Report: Nearly $5B in Loans Pending for 'Green Projects'

Sen. Ron Johnson on federal loans, cutting spending


This is a rush transcript from "Your World," September 29, 2011. This copy may not be in its final form and may be updated.

NEIL CAVUTO, HOST OF "YOUR WORLD": And use it or lose it. Have you heard about this? It is going on in Washington right now, more than $4 billion earmarked for at least seven green projects, a lot of them set to expire tomorrow if the money is not spent now.

Another half-billion or so in federal housing funds, money meant to keep people out of foreclosure, but the money could be foreclosed away if it isn't spent by tomorrow, which is why HUD officials are scrambling to have it extended beyond tomorrow.

There is a great big rush to spend whole wad full of money, no big rush, though, to see exactly how that money is being spent, like the more than $533 million that went to Solyndra to help build a $700 million state- of-the-art plant the size of five football fields, complete with robots whistling Disney tunes. These things did amaze me.

Then you have the spa-like showers with liquid crystal displays of water temperatures, four electric car charging stations, a wild grass and rock garden. What is a wild grass and rock garden?

Anyway, Wisconsin Republican Senator Ron Johnson says when you are in a rush, this is the kind stuff that happens.

But, boy, Senator, this is like a 24-hour marathon going on.

SEN. RON JOHNSON, R-WIS.: Well, Neil, that is pretty unfortunate.

This is the wrong way to try and spend taxpayers' money. And we should -- we just ought to let these programs expire and return that money to the taxpayer.

CAVUTO: What would happen? In other words, Senator, is it true that in the case of these Energy Department grants, more moneys that have been set aside, it's like back to nothing if they don't spend it now?

JOHNSON: Well, let's hope so.

Unfortunately, Neil, there is a pretty good article that ran in The Wall Street Journal about these energy projects. And the Nevada solar project right now, that would spend $1.1 billion and create 45 permanent jobs, at a cost of $25 million per job. Now, that's on the high end of what these green energy jobs cost. Generally, they're somewhere between $250,000 and $750,000 per job. It's -- we simply cannot continue to subsidize this type of uneconomic activity.

CAVUTO: Now, they say on that, by the way, that $25 million per job, that you're not -- that is not a fair comparison, that they are talking about a facility and not a per-job figure.

Be that as it may, Senator, I guess what I am asking is, what are the rules? In other words, if the clock is ticking, you have to spend it by the end of the month, the end of the fiscal year, whatever, then where does that money go if it is not spent? Is it returned to the taxpayer? Or is

it set aside as a future credit line? What?

JOHNSON: Well, we currently have billions of dollars of unspent previous budgetary authority that is just sitting there waiting to be spent for some particular project. It would be probably be going into that category.

But again there have been numerous attempts to just basically take that money and return that to the taxpayer and not allow that budgetary authority to go on. And that is really what should happen to it. It is not spend and it shouldn't be spent.

CAVUTO: Now, I was trying to take a look out of the corner of my eye as I was talking to you, before I talked to you, about Solyndra and these singing robots.

Do we have sound of that, guys?


CAVUTO: What was singing, do we know? The robots are singing? It wasn't the showerhead. OK. I was just going to say, because that -- bottom line, that is just part of the problem for you, right, all kidding aside. When this is what we get for the money, we are not getting much for the money.

JOHNSON: No, we don't.

And let's face it. Let's take a look at Solyndra as an example. This is a $500 million photo-op basically is what we had here. Two months before they approved that loan, Pricewaterhouse basically issued a qualified opinion and said this was not a going concern, because the product they were producing cost $6 to produce. They were selling it for $3 when their competitors were selling it for $1.50 to $2 per unit.

It's simply not going to succeed in the free market system, and it should have been obvious to everyone. But the administration wanted to have a photo-op with Vice President Biden and trot out this green energy program. And the taxpayers got put on the hook for $535 million. That is absurd.

CAVUTO: Senator, thank you very, very much.

Fair and balanced, the other side of this.

Now, my guest says that, despite Solyndra, there are a lot of valuable projects that need to be funded, and that's what they're trying to do.

Democratic Congressman from Oregon Kurt Schrader joining us now.

Congressman, you see these kind of examples and you see the singing robots -- I kind of like the singing robots, so I will leave that aside -- but they worry that you will just compound the program by doing this all over again. Are you?

REP. KURT SCHRADER, D-ORE.: No, I don't think so.

I think the thing that gets lost is the 40 other projects that came out of this Bush administration loan program have been very successful, not had a problem. That is not to say we don't need to do the oversight, that is for sure. But I think by the same rationale that I am hearing talked about, why do we even have any oil and gas leases going on at the cost of billions of dollars in tax subsidies after the BP disaster?

Maybe we should have shut down all them, too, huh?

CAVUTO: Well, but wait a minute. You mentioned the BP disaster. Right after that, we quite rightly froze everything. There was an immediate effort to check all the deepwater drilling throughout the Gulf. Now, some would argue it went on too long.

But yet when we have a boondoggle like what happened with Solyndra, while you might say it's a limited situation or not, there was no such rush to stop future spending on efforts that might, might give us the same results. Don't you find that odd?

SCHRADER: Well, I am not so sure they have not stopped and reevaluated a lot of the projects that are in the pipeline. And the thing you have got to remember is the solar part of this loan program is a real small piece.


CAVUTO: We are rushing billions out the door. We are rushing billions out the door.

SCHRADER: They're following -- as far as I know -- and I am not in the room making the decisions -- they are doing the same timeline as before.

And the solar is a tiny piece of this, Neil. The biggest project in this program was a $8 billion nuke program in Georgia. I don't see those representatives crying.

CAVUTO: All right, a fair point.

But I guess what I'm asking you, if you know you had a problem with Solyndra -- and you might say it was more the exception, hardly the rule -- wouldn't you just, for the better part of valor, say, let's take a look at all of these, the nuke included? Did we dot the I's and did we cross the T's?

SCHRADER: Oh, Absolutely. Absolutely.

CAVUTO: No, no, but I think what happened -- Republicans have done this as well -- when there is a deadline to get money out the door, because you either spend it or lose you, then you are in too much of a rush to check the details.

SCHRADER: Well, and I think that is the problem.

The inspector general is all over that and I have a lot of faith in my colleagues in the Oversight Committee going to raise the issue, so that we don't have a repeat of this type of disaster.


CAVUTO: But how do you know? You have got the clock running out. And, presumably, the inspector general was there for Solyndra, right?

SCHRADER: The issue you are talking about, use it or lose it, is agency-wide. I don't care if it's local government, state government or federal government. And that is a problem.

We ought to incentivize these agencies to not spend the money that they have left over coming to the end of the season. Let them keep it for some other capital one-time purposes and put the rest back in the treasury.

CAVUTO: So you would acknowledge -- and we agree on this -- that when there is a rush to get money out the door because you would lose it then by this agency's standard, you got to get it out? You have got to get it out.

And inherent in that is risk of wasting of it, right?

SCHRADER: I think that is the wrong incentive. You have nailed that very, very well. And in my state legislative role here at the federal government, I see the same thing. We have got to incentivize a different culture if we will get anywhere.

Right now, it is all about defending your turf and stuff. And frankly they are under a mandate. They have conflicting rules. And they're told to do one thing and they're afraid of the other. I think we should give them some clear direction. I hope that is what we do in Congress when we get back.

CAVUTO: We will watch closely. Congressman, very good having you, Kurt Schrader, in Portland.

SCHRADER: Thanks, Neil.

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