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Wed May 16, 2012
Local Viewpoint: Pearce Calls For End To Federal Bailouts
The 112th Congress was supposed to change the way business was done in Washington. We were going to make tough choices to lower spending and put our country back on a path to prosperity. We were going to be more open and transparent to shine light on a process often darkened by backroom deals. And, we were going to end the practice of earmarks so that taxpayers were protected from funding powerful Members’ pet projects back home.
Yet, once again, this Congress takes two steps forward and one step back in the name of political expediency. This week, the House of Representatives will vote on the National Defense Authorization Act (NDAA) and unfortunately, I will have to propose an amendment which bans the government from once again interfering in the private market to prop up a failing business.
There is no need to continually pour hard earned taxpayer dollars into a failing private business. However, despite a string of failed bailout plans, Section 3156 of the National Defense Authorization Act (NDAA) includes a $150 million subsidy to the private uranium enrichment company, United States Enrichment Corporation (USEC). This $150 million comes in addition to the billions of dollars in taxpayer funds that have gone to perpetuate USEC’s failing business model. And, this is language that has shown up in everything from the Highway Bill to Energy Appropriations.
In 2011 alone, USEC reported a net loss of $540.7 million. To put that in perspective, it took Solyndra two years to record this type of loss. No one would consider providing Solyndra more federally backed loans, so why should USEC be any different?
Instead of allowing USEC’s fate to rise or fall on the wisdom and skills of its management and owners in a competitive marketplace, the government has intervened at every turn to ensure that USEC would not fail. This company is worth less than $120 million and it is asking for $2.5 billion in government backing. I doubt any member of Congress would invest his or her own money in a company which saw a 46% decline in profitability within 3 year of its initial public offering. So why is USEC any different?
The answers should be – it isn’t. However, the administration and members of Congress from both parties have come up with excuse after excuse why it is.
Some say it is an issue of national security due to the production of tritium at USEC. However, the National Nuclear Security Administration (NNSA) testified that tritium production would not be affected if USEC failed. Essentially, national security would not be undermined in any way if USEC were to terminate operations as a result of a government decision to cut off further subsidies.
Others claim that this bailout language for USEC does not constitute an “earmark” under House rules because it is included in the president’s budget. I am sure one could find plenty of things in the president’s budget that would immediately be classified as an earmark if offered in a similar fashion and without the support of the appropriate members of Congress.
There is a reason Congress has an embarrassingly low approval rating. Elected officials say one thing while on the campaign trail and do the exact opposite while in Washington. This is not a Democrat problem or a Republican problem – it is a Washington problem.
I hope every member thinks about voting for the amendment to take this bailout subsidy out of the bill. Are we going to be an open and transparent Congress that values the taxpayer dollar and favors free markets? Or are we still a Congress that works through backroom deals and rewards powerful Members with earmarks – even if their pet projects are failures.
Rep. Pearce (R-N.M.) is a member of the House Financial Services Committee.