U.S. Department of Energy
Vogtle Units 3 and 4, the first new U.S. nuclear plant in more than 30 years, benefited from financing from the Department of Energy’s Loan Programs Office.
One of the hidden gems of American government is a small division of the Department of Energy called the Loan Programs Office. This is a government bank that hands out loans to companies with business plans that go beyond the technological frontier, with ideas nobody has tried before. Commercial banks will generally not loan to such companies—as a rule, private bankers want something that is already proven to work—so the LPO helps such entrepreneurs get from the drawing board to producing and selling an actual product.
The LPO has funded thousands of successful projects, from renewable-energy installations, to solar and battery factories, to new low-emission industrial processes, to power grid upgrades, to the first new nuclear power plant in decades, to domestic EV companies, and much more in that vein. It has virtually no overhead, with just a few hundred staffers running a fund of more than $400 billion. Almost all of these projects are successfully paying back their loans. For any government—and especially the American one, with its underfunded and sclerotic agencies—this counts as a smashing success.
But not for much longer. The LPO is being gutted by Elon Musk—who got an LPO loan himself just 15 years ago—and his DOGE goons. New loans have been frozen, it seems permanently. Worse, a reported 60 percent of LPO staff has already accepted DOGE buyouts, with more to come. Even existing loans are under threat; the California utility PG&E recently requested a rate hike in part because its $15 billion LPO loan faces “substantial uncertainty.” One battery company has canceled a planned LPO-funded factory in Arizona, while another has canceled its planned LPO-funded factory in Georgia and moved it to China. (America First!)
The LPO did fund one high-profile failure during the Obama administration: the solar company Solyndra, which Republicans successfully spun into a major scandal. But this is simply how business loans work, whether it’s the government or private banks doing it. Any business plan might fail, which is why a company pays interest on its loan in the first place. By 2023, the LPO had made almost ten times in interest payments what it lost on Solyndra.
Indeed, a government bank should arguably have a lot more failures than this. The fact that nearly all of the LPO’s investments are successfully paid back tends to indicate that it is being quite conservative in its risk assessments—probably a defensive reaction to Republican attacks. But the whole point of a government bank is it can accept a lot more risk than private banks. Therefore, it should be funding truly radical, moon-shot ideas with a higher risk of failure but a chance for a much larger success.
At any rate, all that is beside the point. Yet another highly successful government agency is being illegally destroyed by an unelected billionaire and his pack of teenybopper fascist criminals. The main difference between this and similar efforts to destroy, say, the Consumer Financial Protection Bureau—in this supposed cost-cutting exercise—is that the LPO makes a fair bit of money. The estimated $500 billion in additional federal debt brought about by DOGE gutting the IRS will only get bigger by taking the LPO off the board.
A more interesting question concerns Elon Musk himself. His company, Tesla, was saved from certain bankruptcy in 2010 by a $465 million LPO loan, which provided critical funding while the company was struggling to get its Model S to market. It is, of course, absolutely maddening that a man who benefited from immense government largesse—the LPO loan is only a tiny fraction of the $38 billion in subsidies Musk has collected over the years—is pulling the ladder up behind him, all while he gives himself government contracts to build a completely pointless missile defense shield and drain even more from the taxpayer.
In retrospect, it was a huge mistake not to let Tesla go bankrupt, but perhaps a lesson can be learned. The fact that Tesla went on to make Musk the richest person in the world, at which point he bought the American government, and is now in the process of destroying it, suggests that perhaps these loans ought to come with more strings attached. Rather than simply paying the loan back, the government might get a corresponding equity stake in the company, so the taxpayer can benefit from any resulting stock price gains far down the line, while executives and shareholders get less. Or perhaps there ought to be permanent executive compensation limits for any company receiving an LPO loan—say, no more than 50 times the average worker’s salary. By way of comparison, Musk is still attempting to get a Tesla package that is something like 1.2 million times larger than a typical Tesla worker’s salary.
Alternatively, we could simply impose confiscatory taxation on all rich people, above all ultra-billionaires.
But in any case, government should be careful about how it is enabling private companies. Helping one reach profitability is fine, but not if it ends up destroying democracy.
