How did $50B high-risk, job-killing nuclear loans get in the stimulus? Fraudulent budget gimmickry.

[bananas]

From Climate Progress:

How did $50B high-risk, job-killing nuclear loans get in the stimulus? Fraudulent budget gimmickry.

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Not only won’t these loans generate any jobs in Obama’s first term, but as Peter Bradford, former member of the Nuclear Regulatory Commission, explained to me, it could actually kill jobs. How?

<snip>

But here is where it gets particularly farcical: The loans only got snuck into the bill by budget gimmickry that replicates the high-leverage, fraudulent risk analysis that got us into the subprime mortgage and credit default swap mess. Some leading nuclear energy experts explained this to me Tuesday, and I will do my best to explain it to you.

The Washington Post explained (not quite completely) last week:

Bennett’s amendment took $500 million away from $10 billion initially allotted to a new loan guarantee program for renewable energy and electric transmission projects and moved it to an existing loan guarantee program established under the Energy Policy Act of 2005. The existing program covers a much wider variety of energy projects, including “advanced nuclear” power plants, plants that “gasify” coal or turn it into liquid form, and plants that capture and bury carbon dioxide, a greenhouse gas produced by coal power plants.

Moving the money allows the government to stretch its loan guarantees further. Because of different accounting methods used in the two programs, a $500 million appropriation would permit approximately $5 billion in loan guarantees under the renewable program but $50 billion under the broader, existing program.

Yes, the $500 million switch cost the nation $5 billion in renewable and transmission loans but somehow gained $50 billion in nuclear loans. Does this mean nuclear power plants are 10 times less risky? Does this mean that nuclear power plants have a 1% default rate?

No.

The Congressional Budget Office itself explained in a 2003 report:

CBO considers the risk of default on such a loan guarantee to be very high–well above 50 percent. The key factor accounting for this risk is that we expect that the plant would be uneconomic to operate because of its high construction costs, relative to other electricity generation sources.

<snip>

I would note that the July 2008 report by the Government Accountability Office on the Loan Guarantee Program (LGP) assumed “a default rate of 50.85 percent and a recovery rate of 50 percent, which result in a loss rate of 25.42 percent when multiplied together.”

So why is $50 billion in loans being scored as having a $500 million cost, when, in fact, CBO says that the subsidy is closer to 30% ($15 billion) and GAO says it is 25% ($12.5 billion)? This is where you have to enter the Alice-in-Wonderland world (or is that the Bernie-Madoff world) of budgetary scoring.

The LGP is built around the requirement/assumption that the industry getting these loans will pay, upfront, the equivalent value of the subsidy. I kid you not. The GAO explains:

<snip>

The nuclear industry has no intention whatsoever of paying, upfront, 25% to 30% of the loan to cover the subsidy. Remember, as it is currently written, the loan program is only for a maximum of 80% of the cost of the plant. That means, for, say, a $10 billion, 1200 MW plant, the nuclear industry would have to put up the $2 billion not covered by the loan plus up to $3 billion for the subsidy. Not gonna happen.

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[Blaze Diem]

1. Too bad, Maybe they could have funded the lab for Wind Power training in Oregon

This is where some of the funds SHOULD have gone. Not manipulated around the loopholes to be directed for loans as stated above.
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Can they possibly help fund this?:
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=115x186031

Vestas Wind Systems, the world's largest supplier of wind energy, donated this wind turbine hub to Columbia Gorge Community College last year. The hub -- the spinning part of a turbine where blades attach -- will be used in the college's yearlong technician training program when it's installed in a new lab this spring.
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Last spring, Vestas Wind Systems donated a 12,000-pound turbine hub to Columbia Gorge Community College in The Dalles so students enrolled in the wind technician training program could get their hands on the very equipment they would one day maintain.

Today, it sits in storage near Portland International Airport waiting for completion of a new lab building.

The irony isn't lost on Dan Spatz, the school's resource development director. The college, which runs the only certified wind technician training program in the West, needs more money to meet a huge demand for skilled workers, both Spatz and industry leaders say.

And while he's thankful for a $400,000 state grant for the lab, he's concerned that Gov. Ted Kulongoski's proposed budget didn't include $8 million toward a $19.5 million, 23,000-square-foot training center.

[Blaze Diem]

2. K & R ..Do we have a 5th rec?

Mr President: Would you please not lose sight of your original message to this Nation?
It will be ever necessary to keep the lawmakers on a very tight leash, since they are more likely to play the game as they have for the past 8 years.

They have a really bad habit of behavior that needs constant vigilance to break.

[bananas]

4. Still needs another rec - this is an important article about the stimulus bill. nt

[NNadir]

3. Of course, your idea of JOBS is a bunch of homeless migrants walking around with windex

bottles to wipe the burning chaparral ash off of solar thermal plants.

A single nuclear plant can produce hundreds of millions of dollars of value in a single year, are the modern ones are designed to do it for more than 80 years.

Construction jobs in the nuclear industry and nuclear engineering jobs are high paying work that yield tremendous resources for generations.

The nuclear plant at Oyster Creek - despite the efforts of stupid and vicious people to destroy the infrastructure because they are ignorant - was completed in 1969 and it still produces more energy than all the windmills in Denmark combined, the efforts of dangerous anti-nukes to replace it with dangerous fossil fuels notwithstanding.

But let's face it. There is NOT ONE yuppie consumer anti-nuke brat who knows what a real job is. It's not like these fuckers are going to spend hours in the blazing desert wiping dust off of glass.

If we built 5 nuclear plants, we would easily outstrip all of the energy produced by the wind and solar yuppie toys designed to produce low wage jobs in the entire nation. As a typical undergrad nuclear engineer 5 years out of school makes on the order of $70,000/year, these are good jobs - unless you're an illiterate from Greenpeace who thinks that 616 > 860:

http://energyalmanac.ca.gov/electricity/electricity_generation.html

And why low wage?

Because on the same yuppie stupido planet that thinks that people should triple their electricity rates in order to collect toxic waste (i.e. solar toys) on roofs to power non-existent yuppie electric cars, the connection between wealth and productivity doesn't matter.

After all, everyone can afford a $400,000 solar house and a $150,000 Yuppie electric Tesla car, right?

Nuclear energy saves lives. Nuclear energy works on an exajoule scale. Nuclear energy - despite much grousing from assholes with the scientific insight of plastic trash bags is the lowest cost climate change gas free energy.

The nuclear plant in Finland, even delayed two years and over budget, will out produce all of the broken down yuppie windmills in Denmark produced over 30 years of planned obsolesce junk making and do it cheaper, cleaner and with lower loss of life.

But the fact is, that we never hear an anti-nuke come here and whine like dopes over the warranty problems of the Vestas Oil, Gas and Wind company, because basically the anti-nuke gas cult religion doesn't give a shit. It's all selective attention and scare mongering.

It is disgusting that the ignorant remain ignorant in times like these with the fate of humanity hanging in the balance.. It's like the fucking Repukes. Repeat the lie over and over and over and over and over even after everyone else has seen right through it.

[Blaze Diem]

5. Can this country invest in job education that actually bring the future of energy

to the present.
Construction of the lab in Oregon is a small price to ask for, and doesn't it fall into the category of campaign wishes of Pres Obama?
When technology works with education in a positive move but is stopped by government funding then it becomes apparent where our government's priorities truly lie.

[TacticalPeek]

6. K&R

Thanks for finding this.

[bananas]

8. Just posted in LBN: 'Nuclear Pork' Cut Out of Final Recovery and Reinvestment Package

I hope they don't try to slip it in again before Obama signs it!
http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=102x3735383

[kristopher]

9. Thanks for the update. nt

[glitch]

7. Excellent compilation of facts, easy enough for most people to comprehend. Thanks for posting K&R

This is interesting as well, including the responses to it: http://freakonomics.blogs.nytimes.com/2009/02/09/does-a-big-economy-need-big-power-plants-a-guest-post/