Americans For Prosperity: “Wasteful Spending”

Cherry-picking details from news reports, Americans For Prosperity bills the Recovery Act as a wasteful boondoggle funneling money to foreign projects instead of creating American jobs. In reality, Recovery Act sustained millions of American jobs and boosted the economy, while a closer look reveals that AFP’s stories about stimulus money going to Mexico, Finland, and China quickly fall apart

The Recovery Act Created Millions Of Jobs, Boosted GDP, And Cut Taxes

Recovery Act “Succeeded In…Protecting The Economy During The Worst Of The Recession.” From the Center on Budget and Policy Priorities:A new Congressional Budget Office (CBO) report estimates that the American Recovery and Reinvestment Act (ARRA) increased the number of people employed by between 200,000 and 1.5 million jobs in March. In other words, between 200,000 and 1.5 million people employed in March owed their jobs to the Recovery Act. […] ARRA succeeded in its primary goal of protecting the economy during the worst of the recession. The CBO report finds that ARRA’s impact on jobs peaked in the third quarter of 2010, when up to 3.6 million people owed their jobs to the Recovery Act. Since then, the Act’s job impact has gradually declined as the economy recovers and certain provisions expire.” [, 5/29/12]

At Its Peak, Recovery Act Was Responsible For Up To 3.6 Million Jobs. According to the nonpartisan Congressional Budget Office:

CBO estimates that ARRAs [sic] policies had the following effects in the third quarter of calendar year 2010:

  • They raised real (inflation-adjusted) gross domestic product by between 1.4 percent and 4.1 percent,
  • Lowered the unemployment rate by between 0.8 percentage points and 2.0 percentage points,
  • Increased the number of people employed by between 1.4 million and 3.6 million, and
  • Increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 5.2 million compared with what would have occurred otherwise. (Increases in FTE jobs include shifts from part-time to full-time work or overtime and are thus generally larger than increases in the number of employed workers). [, 11/24/10]

Recovery Act Included $288 Billion In Tax Cuts. From PolitiFact: “Nearly a third of the cost of the stimulus, $288 billion, comes via tax breaks to individuals and businesses. The tax cuts include a refundable credit of up to $400 per individual and $800 for married couples; a temporary increase of the earned income tax credit for disadvantaged families; and an extension of a program that allows businesses to recover the costs of capital expenditures faster than usual. The tax cuts aren’t so much spending as money the government won’t get — so it can stay in the economy.” [, 2/17/10]

Tax Credits Overseas? $2.3 Billion Went Specifically To U.S. Jobs

Claim That Administration Spent $2.3 Billion Creating Jobs Overseas Cites Washington Times Article That Refers To “$2.3 Billion Of Manufacturing Tax Credits.” From the September 9, 2010, article cited in the AFP ad: “The Department of Energy estimated that 82,000 jobs have been created and has acknowledged that as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.” [Washington Times9/9/10, emphasis added]

PolitiFact: Washington Times Is Mixing Up Two Programs; ARRA “Explicitly Links The Credits To Creation Of Manufacturing Jobs In Green Industries In The United States.” From a analysis of a similar claim in a 2010 ad by Republican Robert Hurt’s campaign:

The ad says the accusation is based on a story published Sept. 9 in the Washington Times that says “as much as 80 percent of some green programs, including $2.3 billion of manufacturing tax credits, went to foreign firms that employed workers primarily in countries including China, South Korea and Spain, rather than in the United States.” […]

It’s an assertion that originates from a series of stories by the Investigative Reporting Workshop at American University in Washington. The workshop report, “Blown Away,” documents how foreign-based companies are using stimulus grants to develop wind farms in the United States.

Here’s the problem for Hurt and other politicians relying on the Washington Times story:  the $2.3 billion in manufacturing credits come from a part of the stimulus act that explicitly links the credits to creation of manufacturing jobs in green industries in the United States, according to the workshop report.

By contrast, the workshop investigation focused on a provision that allowed payments in lieu of tax credits for development of alternative energy sources, including wind farms, without requiring the projects to produce manufacturing jobs in the United States.

“They’re sort of freely mixing the two programs,” Russ Choma, the journalist who produced the workshop report, told PolitiFact. [, 10/25/10]

$2.3 Billion Manufacturing Tax Credit Program Was “Based On How Many Domestic Jobs Would Be Created.” From the AU Investigative Reporting Workshop: “Obama was announcing $2.3 billion in tax credits for manufacturers, including foreign companies that are hoping to set up manufacturing in the United States. Unlike the grant program investigated by the Workshop, the administration gave out the tax credits based on how many domestic jobs would be created.” [, 2/8/10, emphasis added]

Far From ‘Admitting’ That Tax Credits Went Overseas, The Obama Administration Explained That $2.3 Billion In Tax Credits Were “Aimed At Growing America’s Clean Energy Manufacturing Sector.” From “That’s why the clean energy manufacturing industry that is expanding across the Midwest — spurred in large part by the Advanced Energy Manufacturing Tax Credit, also known as 48C — is so important. As part of the Recovery Act, 183 projects (MS Excel) will receive a total of $2.3 billion in tax credits to establish, expand or re-equip clean energy manufacturing facilities. This federal investment is also being matched by nearly $5.4 billion dollars in private capital, for a total of more than $7.6 billion aimed at growing America’s clean energy manufacturing sector. The impact of these investments is especially significant in the Midwest where 41 projects (accounting for nearly $530 million in tax credits) are underway. With incentives from both the federal and private sectors, clean energy manufacturers are drawing on the traditionally strong manufacturing base of states like Ohio and Michigan to develop the next generation of solar, wind, geothermal, and other renewable energy and energy-efficient technologies.” [, 12/16/10]

A Solar Plant In Mexico? The Loan Guarantee Went To A California Project

Loan Guarantee Supports Construction Of “Solar Ranch” In San Luis Obispo, CA, USA. From the Department of Energy press release announcing the loan: “U.S. Energy Secretary Steven Chu today announced that the Department has finalized a $1.237 billion loan guarantee to support the California Valley Solar Ranch Project, sponsored by SunPower Corporation. The project, which is being built in San Luis Obispo County, CA, includes the construction of a 250 megawatt alternating current photovoltaic (PV) solar generating facility and associated infrastructure.” [DOE Release, 9/30/11]

NRG Energy Bought Project From SunPower Prior To Loan Guarantee, Is “On The Hook” For Loan. From the San Jose Mercury News: “Industry analysts say San Jose-based SunPower is struggling but nowhere near bankruptcy, and they describe the loan guarantee as low-risk for taxpayers. More significantly, Carlsbad-based NRG Energy, not SunPower, is on the hook to repay the loan, according to company representatives. NRG bought the project before the federal backing came through, although SunPower will design and build the solar farm in San Luis Obispo County.” [San Jose Mercury News via Nexis, 10/18/11]

SunPower Announced Mexican Plant On U.S. Border Following Capital Infusion From French Oil Company. From the PV Magazine article cited in the AFP ad: “American module and system manufacturer SunPower has announced that it will open a new plant in Mexico. It will produce the SunPower E18, E19 and E20 modules and the SunPower T5 Solar Roof Tile system. The plant will be located in Mexicali, close to the U.S. border and inland from the border city of Tijuana. An existing 320,000 square foot building will be leased by SunPower for the facility. ‘Establishing our own manufacturing facility in Mexicali means we will be positioned to quickly deliver our high-efficiency, high-reliability solar products to a growing North American solar market,” SunPower’s CEO Marty Neese said when announcing the new plant. SunPower recently ramped up its manufacturing in Malaysia, has a fab in Silicon Valley, California and also a panel facility in Europe. SunPower has sufficient funds to pursue an expansion in manufacturing after recently selling 60 percent of its stock to French oil giant Total. As part of the deal SunPower has access to a $1 billion line of credit.” [PV Magazine8/8/11]

SunPower Spokeswoman: “Most Of The Solar Panels For The California Valley Solar Ranch Will Be Sourced From Our Manufacturing Facility In The Silicon Valley.” From “And third, a large portion of the panels for the 250-MW plant are going to come from an American manufacturing plant, according to SunPower’s Julie Blunden: ‘Most of the solar panels for the California Valley Solar Ranch will be sourced from our manufacturing facility in the Silicon Valley (Milpitas). Because of the magnitude of the plant — at 250 megawatts, it is one of the first central station solar PV plants in the world — we also need to source panels from our facilities in Mexico and Asia. Our Silicon Valley manufacturing facility will deliver panels to CVSR using equipment sourced from 4 US states: Oregon, Colorado, Illinois, and Pennsylvania, and using silicon that comes from Michigan.'” [, 10/15/11]

With Loan Guarantees, DOE Doesn’t Actually Pay Out Any Money Unless The Project Defaults. From a blog post by Michael Mendelsohn, a Senior Financial Analyst at the Department of Energy’s National Renewable Energy Laboratory: “Importantly, no loan guarantee money is actually spent unless a project defaults.  The money is only transferred into a Treasury Department account where it is pooled with the credit subsidy costs from other projects in the program.  So, using the credit subsidy costs referenced above, if 11.7% of the loans default, they are fully covered and repaid from the credit subsidy account.  If fewer default, the money is retained by the government.  If more default, the Treasury funds the difference from supplemental funding available to it.” [, 12/28/11, citation removed]

Cars In Finland? All Money DOE Loaned Fisker Went To U.S. Jobs

DOE Promised $529 Million Loan To Start-Up Car Company Fisker. From the Department of Energy: “With the help of a $529 million loan, Fisker is producing high performance vehicles with an advanced hybrid electric powertrain that could significantly improve performance and fuel economy.” [, 10/20/11]

Fisker Is No Longer Receiving Federal Funding. From the Orange County Register: “Henrik Fisker unveiled the hybrid-electric Atlantic on Tuesday. […] The company is now funded with more than $1 billion in private funding with $132 million raised in March after the government cut off funding the rest of a $529 million federal loan when it failed to meet development milestones. Part of that loan was meant to bring production to the United States at a plant in Delaware of this second vehicle, which was called project Nina before today.” [Orange County Register, 4/3/12]

  • Fisker Received $193 Million In Loans – Not The Full $528 Million – Before DOE Suspended Its Loans. From the New York Times: “Fisker borrowed $193 million of the $528 million allocated by the federal government before its loans were suspended last May.” [New York Times, 4/4/12]

The Money DOE Loaned Fisker Exclusively Supported Vehicle Development Based In The U.S. From the Department of Energy: “Fisker’s loan has two parts. In the first part, Fisker used $169 million to support the engineers who developed the tools, equipment and manufacturing processes for Fisker’s first vehicle, the Fisker Karma. That work was done Fisker’s U.S. facilities, including its headquarters in Irvine, California which has 700 employees and plans to continue hiring. While the vehicles themselves are being assembled in Fisker’s existing overseas facility, the Department’s funding was only used for the U.S. operations. The money could not be, and was not, spent on overseas operations. The Karma also relies on an extensive network of hundreds of suppliers in more than a dozen U.S. states.” [, 10/20/11]

Fisker: Company Only Spent Federal Money On Work In U.S., Not Finland. From ABC News: “Henrik Fisker said the U.S. money has been spent on engineering and design work that stayed in the U.S., not on the 500 manufacturing jobs that went to a rural Finnish firm, Valmet Automotive. […] In a lengthy interview, Fisker said he apprised the Department of Energy of his decision to assemble the high-priced Karma in Finland after he could not find an American facility that could handle the work. They signed off, he said, so long as he did not spend the federal loan money in Finland — something he says the company has taken care to avoid.” [ABC News, 10/20/11]

Traffic Lights In China? DOE Allowed U.S. Lights To Be Made With Foreign Parts Due To Lack Of American Manufacturers

Traffic Lights Were Partially Made With Parts From Abroad, Installed In America – Not China. From the Pittsburgh Tribune Review article Americans for Prosperity cites to back up its claim that “tens of millions” was spent “to build traffic lights in China”: “An exemption in the ‘Buy American’ clause of the American Recovery and Reinvestment Act of 2009 — legislation President Obama championed to create American jobs — says components and subcomponents of green-energy products need not actually be U.S.-made. As a result, the Trib found, many products needed to make streetlights, traffic lights and other high-tech products are manufactured in China, Taiwan, Japan and South Korea. One of those products, light-emitting diodes or LEDs, is central to replacing energy-wasting, high-pressure sodium streetlights and old traffic signals in most American cities. The LED lamps produce better light, last years longer and require less electricity to produce the same degree of illumination. Communities across the nation are using stimulus funds to make the switch to LED lights, including dozens in California and Michigan.” [Pittsburgh Tribune Review via Nexis, 10/16/11]

$6.3 Billion In Stimulus Money Promised To Help Upgrade Cities And States To Energy Efficient Lighting. From the Pittsburgh Tribune-Review: “The Department of Energy granted $6.3 billion in stimulus money to cities and states for projects to improve energy efficiency.” [Pittsburgh Tribune Review via Nexis, 10/16/11]

Grant Recipients Were Unable To Find Necessary Domestic Manufacturers, Prompting DOE To Waive “Buy American” Requirement. From the New York Times’ “Green” blog: “The Department of Energy has waived a ‘buy American’ requirement for government projects receiving money from last year’s stimulus bill so that recipients can purchase energy-efficient lighting products for public buildings and roadways. The department issued the waiver after determining that products like compact fluorescent light bulbs and traffic signals made with light-emitting diodes, or LEDs, are manufactured almost exclusively in China and Mexico. A memorandum written by Cathy Zoi, assistant secretary for energy efficiency and renewable energy, said the department received a large number of inquiries and petitions from grant recipients, suppliers and trade associations stating their efforts to find domestic manufacturers for compact fluorescent light bulbs, LED traffic and crosswalk signals, and fluorescent electronic lighting ballasts were unsuccessful. […] Federal agencies may waive the ‘buy American’ requirement if they determine that a needed item is not available from domestic sources in sufficient quantities, that it would inconsistent with the public interest to comply, or that the cost is unreasonable.” [, 3/5/10]

National Electric Manufacturers Association: Waiver Will Benefit American Companies. From the New York Times’ “Green” blog: “Craig Updyke, manager of trade and public affairs for the National Electrical Manufacturers Association, said the waiver for the public lighting projects would be a great benefit to its member companies, which include General Electric, Philips and Osram Sylvania. ‘The waiver is consistent with the goals of the Recovery Act,’ Mr. Updyke said. ‘It will boost employment and boost efficiency in public buildings.’” [, 3/5/10]

[NARRATOR:] Washington promised to create American jobs if we passed their stimulus. But that’s not what happened. Fact: billions of taxpayer dollars spent on green energy went to jobs in foreign countries. The Obama administration admitted the truth: That $2.3 billion of tax credits went overseas, while millions of Americans can’t find a job. $1.2 billion to a solar company that’s building a plant in Mexico. Half a billion to an electric car company that created hundreds of jobs in Finland. And tens of millions of dollars to build traffic lights in China. President Obama wasted $34 billion on risky investments. The result? Failure. American taxpayers are paying to send their own jobs to foreign countries. Tell President Obama: American tax dollars should help American taxpayers. [Americans for Prosperity via, 4/26/12]