Energy and Water Development and Related Agencies Appropriations Act, 2015

Floor Speech

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Mr. McCLINTOCK. Mr. Chairman, this amendment requires energy companies of all kinds to fund their own research and development programs, rather than continuing to require taxpayers to subsidize this activity to the tune of $3.1 billion.

If we are serious about an all-of-the-above energy policy, we have got to stop using taxpayer money to pick winners and losers in the energy industry and start requiring every energy technology to compete on its own merits.

For too long, we have suffered from the conceit that politicians can make better energy investments with taxpayer money than investors can with their own money. It is this conceit that has produced a long line of scandals, best illustrated by the Solyndra fiasco.

This research doesn't even benefit the common good by placing these discoveries in the public domain. Any discoveries, although they are financed by the public, are owned lock, stock, and barrel by the private companies that received these public funds.

Public costs, private benefit--that is called corporate welfare. That is what these energy subsidies amount to.

My amendment protects taxpayers from being forced into paying the research and development budgets of these companies. It gets government out of the energy business and requires all energy companies and all energy technologies to compete equally on their own merits and with their own funds.

Last year, when we debated similar amendments, we heard about all of the technological breakthroughs financed by the Federal Government, from railroads to the Internet, and we heard promises of future breakthroughs from this massive expenditure of Federal funds.

Well, I freely recognize that, if you hand over billions of dollars of public subsidies to private business, those particular private businesses will do very well. I freely recognize that some of these dollars will produce breakthroughs that will then be owned by these private companies, and they will do extremely well.

What the advocates of these subsidies fail to consider is the vast dilemma between the seen and the unseen, the immediate effects that you can clearly see and the unintended effects that cannot be seen.

In this case, what we don't see clearly is the opportunity cost of these subsidies. Investors, using their own money, are very focused on making investments based on the highest economic return of these dollars. Politicians, using other people's money, make investment based on the highest political return of these dollars. This is the principal difference between Apple computer and Solyndra or between FedEx and the post office.

These public subsidies, in effect, take dollars that would have naturally flowed into the most effective and promising technologies and diverts them into those that are politically favored.

Dollar for dollar, this minimizes our energy potential, rather than maximizing it. For example, hydraulic fracking--it has revolutionized the fossil fuels industry. It offers us the very real potential of becoming energy independent.

Well, after the 1973 oil embargo, the Federal Government began heavily subsidizing research on this technology. How did it work out? According to CNN:

Between 1978 and 2000, the Federal Government spent about $1.5 billion on oil and gas production research, much of it on extracting fuel from shale, according to a 2001 report from the National Academy of Sciences, but the process remained expensive, and research faded as oil prices came back down in the 1980s. By the 1990s, private industry began to step back into the business with new technologies with lower costs, leading to today's boom.

We were told last year that the little companies don't have the capital to develop their big ideas. Well, that is why there are private investors who can accurately evaluate those ideas and invest in the best of them.

Government investment doesn't do that very well or efficiently, and it is time we had done with it.

I reserve the balance of my time.

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Mr. McCLINTOCK. Mr. Chairman, I forgive my friend from Ohio for not being up on California history. The fact is California exists because it had the freedom to develop its vast natural resources. It is government intervention that has caused this economy to decline dramatically.

Both of my friends miss the point. Government simply doesn't make these investments as wisely as private investors who are using their own money. Private investors invest to the highest economic value of a dollar; politicians invest to get the highest political return.

The gentlewoman is correct in one respect: California is the home of Solyndra and many, many other failed government investments in recent years. It is the private investors who took up the research on hydraulic fracturing after government investments failed that have produced the technologies that are giving us the economic boom in States like North Dakota that actually have the freedom to develop their resources on public lands.

It is simply a question of efficiency, a question of waste, and a question of right and wrong. Let's stop picking winners and losers in the marketplace and let the investors use their own money to make these research and development decisions.

I yield back the balance of my time.

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