Government spending has been spiraling upward in nearly all areas—and spending by most government agencies can, and should, be cut. President Obama recently submitted his 2012 budget request to Congress, providing fertile ground for spending cuts. One of the fastest-growing federal agencies, the Department of Energy (DOE), with its numerous research, development, and grant programs, offers many opportunities for savings. While there is an important role for DOE in energy security and environmental management, many DOE projects fall outside its mission, supporting everything from commercialization of technologies to non-critical research—which can be conducted, usually much more efficiently, by the private sector.Three things.
One, and I'm sure there are plenty at the Heritage Foundation who would agree with me on this, but cutting $6 billion from the federal budget will have approximately zero effect on "Alleviating the huge debt burden that the government is placing on future generations," as the report calls for. When someone calls for deficit reduction without addressing Social Security, Medicare, Medicaid, and/or revenue increases, I instinctively ignore them. I realize these are program-specific cut recommendations, but the idea that cutting back on investing in our future will relieve the burden of our irresponsibility from future generations is more than a tad suspect to me.
Two, the report claims that "Energy production is a viable commercial enterprise, so the U.S. does not need a government agency dedicated to advancing this activity." This is simply incorrect. Few to no commercial scale energy production technologies would benefit from economies of scale and distribution without implicit and explicit government support. Coal and oil receive tens of billions of federal dollars in subsidies annually, and the continued deployment of energy production technology depends also on government insurance and liability policies, since material extraction, energy production and transmission are such high-risk enterprises. As Mark Hertsgaard reports in his account* of the 1950s budding nuclear power industry, "the industry ... preferred an arrangement whereby the government would help cover the costs of commercialization but still allow the corporations to control and profit from it."
Three, the report is founded upon the unsupported assertion that the private sector is the more effective laboratory for energy technologies. "Many government programs included in Presidents’ annual DOE budgets evolved from basic research and development to attempts at commercialization better left to the private sector." The report continues by questioning need for government funding or operations in R&D. On the contrary, publicly-funded research and development are essential factors in the advancement of energy technology. There are two key reasons for this. One is the so-called "Valley of Death" in technological development that exists between the basic research stage and the commercialization stage, in which risk, uncertainty and deployment challenges combine to dissuade private capital from advancing project. The second reason is the spillover effect; private enterprise will be less likely to finance energy technology R&D since they will be ultimately unable to capture the full benefits of production.
We obviously, but maybe not imminently, need to have a serious national discussion about the debt/deficit problems. But targeting relatively small federal programs, particularly ones like DOE technology innovation programs with a clear national mission and a big bang for their buck, is not the right way to go about it.
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*Nuclear Inc.:The Men and Money Behind Nuclear Power by Mark Hertsgaard. 1983. pp. 33.
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