If there is a silver lining to the Obama administration’s economic policies (and that’s a BIG IF) it’s that we are learning a very important lesson. When our government picks winners and losers, taxpayers lose.
Take the Chevy Volt for example. Chevy has recently hyped the fact that people around the country have driven one hundred million miles in Chevy Volts. To put this into perspective, it only takes 5,000 cars driving 10,000 miles a year to reach this “milestone” in two years.
Out of the 27.2 million cars sold in the past two years (the years the volt has been on the market), Chevy has only sold about 30,000 Volts. That number would be much lower if the government had not given people a $7,500 tax credit (remember, the federal government is borrowing 4 dollars of every 10 dollars they spend) to buy it and experts have said that the tax credits would have to be $12,000 dollars to make the Volt competitive with normal gas burning cars.
The picture gets cloudier when you think of Solyndra, the solar company that went belly up after receiving $500 million in government money. The moral of the story is that governments aren’t very good at being venture capitalists.
Wisconsin has also realized the limits of what the government can do while investing in businesses.
Recently, there have been reports that the Wisconsin Economic Development Corporation misplaced a $56 million dollar loan portfolio because of a problem with their software and borrowers have fallen $12 million dollars behind on loan payments to the state.
Thankfully the software problems are being fixed and the WEDC is under new management.
Unfortunately, some of the $12 million in late loans, like the $2 million left on a loan made to Flambeau River Biofuels by the old Department of Commerce, probably won’t ever be recovered by taxpayers. We need to be more careful about how we spend taxpayer money.
Next session there will be talk about a venture capital bill in Wisconsin, and even here there are people that want to give a small appointed committee the ability to dole out (I mean “invest”) hundreds of millions of taxpayers dollars to get in the business of picking winners and losers with our money. This is a bad idea.
There are private venture capital firms in Wisconsin. One solution could be to partner with them on projects they are willing to risk their money on, under the same terms and conditions they have.
This is a lot different than what some in the legislature want to do, which is give that committee of appointed officials the ability to risk taxpayer money like the Federal Government has.
Either way, making a venture capital board with the ability to dole our money as they see fit is not a good idea. People have biases and they are going to push their own agendas, just like the President did by investing in Solyndra and the Chevy Volt. A select committee shouldn’t ever have the power to write checks for private businesses on the taxpayer’s dime.
You might be wondering, “Seeing how the government has wasted money playing venture capitalist, why would you vote for it at all?” The reason I would be willing to vote for a 60-40-percent split is because venture capital firms have a vested interest in making sure that they invest their money wisely and making a profit. If there truly is a lack of venture capital available in Wisconsin, then we the state, can and should make a profit, not lose money on poor risks.
Venture capital firms have to do their homework before they invest, otherwise they go broke, and that isn’t the case for members of an appointed government committee that can vote money to their friends and not pay any real consequences.
Conservatives need to show that we are serious about letting the free market work, and that it will create private sector jobs. The answer lies in getting government out of the way, not by throwing more of our taxpayer’s money at it.
State Sen. Frank Lasee represents the 1st Senate District in Green Bay