“UNLIMITED” BAILOUT OF NUCLEAR POWER UNDER CLIMATE BILL IS AS BAD OR WORSE THAN WALL STREET BAILOUT
Just Say No to Nuclear Socialism! Alliance for Generational Equality Urges All Elected Officials Who Have Vowed “No More Bailouts” to Be Consistent When It Comes to Nuclear Power; No Handouts Needed for Profitable Industry With Extensive Foreign Ownership.
WASHINGTON, D.C. (May 12, 2010) If your Member of Congress says he or she opposes more bailouts and then turns around and supports the Senate climate bill released today, they are simply not telling you the truth, according to the independent and nonprofit Alliance for Generational Equality (AGE), which represents seniors as well as Americans in other generations.
AGE wants all seniors to know that the Senate climate bill contains $54 billion in loan guarantees for new reactors, in addition to 20 years of unlimited loan guarantee authority for new reactors established in the referenced Senate energy bill (S.1462) that would leave taxpayers on the hook for what would likely be huge sums. Of particular concern: the Congressional Budget Office estimates that the default rate on new reactors will be “very high – well above 50 percent.”
AGE Vice President and CEO Dave Herman said: “This is not about whether you support or you oppose nuclear power. For elected officials, it is about whether they are being sincere in saying no more federal bailouts. Whether it’s for banks, car companies, investment firms or nuclear reactors, a bailout is a bailout is a bailout. In fact, this is even worse than the earlier bailouts since the nuclear loan guarantees are unlimited, meaning there is literally no limit to how deeply the industry could reach into taxpayers’ pockets.”
Herman added: “How can Republicans in the Senate who are opposing financial reform legislation because of the fear of potential bailouts, then turn around here and dole out what are explicit bailouts for another industry? Federal loan guarantees for new reactors encourage utilities that are currently financially sound to take enormous risks and promise in advance to bail out them out with U.S. taxpayer dollars when the bets go bad. Federal loan guarantees that put U.S. taxpayers directly on the hook in advance are not only a huge drain on federal tax dollars waiting to happen, but they actually somehow manage to do the impossible by making the earlier bailouts look like good deals.”
Herman concluded: “We need a little less socialism from Washington and a lot more faith in the wisdom of the marketplace. We don’t care if the nuclear power industry wants to build more nuclear reactors. This is a very profitable industry with extensive foreign ownership that already makes a guaranteed profit in most states under utility regulation. If these companies controlled by French, Japanese and U.S. interests want to finance new reactors and find investors who want to support that, they have our blessing. But we are not prepared as taxpayers to allow seniors and other Americans to be ripped off by yet another multi-billion-dollar bailout for another industry.”
See Jerry Taylor, “Radioactive Corporate Welfare,” Cato Institute, February 18, 2010, at http://www.cato-at-liberty.org/2010/02/18/radioactive-corporate-welfare/ and “Nuclear Reactionaries,” Washington Monthly, May/June 2010 at http://www.washingtonmonthly.com//features/2010/1005.frank.html .
4 Comments, Express Your Opinion
Charles Barton
Loan guarantees are not bailouts and they are not subsidies. Of course the fanatic opponents of nuclear power are going to lie about this, because they have no effective argument that is grounded in the truth.
Left me explain this with two stories. Joe Smith a young man wishes to buy a car. He goes to the bank and discovers that the payments on his new car will be $50 a week more than he can afford. He goes to his father and asks the old man to make up the $50 he cannot afford. Joe is asking for a subsidy.
Joe Smith story two. Joe Smith a young man wishes to buy a car. He goes to the bank and discovers that the payments on his new car will be $50 a week more than he can afford. Joe tells the banker that that he cannot afford the loan. The banker tells Joe that his interest charges are high because he is considered a bad credit risk, but if he can get his dad to co-sign the loan, his payment will be cut by $75 a week. Joe goes to his father and asks him to cosign the loan. When his father hesitates, Joe offers to pay him $25 a week for his signature. Joe’s father agreed to cosign the loan, and the banker explained that his signature was a loan guarantee.
The difference between between a subsidy or a bailout and a loan guarantee is the difference between being out $50 a week and having $25 extra dollars a week in your pocket.
May 13th, 2010
Jack Gamble
Where in the world do you get the word “unlimited” from?
The temrs of nuclear loan guarantees are not unlimited. They are for up to 80% of the cost of the project and caps are set on the amount before construction ever begins. The word ‘unlimited’ has never been used in any form of legislation to describe loan gaurantees for nuclear power plants.
You also fail to mention that this is only a loan guarantee, as in an insurance policy, on a loan that is paid back by the utility. If the project is completed, the government doesn’t pay one dime, instead the company actually pays a fee for the gaurantee - to the tune of several hundred million dollars for each new reactor.
Then consider the fact that the average nuclear power plant pays as much as $100 million in state, local, and federal taxes every year (and the new plants will operate for 60-100 years). They also generate as many as 3,500 construction jobs and 800 permanent jobs per reactor - all of whom pay income taxes as well. This doesn’t even take into account the thousands of ’satellite jobs’ like restaurants, hotels, and retailers that spring up around a new nuclear plant.
We’ve not even mentioned the environmental benefits of replacing coal and oil with emmisions-free energy.
The fact is that new nuclear power plants are long overdue in the US and a new generation of nuclear power plants will generate billions in revenue for the government. You can use words like ‘bailout’ and ’socialist’ until you’re red in the face, but anyone who’s done their own research knows that you’re attempting to stoke the fears of the 2008 collapse to advance your own agenda.
May 13th, 2010
Steve Aplin
No, the bailout of Wall Street involves actual transfers of money to companies that had very obviously screwed up.
The loan guarantees for nuclear projects, by contrast, are just a co-sign. As you know, if a borrower repays his/her loan, the co-signer doesn’t have to put out a dime.
You must be confusing nuclear loan guarantees with renewable power subsidies. In the case of renewable power, those ARE subsidies, without which the renewable power industry could not exist.
As you correctly mention, nuclear power is already a profitable industry. It needs loan guarantees so it can borrow the money required to build new reactors. Its profitability virtually ensures the co-signer — i.e. the U.S. government — won’t have to step up.
May 13th, 2010
Margaret
This post seems to be unrelated to your claimed aims as a “senior advocacy group” but since you’ve posted, I feel a response is required.
First, this is not a loan subsidy program, it is a loan guarantee program. Much like the student loan program, the government expects to be paid back. In fact, the participating utilities are required to pre-pay some percentage of the loan for the government to hold in escrow.
The 50% failure number that is touted in the CATO report is an assumption from the GAO, not a researched value. It is also an OLD number from 2002-3 time frame.
Given that 73 reactors have been successfully built and started up around the world since 1990, I’d like to believe that the US can build these machines at least as quickly, safely, and efficiently as any other country.
Nuclear power represents an inexpensive, carbon-free reliable energy source. If you are truly advocating for seniors, you should give nuclear power a more serious examination. It will provide seniors with low cost reliable electricity for decades.
May 13th, 2010
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