Nobel Laureate and Secretary of Energy Steven Chu seems to have taken a page from early 20th century labor leader Samuel Gompers: at every turn he screams for “more.” Even as the Obama administration and both parties in Congress pay lip-service to budget cuts (while doing little to enact them), sickness Chu has taken to running around with a Power Point calling for his department’s budget to grow in almost every area of its operations. For all intents and purposes, order Chu has a proposal to turn his department into a huge government-run research and development firm. Although intended as an outline for growth, illness Chu’s lucid presentation can also be taken as an outline for slimming his department and cutting government.
The great bulk of Chu’s proposed spending increases and billions of dollars in new loan guarantees (off budget for now, but a taxpayer liability if they’re not repaid) go for applied research and product development. Chu’s department would work to put 1 million electrical vehicles on the road, build new nuclear reactors, establish new “Energy Innovation Hubs,” and open new “Energy Frontier Research Centers.” The Advanced Research Project Agency-Energy, which tries to develop innovative new energy-related products would also get a big boost in funding. So would efforts to improve the overall reliability of the electrical gird and weatherize individual homes (states still have millions of leftover dollars from stimulus-related efforts to do this.) Worthwhile or not on their own terms—and, certainly, some of the new technologies proposed for investment seem like decent ideas—there’s little reason to think that the government ought to be doing any of this. Since they have huge theoretical benefits–no fuel price fluctuations and little or no pollution in the traditional sense–any person or company that figured out an efficient, low-cost way to harness any “green” energy source would make billions of dollars. Many of the nation’s largest and most profitable companies are in the energy business and have enormous incentive to do energy research themselves.
Taxpayer subsidies let the government decide where R&D dollars get spent. Furthermore, quite simply, the government has never been any good at developing actual consumer products of any kind. While U.S. government labs and projects have helped in developing the underlying technologies that created everything from the Internet to nuclear power, the private sector has always done much better than the government in bringing new fundamental discoveries to market. Government efforts to develop much better, cheaper housing construction methods (Operation Breakthrough), gasoline substitutes (Synfuels), and a “car of the future” (Partnership for a New Generation of Vehicles) produced nothing useful at all but ran through millions of dollars. The handful of useful products to come directly out of publically financed institutions, like NCSA-Mosaic, the first useful web browser, have typically come from creative people working on projects they thought were interesting rather than the government-mandated task. Even if Chu’s DOE somehow succeeds in developing useful consumer products, the financial benefits of having created them will accrue only to profit-making corporations, not taxpayers as a whole.
All this isn’t to say that it’s possible or even wise to trim the federal budget by the entire $30 billion DOE spends. When the department secures nuclear facilities, cleans up environmental messes that the government itself has made, and does basic research, it is performing necessary government functions. Nuclear security is certainly a government responsibility and it’s likely that the $11.8 billion in proposed spending is worth it. Likewise, it seems pretty cut and dry that the government should, indeed, spend most of the $6 billion or so it devotes to cleaning up environmental messes its own work has produced. Finally, basic research—devoted to understanding the fundamental laws of nature without trying to solve any particular problem—has never been done at a large scale without public sector support. Thus, the $2 billion–a 24 percent increase–proposed for “basic energy research” is probably a decent investment. Of course, none of this spending is beyond question and some might be done better outside of DOE. But even if one rejects the Obama administration’s proposed increases in all of these “necessary” areas and then cuts spending ten percent, that still leaves somewhere around $17 billion in truly necessary spending on current DOE projects. This is still a huge cut from the $29 billion Chu wants to spend.
A look at Chu’s DOE budget, in short, reveals two things. First, that there is, indeed, plenty of wasteful spending that the country would be better off without. Second, even a hugely bloated agency does carry out some valuable, core functions that probably shouldn’t go away.