Monday, August 02, 2010

MN-02 : Kline Willing to Risk 3M Jobs to Cut Corporate Welfare ?

Timing is everything in politics.

An issue can be ignored until it’s time to be used to make political hay.

Some would say that the Republican current fixation with deficit spending is an issue whose “timing” will help this November.

So it is that when John Kline posted on his website : Congressman John Kline is inviting Minnesotans to help Washington end its addiction to wasteful spending, that I was not surprised. I expected to see the typical stuff that he likes to talk about … like an earmark added to the 2006 Appropriations Bill (HR 3058) for the Sparta Teapot Museum in North Carolina. But NO, Mr. Kline actually asked about ending a program that is more Corporate Welfare than a Congressman bringing “home the bacon.

Of the four choices, the biggest dollar program with a projected savings of $2 Billion is : “Eliminate funding for a green government project that the private sector is already leading: The “FreedomCAR” and fuel partnership program is a duplicative program already being implemented by the private sector.”

FreedomCAR ? Hmmmm… I will bet that you never heard of the FreedomCAR, but since Freedom is in the name, somehow you are probably thinking that this is a Republican-themed program. The C-A-R in FreedomCAR is an acronym for Cooperative Automotive Research, but what’s the Freedom … simple … to reduce our dependence on foreign oil and the foreign dictators that reap monies off our dependence. A goal that every American can agree with … and also agree that we have a long way to go to get there.

The program was created during John Kline’s first term in Congress … that’s when the Republicans controlled the House and George Bush announced the program in his 2003 State of the Union address. Funny, how we forgot about that … but now, the “timing” has a Democrat in the White House and Democrats controlling the House.
Yes, “timing” is everything … especially since President Obama just drove Chevrolet Volt during his tour of the Detroit-Hamtramck assembly plant last week.

This program subsidizes research by major automakers for developing their own versions of hybrid, plug-in hybrid (PHEV), and fuel cell vehicles. The subsidies also fund private R&D of light- weight materials, electronic power control, and electric drive motors.

One of the main components in these plug-in hybrid vehicles is the battery … since PHEVs have the potential to displace a large amount of gasoline by delivering up to 40 miles of electric range without recharging— new batteries would have to be developed. The Department of Energy awarded 3M in Saint Paul up to $1.14 million (total DOE/industry cost share: $ 2.28 million) over two years to screen nickel/manganese/cobalt (NMC) cathode materials through building and testing of small-sized cells.

I do not know the status of 3M’s project, nor how many jobs were created or retained, but the objective sure sounds reasonable.

Working with corporate interests is not new … when President Bush gave monies to the auto industry, he said : “In the midst of a financial crisis and a recession, allowing the U.S. auto industry to collapse is not a responsible course of action." The monies for this came from the TARP legislation that John Kline voted for. Ah, “timing” is everything … while President Obama’s so-called bailout of the GM and Chrysler is now getting repaid, the Bush monies will never be returned.

What seems odd though is the “timing” and what project Mr. Kline included in his choices.

Ending Corporate Welfare is fiscally responsible. Yet, this project is one that may take government incentives from our goal of being energy independent.

The question is why did Mr. Kline and the Republicans pick the FreedomCAR project and not some other Corporate Welfare programs.

The term “Corporate Welfare” actually has many components.

How about ethanol subsidies which cost the US Treasury $6 billion in 2009 ?
Ethanol subsidies are just the tip of the money tree. "Farm subsidies are America's largest corporate welfare program," said Brian Riedl, an analyst at the Heritage Foundation. The question is why federal money flows primarily to growers of five crops—corn, soybeans, wheat, cotton and rice—while livestock, poultry and produce farmers get by without subsidy checks? After the media reported that at least 2,702 millionaires received farm payments from 2003 to 2006 (including such hobby-farmers as Scottie Pippin of the NBA fame and a number of family members of Congress including Minnesota’s Michele Bachmann (R-MN-06), the 2008 Farm bill prohibited all subsidies to anyone whose non-farm adjusted gross income exceeds $500,000. The Obama administration said its proposed farm subsidy cuts would save $2.3 billion over 10 years. Its new budget proposal would lower the cap on direct payments from $40,000 per person per year to $30,000. It would also reduce income eligibility limits over three years to $250,000 for non-farm adjusted gross income.

As easy to see Corporate Welfare in the Ag sector, there is a larger sector that is prone to largesse … and that’s is processed by a House Committee that Mr. Kline sits … The House Armed Forces Committee. Interestingly, Mr. Kline makes the argument the FreedomCAR program is a “duplicative program.” Hmmm. Why is Mr. Kline supportive of General Electric’s request for $1.8 - $2.9 billion required for an alternative engine for the F-35 Joint Strike Fighter ? In essence, a “duplicative program.”

GE claims that its alternate engine will enable the government to have cost-saving competitions across the lifetime of the F-35 program, saving taxpayers billions of dollars. What it leaves out of its talking points is that the government would first have to pay for two production lines, two supply chains and two workforces to build the competing engines, and then split the annual buys between two teams in a way that would eliminate any economies of scale. Once fielded, the two engines would require separate sets of spare parts, separate maintenance procedures, and other redundant items that would increase rather than decrease the cost of operating the plane. Senator Tom Harkin (D-IA) during debate about whether to fund the alternate engine expressed concerns about having two redundant engines would increase the complexity of the program, potentially undercutting both affordability and readiness.

Lockheed chairman Robert Stevens has stated that the company expects the actual purchase price of each Air Force F-35 variant will be roughly the same as a current Lockheed F-16 or Boeing F/A-18. That would be about $60 million in today's dollars -- less than half the price of an F-22 Raptor -- and it includes all the necessary mission equipment. Remember that Mr. Kline supported an “earmark” to procure additional F-22 that the Pentagon does not want …. Oh, and the alternate engine was not requested by President Bush or President Obama or the DOD … it’s just Corporate Welfare being funded by Mr. Kline and his friends in Congress.

“Timing” is everything in politics … and this “Timing” reeks of a political stunt.
Cutting Corporate Welfare for the FreedomCAR maybe short-sighted. Developing the technology required to ween ourselves from foreign produced oil, will require decades of trial and error in which a variety of bridge technologies are phased in over time.
Cutting FreedomCAR funding may sound good for political purposes but not be a good strategic decision.

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