earned credibility and spend taxpayer money on broadband. On August 16, Hogan announced that Maryland will be providing “an additional $10 million this year as the first installment of a five-year $100 million initiative that will finally provide another 225,000 Marylanders in rural communities with access to reliable and affordable high-speed internet services.” But, publicly-funded broadband plans are usually duds that cover few residents at an astronomical cost. Gov. Hogan should stop squandering taxpayer money on the digital domain and focus on reducing barriers to private internet deployment.
It’s hard for politicians to say no to photo-ops, especially when officials can boast about “closing the digital divide.” In 2017, Hogan’s administration created the Office of Rural Broadband and tasked it with doling out the $100 million to projects recently cited by the governor as broadband spending “successes.” Cited achievements of the office include a refinancing of the city of Westminster’s $17 million in debt incurred during the building of a fiber network. Westminster built out the network and then contracted with a company called Ting Internet to deliver access to the city. But millions of dollars of debt later, the city has preciously little to show for its public-private partnership. The failure of large, publicly-owned networks is hardly limited to Westminster. In 2011, Maryland unveiled the $158 million One Maryland Broadband Network, funded mostly by federal stimulus money. At the time, officials touted an “ambitious” engineering and construction endeavor that would provide secure internet access to thousands of businesses and public buildings via a comprehensive fiber optics network. There were problems right from the get-go; a state audit uncovered that, leading up to construction, Department of Information Technology officials “orally agreed to pay the project manager an 8% markup on subcontracted services” against department policy and without the knowledge of department leadership. Payments flowed to contractors without any verification that progress was being made, at significant cost to state and federal taxpayers. And, eight years later, the state has next to nothing to show for the expensive project.
Budget-busting broadband bridges to nowhere are unfortunately all-too-normal across the country. A 2017 study by University of Pennsylvania Professor Cristopher Yoo and legal scholar Timothy Pfenninger found that most municipal fiber networks “do not generate enough cash to cover their current operating costs and only two out of the 20 are on track to recover their total project costs during their 30-40 years of expected useful life.” Fortunately, taxpayers and consumers needn’t rely on the failed promises of municipal broadband to secure internet access for the future. The next generation of high-speed wireless service, 5G, is quickly coming to cities across the country with coverage predicated on small-cell (pizza-box sized) deployments on telephone poles rather than expensive fiber networks. Maryland can reap the benefits of this low-cost, high-speed technology, but only if they signal to providers that cities such as Baltimore, Columbia, and Silver Spring will keep deployment barriers low. Maryland can lead the way in fast, reliable internet coverage without squandering the hard-earned dollars of taxpayers across the state.
Blogs:
Monday: In Washington, Some Proposals Like Indexing Capital Gains are Worth Fighting For
Wednesday: It’s Time to Celebrate Markets in Wireless Spectrum, Not Undermine Them
Wednesday: Watchdog Slams Michigan’s New Vaping Ban
Thursday: Time for Free Trade with Taiwan
Media:
September 3, 2019: The Washington Examiner (Washington, D.C.) mentioned TPA in their article, “Tax groups cheer new trucking rule, to save $274M.”
September 3, 2019: Townhall ran TPA’s op-ed, “Time for Free Trade with Taiwan.”
September 3, 2019: The American Conservative ran TPA’s op-ed, “Bernie Sanders: Federal Workers Should Have the Right to Strike.”
September 4, 2019: FEE ran TPA’s op-ed, “Drug Warriors Ignore Basic Facts to Push the Vaping Scare.”
September 4, 2019: Cox Television interviewed me about long-standing IT problems at FEMA.
September 4, 2019: The Epoch Times quoted TPA in their article, “Little Will Get Done in Congress This Fall as 2020 Jockeying Dominates.”
September 4, 2019: Law360 quoted TPA in their article, “Cable Cos., Public Interest Orgs Push FCC Auction Of C-Band.”
September 5, 2019: WBFF (Fox, Baltimore) interviewed me about tariffs and how they affect Maryland businesses and consumers.
September 5, 2019: TPA policy director Ross Marchand appeared on “Real Talk with Riggin” (KZIM KSIM; Cape Girardeau, Mo.) to discuss “surprise billing” issues and healthcare reform.
September 6, 2019: The Washington Examiner (Washington, D.C.) ran TPA’s op-ed, “New US Space Command creates a black hole of waste.”
Have a great weekend, and as always, thanks for your continued support.
Best,
David Williams
President
Taxpayers Protection Alliance
1401 K Street, NW
Suite 502
Washington, D.C. xxxxxx
www.protectingtaxpayers.org
