When tycoons and politicians do business, taxpayers lose
If your blood hasn’t boiled in awhile, you must have missed the AJC story earlier this week about Range Fuels — a multimillion-dollar lesson in why taxpayers usually lose when billionaires with hare-brained schemes sidle up to politicians.
It’s been about a year since Range Fuels shut down its facility in Soperton, the South Georgia town where it had promised to turn our state into a world leader in turning wood into ethanol. There was just one problem: Range didn’t actually know how to turn wood into ethanol. The resulting failure cost taxpayers $64 million in federal loan guarantees and another $6 million in state funds.
This past week, the AJC’s Dan Chapman reported the sale of Range for a mere $5.1 million. The lucky bargain shopper? A New Zealand firm bankrolled by Vinod Khosla — the former tech executive who just happens to have been one of the main backers of Range.
Too bad Georgia didn’t invest in one of Khosla’s other ethanol endeavors: In its 2011 ranking of the richest Americans, Forbes described Khosla as “the rare Silicon Valley venture capitalist able to generate profits from a clean tech portfolio.” I’m sure his portfolio’s profitability has nothing to do with the fact that taxpayers shoulder losses by the million on dogs like Range Fuels.
To the degree the public is upset about inequality, the anger seems to stem less from the existence of inequality — which we’ve always had, and always will — and more from the belief that the inequal gains were ill-gotten. The belief that the system is being rigged.
The Occupy movement blames this chiefly on bankers and big business generally, the tea partyers on big government. They are both right when they notice the overlap between their respective targets.
Both parties are guilty of enabling this overlap. Range Fuels was handed money by a GOP governor, Sonny Perdue, and the Republican Bush administration; solar-panel flop Solyndra by the Democratic Obama administration. Both George W. Bush and Barack Obama oversaw bailouts of financial firms and auto makers. Need I go on?
And while failures make headlines, the relative successes line private pockets with public largesse, too.
The timing of this lesson couldn’t have come at a better time. As Georgia’s leaders mull ways to spur the economy during the 2012 legislative session, Range Fuels should be an indelible reminder of the folly of using taxpayer dollars and tax-code loopholes to enrich private firms and individuals.
That goes for the CAPCO scheme, which hands money over to private companies to invest without retaining a stake for the state.
That goes for any other effort that calls for the state to invest directly in private firms — an enticing opportunity for corruption now and years into the future.
That even goes for using hotel/motel tax revenues, once they are freed up from paying off the Georgia Dome, to build an outdoor stadium that will accomplish little besides cannibalizing the Dome’s business and making a lot more money for the Falcons.
The hidden danger of economic downturns is that they invite all manner of bad decisions made with scarcer-than-ever public monies, all in the name of “jobs.”
Yes, Georgia needs jobs. And, yes, there are things Georgia’s leaders can do to encourage their creation. But we don’t need more “friends” like Vinod Khosla, or more misadventures like Range Fuels.
– By Kyle Wingfield
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232 comments Add your comment
Hillbilly D
January 7th, 2012
1:13 pm
I have noticed Kyle writes a pretty balanced blog.
I’d agree with that. Sometimes I agree with Kyle; many times I don’t. He and I have a different way of looking at things but you could say that about me and most of the human race. When I read his columns, though, even if I think he has it totally wrong, I feel that I’m reading his thoughts and not the party line from whatever perspective the issue takes. Most columns of this type read like a press release for either the Rs or the Ds. Now some writers are good enough to hide some of that and many aren’t. Kyle does a lot less of the “cut and paste” than some folks.
As to OWS and the Tea Party, I think it’s a valid point that they are really after the same target. OWS is attacking from the left flank and the Tea Party is attacking from the right flank. Both groups have their fringe element that they’d be better off without and tend to get into too much bloviating and hyperbole but that’s a danger with this sort of thing. What we need now is a good artillery barrage into the center, (that’s a metaphor; don’t take it literally) for the masses to carry the day.
Dusty
January 7th, 2012
1:19 pm
Linda,
Somehow I do not want to “throw out the baby with the bath water”. I don’t believe the effort towards green energy is totally wrong. Nor do I believe we can supply all the gas & oil we need in this country.
The push came too fast. Example, the Gore initiative to change everything giving us bad products, expensive projects and unrealistic regulations. There was the push for ethanol at any cost and all the other poorly thought out projects you mentioned.
Actially, if the government would stay out of “green energy”, private enterprise would probably have researched enough to give us real help on our energy supply.. Let them do it at their expense.
redneckbluedog
January 7th, 2012
1:30 pm
Dusty
January 7th, 2012
1:19 pm
—————————-
Private enterprise is not going to get into renewable energy until it becomes profitable…the government has to develop it to get it to that point….The only other option is failure….
Dusty
January 7th, 2012
1:38 pm
RedNeckBluedog,
:If you want to vote for a second term Obama, that is your privilege. If you cannot see the transparency of an inexperienced man depending on political cronies to run our country, you deserve a second term.
Unfortunately, that involves me and millions of others who know bad governance when they see it.
Republicans have not made their final decisions. They are not blind. They do not want another Obama downhill slope’n'drain. We are too close to hitting bottom now.
Linda
January 7th, 2012
1:45 pm
redneck@1:10, Recent reports from the US Geological Survey (USGS) have been astounding. Read them yourself.
redneck@1:11, I agree with the blame, especially that accepted by Clinton. I think the entire world, especially the American people, wanted to know what happened. I think Obama was right to appoint the inquiry commission. Moving forward without making the same mistakes again requires knowing what the mistakes were.
Dusty
January 7th, 2012
1:46 pm
redneckbluedog,
Big companies all over the USA are doing research in numerous and various projects which are not giving them profit now. That is part of their business.
Nowhere in our constitution does it say the government should be financing research. That is the inducement of private companies run by private citizens. It is what made America great. The government does not operate our lives or our business because we are free people.
Don’t start tying us down by saying ONLY government can do big things.
getalife
January 7th, 2012
1:51 pm
“One of the most recent retorts comes from Georgia, where last month Democratic state Rep. “Scott Holcomb introduced a bill requiring members of the local legislature to prove they’re not Legislating Under the Influence. Holcomb told HuffPost he came up with the idea because he was struck by a bill from his Republican colleagues to drug test welfare applicants.
“I was really struck by how awful it was,” he said. “I wanted to bring some attention to it.” Aol.
You found a leader Georgia.
Support him and throw pee on the gop.
Dusty
January 7th, 2012
1:54 pm
Sorry, LInda, I don’t think we need any more investigative committees. I think we need less.
If we can’t tell what causes our mistakes, we are not very clever. It is usually obvious.
Dusty
January 7th, 2012
1:57 pm
Getalife,
We are not running an outhouse here. Go home.
getalife
January 7th, 2012
1:59 pm
Lets start calling them the pee party.
Tycoons united with politicians is call fascism.
The pee party went too far right into na zi territory.
Linda
January 7th, 2012
2:03 pm
Dusty@1:19, What would happen if the fed. govt. stepped out of the way & energy companies could explore on the Outer Continental Shelf & on land & in water wherever individual states would allow it?
What would happen if the energy companies woke up one morning & realized our natural resources were being depleted? Think they would “discover” affordable alternative sources of energy–quick-like?
When will more people realize that global cooling from the ’70s, global warming from the ’90s & now miscellaneous climate change & cap & trade were the greatest hoaxes every pulled on the world?
Even if the world was getting hotter than a baked potato, who in their right mind would think that politicians in DC could “fix” it?
Dusty
January 7th, 2012
2:04 pm
Getalife,
Off your meds again, huh? Now say “goodbye” like a nice fellow.
getalife
January 7th, 2012
2:06 pm
dusty is now against investigations.
Oh my.
dusty,
How far right of the na zis are you going to go?
We are Americans not fascists.
Dusty
January 7th, 2012
2:19 pm
LInda,
I think you have made my point. The government cannot solve every problem. They are not even supposed to do that beyond the general welfare..
You short change big companies. They are looking for new sources, new and better products including medical needs. better planes, cars, housing, IT stuff and agriculture.. They know what shortages & problems are looming because they are in that business. They harness the American energy.
Americans have every innovative product in the world because American people in American companies have developed them. The “Now better from other countries” started with the American product and added a little to it. Then they made it cheaper with cheap labor.
I think America is the best place in the world to develop what is most needed here and globally. The government should only keep us free to do it.
bluecoat
January 7th, 2012
2:21 pm
I was hoping for Obama/Clinton ticket.Wonder who the mexican descendant will pick.Solar must come on strong.Think China leads it.
Dusty
January 7th, 2012
2:22 pm
Getalife,
Bye bye, baby….
getalife
January 7th, 2012
2:22 pm
dusty is a member of the pee party.
They do not stand up for freedom or our planet or our people.
They stand up and fight for the wealthy until the wealthy control all the wealth and our planet is destroyed.
Then dusty will say oops.
Jack
January 7th, 2012
2:27 pm
Run for political office; get elected and then do something other than complain.
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
2:30 pm
bluecoat: [Corporations] got rich off the poor mans sweat,and continue to take in form of taxes,inflation.
—————————
Another example of economic retardation.
Corporations get rich by providing products and services that people want. No one is forced to buy from or work for corporations. We do so because we want to.
Losers hate corporations because the successful ones are just another reminder of their own failures.
Losers–Get a job, get a haircut, no spare change.
Linda
January 7th, 2012
2:33 pm
Dusty, I think Reagan said it best. “Govt. is not the solution. Govt. is the problem.” If he only knew what the fed. govt. has involved itself in & the problems it has caused since his time. The progressive movement will destroy our govt. & our way of life if left unchecked.
I don’t short-change big companies. Without corporations, we would have no homes, no vehicles, no food, no clothes, no jobs & no stuff.
getalife
January 7th, 2012
2:37 pm
The stink of corruption is so bad even Kyle wrote about it.
Nice piece Kyle.
I tried getting wooten to write about it on his way out.
He is more like lil bar I guess and ignores corruption.
getalife
January 7th, 2012
2:48 pm
“Now that the most polarized and paralyzed Congress in memory has managed to kill one of its most resilient boondoggles — the three-decade-old, multibillion-dollar subsidy for corn ethanol — we hope it has not exhausted its resolve and will take a hatchet to other harmful energy subsidies, chiefly those it gives to fossil fuels.”
Cut big oil welfare.
redneckbluedog
January 7th, 2012
2:55 pm
Dusty
January 7th, 2012
1:38 pm
RedNeckBluedog
————————–
I am behind a Gary Johnson/Ron Paul ticket 100%…It is the only chance to truly take our country back…Without Karl Rove, Crossroads, Fox News, and Keith Olbermann telling us how to think about everything…
As to your point about R&D efforts to fund research…Corporations have been laying off for the past 3 years and hoarding cash to the point where government deficit spending has been the only funding source in the country. I know, part of my business is funded by such. Oil companies are going to drag their feet as much as possible…they have nothing to lose…
You can vote Romney if you choose, but he is still going to lose. Mitch Daniels provides him the best chance of winning, and I’m not sure he would take it. Otherwise you’re stuck with Christie…And I think Gary Johnson will get Ron Paul’s share of the vote, Paul or not…..
redneckbluedog
January 7th, 2012
3:00 pm
Linda
January 7th, 2012
2:03 pm
——————————–
A Libertarian ticket would step out of everthing..!!!! See Dusty’s post at 2:19……There would be no oil and gas subsidies or sweet defense contracts or sweet union kickbacks or battles over women’s uterii……TRULY SMALLER GOVERNMENT…..
We’re left to our own devices…a chance to reset the country……You do your thing I’ll do mine…..That sounds like what both you and Dusty want….Unless you’re just making up excuses to vote against the President…..
redneckbluedog
January 7th, 2012
3:04 pm
Lil’ Barry Bailout (Revised Downward)
January 7th, 2012
2:30 pm
Corporations get rich by providing products and services that people want. No one is forced to buy from or work for corporations. We do so because we want to.
——————————————————————————
I totally agree with that. But your argument breaks down when that’s not enough. When they have to go paying Jack Abramoff to cut them sweet tax deals and or kickbacks….or pass legislation….or funding the Supreme Court and Crossroads GPS to influence legislation..
That’s not Econ 101….that’s kissing hiney, cutting throats, and you know what….
getalife
January 7th, 2012
3:06 pm
When the gop get power they grow government and explode the deficit.
It is bs to appease the pee party.
td
January 7th, 2012
3:09 pm
redneckbluedog
January 7th, 2012
1:30 pm
So you are trying to tell us that private industry will not invest in a product they could make a profit? When and if the technology become viable and profitable then private industry will invest and produce said product and a rate that will make your head spin.
The problem is the environmentalist are attempting to use government to try to inflate current energy prices and then wants the government to take over the development and manufacturing of a technology that is not viable right now. From some of the articles I have read, the scientist are saying it will be another decade before battery technology is developed to a point to make solar energy a sound alternative. Why must we waste all of this tax payer money now when it is not viable?
td
January 7th, 2012
3:19 pm
redneckbluedog
January 7th, 2012
3:04 pm
You want to make your arguments against corporate America instead of focusing on the real problem. Corporations pay a great deal of money for lawyers to tell them what the rules of the game are and how to best make those rules work for the best interest of the corporation. Why are the rules so complicated and who writes the rules? Why do we have a tax code so complicated that corporations can ask for carve outs? Why do we not have a simple tax system? With a consumption tax you would take a great deal of money out of Washington because the politicians could not write all those special tax deals for their friends to get special tax breaks.
lynnbo
January 7th, 2012
3:25 pm
There is only two things we can do. 1. Vote them all out and keep voting them out to enforce term limits. 2. Most of our leaders are dirty and corrupt. If we all started exposing them with details in the press and editorials to the paper and internet to our neighbors this will help.
Otherwise you sit their and take it over and over. Both parties are corrupt and this is why Georgias economy was so damaged………….. Perdue had much to do with it and he is rich now.
Linda
January 7th, 2012
3:35 pm
redneck@3:00, There is no way you can lean Libertarian & prefer a “truly smaller govt.” & at the same time be for govt. subsides in failed green energy companies, govt. bailouts, govt. deficit spending & Obama as a second choice.
Furthermore, there is no way you can be a Christian & at the same time be for abortion.
Even furthermore, as both a Christian & a lady, I was offended with your crude reference @ 3:00.
Michael H. Smith
January 7th, 2012
3:47 pm
td
January 7th, 2012
3:09 pm
This alternative energy thing a.k.a. green energy economy is a good thing to pursue. However, the government’s terms need to be completely redrawn in such a manner to only pay for the successful desired result achieved not money paid upfront for rosy promises and slick sales pitches that may and usually never come to any marketable fruition.
Face it, energy independence, particularly from clean renewable sources is a majority military advantage in and of itself. Notwithstanding the added benefits of more competition driving down consumer energy costs where multiple energy products are available within our marketplace.
Cutting our military expenses for defending the world’s oil supply alone would probably more the cover the total pay-out in rewards for producing viable alternative energy that can compete Joule for Joule with traditional energy.
BTW, to my conservatives and Libertarians friends, government funding of science and useful arts is one of the enumerated powers granted to Congress under Article One Section Eight:
To promote the Progress of Science and useful Arts…
http://www.usconstitution.net/xconst_A1Sec8.html
Hillbilly D
January 7th, 2012
4:13 pm
government funding of science and useful arts is one of the enumerated powers granted to Congress under Article One Section Eight:
I’d disagree. What it says is To promote the Progress of Science and useful Arts, by securing for limited Times to Authors and Inventors the exclusive Right to their respective Writings and Discoveries;. That’s copyrights and patients not government funding. in my opinion.
td
January 7th, 2012
4:15 pm
Michael H. Smith
January 7th, 2012
3:47 pm
I agree that we as a nation should pursue every possible energy source. I also agree with you that government has a funding role in science and technology. I think the government was went over the line in funding the manufacturing of alternative energies.
Linda
January 7th, 2012
4:42 pm
The Chevy Volt is an electric Edsel. Govt. loans, rebates, grants & tax credits total about $3 B. It’s old hat for the fed. govt. to blow our $ 2.3 B, but where is the world did the state of Michigan come up with $600 M to blow? The average cost of taxpayer money is up to $250,000 per car. GM’s goal of selling 10,000 in ‘11 was short by about 4000 cars. It would have been worse had the govt. not bought fleets of them & gotten their cronies (such as GE) to buy a respectable few.
The Volt goes about as fast as a go-cart, goes all of 30 miles before kicking over to gas & gets a whopping 30 mpg. Now, that’s gonna lessen our dependence on foreign oil! One of the reasons the Volt gets 30 MPG is that only 2 people fit in the backseat. Did I mention that the batteries are charged with electricity from coal-power? Not to worry! The fed. govt. is phasing out coal.
Did I mention that Ford sold about 600,000 F150’s last year?
BTW, the average income for a “normal” Volt buyer is $170,000. That’s about $30,000 short of the income of a taxpayer filing singly, who fits into that tax bracket Obama calls “millionaires & billionaires.” Even tho the Volt price tag is about $40,000, the buyer gets a $7500 tax credit to lessen his hardship. Guess who’s paying for the tax credit! This appears to be a reverse Robin Hood transfer of wealth from middle-income households to almost “millionaires & billionaires,” GM & unions.
One of the prizes awarded last year to the Volt was making the list of the Worst Product Flops of 2011. That was BEFORE GM learned that the batteries were catching on fire & recalled all the Volts for what is being called “enhancement.”
The Volt was expected to set the world on fire but it was the Volt that caught on fire. Maybe if it could fly…
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
5:15 pm
Remember when the Chevy Volt was named “Car of the Year”?
Heckuva job, Motor Trend! Too fkn funny!
Lil' Barry Bailout (Revised Downward)
January 7th, 2012
5:22 pm
I love it. Moron 99-percenters subsidizing Chevy Volts purchased by millionaires & billionaires.
Michael H. Smith
January 7th, 2012
5:22 pm
I think the government was went over the line
Absolutely!
Then again “limiting government powers” was the very intent of Section Eight of Article One. Unfortunately socialist liberals don’t believe one word of what Section Eight is saying.
Which is:
The federal government’s rights and powers are to be few in amount and narrow in scope. The rights and powers of the states are to be many by amount and broad in scope. Et al James Madison ~ the federalist papers #41 and #45(esp.)
Michael H. Smith
January 7th, 2012
5:34 pm
The sad thing is that the EV-1, GM’s other electric car of the ’70s as I re-call never caught fire and it was a doable technology then as now, which people wanted but guess who killed that idea?
Who Killed the Electric Car?
http://en.wikipedia.org/wiki/Who_Killed_the_Electric_Car%3F
Velma
January 7th, 2012
5:44 pm
I think the most important and insightful in Kyle’s column is the overlap between Tea Party and Occupy. If they could just put down their petty social differences and focus on the fact that our government has become a piggy bank for corporate America, then perhaps we could focus on solutions created by we the people and not by lobbyists and CEOs who pad the pockets of our elected officials.
Linda
January 7th, 2012
5:47 pm
Lil’ Barry@5:22, No, people making $200,000 per yr. are not millionaires, let alone billionaires, but taxpayers filing singly in that tax bracket are included in Obama’s class warfare speeches & those he wants to increase taxes on because they are not paying “their fair share.”
When I called them ALMOST “millionaires & billionaires,” it was tongue in cheek.
Linda
January 7th, 2012
5:59 pm
Velma@5:44, You are misinformed. There is absolutely NOTHING in the Tea Party movement that has ANYTHING whatsoever to do with any social agenda. There are members of the Tea Party who happen to have social values, but the Tea Party is strictly limited to govt. spending & taxation. Regardless of how the left has painted the Tea Party, you will not be able to find any Tea Party platforms anywhere on the internet that includes social issues. Do your own research.
Rafe Hollister
January 7th, 2012
6:17 pm
Linda
Good to see you back posting, been awhile hasn’t it? You have made some good points.
Smaller government and adhering to the Constitution solves most of our problems.
The REAL GodHatesTrash, Superstar
January 7th, 2012
6:19 pm
True dat, Linda. The teab-ag crowd are anti-social misfits, angry dullards all.
I Report (-: You Whine )-: mmm, mmmm, mmmmm! Just sayin...
January 7th, 2012
6:43 pm
That’s real clever, gitmo, the “pee” party, wow, why didn’t I think of that?
Oh yeah, cause I’m not a first grader, that’s why.
I hereby offer my official services to you libs as a translator for tonight’s Repug debate, and for this night only, my fee is substantially reduced. We will discuss payment terms on an individual basis, or cash only, as I like to say. But whenever one of the Cons talks of something you know nothing about, like responsibility, productivity, strong moral character and such things, I will explain to you what it means. Results are guaranteed.
Assuming, of course, that you are not a total moron like obozo or something. But, I promise that I will make every effortt, regardless of your mental capacity.
So get the credit card ready, hope that the Saints put down the Lions early, tune in your TV to A.B.S. and learn something, y’all.
Linda
January 7th, 2012
6:44 pm
REAL@6:19, At least we know proper English which includes how to spell. To be helpful to you, there is another blog on the AJC where they are swapping dessert recipes, as best as I can tell. Remember that a small t stands for teaspoon & a big T stands for tablespoon. You may spell the Tea Party with any t you can muster. Good luck to you & may God bless you in you cooking.
Linda
January 7th, 2012
7:11 pm
Rafe@6:17, Nice to know I was missed. Glad to contribute. Keep up your great posts.
Michael H. Smith
January 7th, 2012
7:29 pm
Velma
January 7th, 2012
5:44 pm
I know where you are trying to go with your train of thought, however, you do realize the two groups are coming from totally different political and philosophical realms. The TEA PARTY is very constitutionally aligned or correct and we know it. On the other hand the occupiers only know they strongly dislike profiteers that may or may not be crooks. If the occupiers( some of them not all of them) spent more time understanding the bases of what and why they overlap on certain issues with the TEA PARTY they just might convert to being patriots that protest lawfully and respect the property and individual rights of others.
The TEA PARTY works lawfully within the system not outside of it.
But for what it is worth the occupiers should be occupying the halls of Congress and the lawn of the White House where they will do some real lasting good rather than Wall Street that only laughs at them – all the way to their corrupt taxpayer bailed-out banks.
Michael H. Smith
January 7th, 2012
7:43 pm
people making $200,000 per yr. are not millionaires
A good number of them are mom and pop small business people that work their butts off, sometimes for less than minimum wages and struggle to pay their bills on time.
Yeah, to someone that has never been in a family mom and pop business to know the difference between a GROSS PROFIT AND NET PROFIT, $200K looks very big but that is usually a gross profit. Figure more like 2 or maybe 3 percent of the gross profit and then you know what these so-called millionaires can actually call, “their money”.
bluecoat
January 7th, 2012
7:48 pm
LiL B economic retardation…when corps are bailed by taxpayer(by either party)where does this money come from?When you exploit the people,make more money for shareholders.Are you being just?Then these low paid people can”t pay med.bill etc.need assistance.Who pays those bill.The corp,I think not.You continue to harp on consumption tax.A tax that will hurt the low income because will take bigger portion of their income.Possibly vat or progressive income tax best.
MrLiberty
January 7th, 2012
8:03 pm
There is a reason why Ron Paul appeals to both OWS and the Tea Party types. He is the only person in the race speaking out against CORPORATISM