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Dear Representative, On behalf of our combined memberships, we urge you to support stringent budget caps on the Department of Energy (DOE) Loan Guarantee program and oppose any legislative efforts to exempt the program from the regulations of the Federal Credit Reform Act of 1990. The Administration requested a $9 billion cap for the program and the House included a $7 billion cap in their version of the FY08 Energy and Water Appropriations bill (H.R. 2641). However, recent press reports have alluded to the conferenced version of Energy and Water appropriations including a cap as high as $25 billion. Separately, there is a provision in the Senate passed version of H.R. 6, and in an amendment filed on the farm bill that would effectively strip Congress of all oversight of the program and allow the DOE to disperse unlimited loan guarantees. A $7 billion cap will help protect taxpayers from being exposed to enormous losses, we urge you to support strong budget caps for this program. The Department of Energy Loan Guarantee Program was authorized in Title XVII of the Energy Policy Act of 2005. According to the DOE, the program will cover 100 percent of the loan at up to 80 percent of the cost of the eligible project. If these entities default on their loans, as some surely will, the federal government will be forced to cover the costs. This leaves taxpayers to foot the bill on defaults that could cost hundreds of millions, or even billions, of dollars. In a report released last month, the DOE Office of the Inspector General found that issuing loan guarantees at 80 percent of the project cost will “result in significant risk to the Government and therefore, the American taxpayer.” The federal government has made this mistake before. During the late 1970s and early 1980s the federal government issued loan guarantees to jumpstart the synthetic fuels industry. It was a fiscal nightmare and taxpayers ended up covering the $15 billion bill. Without congressional oversight the synthetic fuels debacle could pale in comparison to the current loan guarantee program. The nuclear industry has already made it clear that they want $50 billion in loan guarantees over the next two years. The Congressional Budget Office considers the risk of default on nuclear loan guarantees to be very high — well above 50 percent.
Congress must keep reasonable limits and safeguards on the program or the devastating consequences will fall on the shoulders of federal taxpayers. We urge you to keep a budget cap in line with the DOE request and oppose any language restricting Congressional oversight of the program. For more information please contact Autumn Hanna, Taxpayers for Common Sense Action at 202-546-8500, autumn@taxpayer.net; Kristina Rasmussen, National Taxpayers Union at 703-683-5700, krasmussen@ntu.org; or Elizabeth Wright, Council for Citizens Against Government Waste at 202-467-5300, ewright@cagw.org.
Ryan Alexander
Pete Sepp
Thomas Schatz |
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