Can You Spare Some Change?

Rich Tucker

6/27/2008 3:12:12 PM - Rich Tucker

Finally, in an election supposedly about “change,” somebody offered something genuinely different. Something that might actually work and would, if nothing else, improve how Washington operates.

“I further propose we inspire the ingenuity and resolve of the American people,” Sen. John McCain said, “by offering a $300 million prize for the development of a battery package that has the size, capacity, cost and power to leapfrog the commercially available plug-in hybrids or electric cars.”

$300 million is a lot of money. Even the free-spending guys on “Entourage” could live for many years on $300 million. Still, it’s mere peanuts to our federal government, which spends more than $2 trillion each year.

Now, a fair-minded critic could point out that, with gasoline soaring past $4 per gallon, there’s already plenty of market incentive to build a better battery; isn’t this proposal superfluous?

Perhaps. But it would also serve to create a bigger market, and trigger more research. Few can resist the temptation of $300 million.

Moreover, this idea has the ability to change Washington’s approach to energy policy. Before we get to that, though, let’s hear what the self-declared candidate of “change” had to say about McCain’s proposal.

“When John F. Kennedy decided that we were going to go put a man on the moon, he didn’t put a bounty out for some rocket scientist to win,” Sen. Barack Obama intoned. “He put the full resources of the United States government behind the project.”

That’s more of an apt example than Obama realizes. Yes, the space program scored some big successes in the late 1960s. But let’s consider what federal control of space has given us in, say, the last 30 years.

NASA can no longer put a man on the moon, something it did repeatedly 40 years ago. Instead, the government has spent recent decades launching a dangerous space shuttle into orbit. The shuttle exists only to service a needless space station, an orbiting platform that breaks no new scientific ground but merely mirrors the MIR, launched by the Soviet Union decades ago.

One of Obama best-known supporters is former Secretary of Energy Bill Richardson. He dismissed McCain’s plan out-of-hand on CNN. “What Obama wants to do is conservation, fuel efficiency of vehicles, renewable technologies, solar wind, biomass, biofuel,” Richardson said. How would Obama encourage these industries?

“You don’t just throw out 300 million bucks as a gimmick for somebody to discover it. You do long-term research. You do tax incentives for the industry. You invest. You co-invest with the industry.” Richardson said.

In other words, the candidate of “change” is actually the candidate of “business as usual.”

Washington’s been handing out tax incentives for decades, and has precious little to show for it. Corn-based ethanol, to name one, enjoys a 51-cents-per-gallon tax subsidy. That means taxpayers are shelling out about $4.5 billion this year for ethanol they haven’t even put into their cars yet.

That subsidy will drop slightly under the new farm bill (to 45 cents-per-gallon), but that’s little comfort to drivers. Meanwhile, as Investors Business Daily pointed out, lawmakers agreed to spend more money on other biofuels including switch grass. “The Democrats can’t wait for offshore oil or ANWR, but they can wait for switch grass,” IBD noted sardonically.

The problem is that many of these alternate fuels have been around for decades. In 1976, Disney published a comic book featuring Mickey Mouse and Goofy exploring energy. Wind, water and geothermal power were some of the technologies that were supposed to help us pull out of that year’s “energy crisis.” These “infant technologies” have now joined me in middle-age, and have yet to make much of a contribution to our energy supply.

Richardson added that, “Obama wants to develop that battery too. And he wants to develop fuel efficient vehicles and plug-in hybrids. These are the new technologies of the future.” He just wants the government to be the driving force in the development.

But it won’t be. The government can’t do R & D as well as the market does. In fact, the government can’t even keep its previous promises.

The federal government was legally required to begin taking charge of all nuclear waste in this country in 1998. That’s during Richardson’s tenure as Energy Secretary. It hasn’t taken charge of any (although it’s managed to collect $27 billion in fees from nuclear plants, money that’s supposedly being spent on permanent disposal of nuke waste) and it’ll probably never take charge of any.

McCain’s approach, whether he knows it or not, is the right one. The best way for the government to encourage innovation is to draft requirements, set rewards and get out of the way.

Tax incentives don’t work, but rewards might, and wouldn’t cost taxpayers anything until they’ve led to a successful product. That, at least, would be a “change” for the better.