Crony Capitalism, Carnahan Style
Wind power is not economically feasible. It is only a reality because of tax breaks and government subsidies, which are often the seed corn for political favoritism and cozy dealings.
In Missouri, a company called Wind Capital Group (WCG) is more than well connected. In the photo to the right is the firm’s CEO is Tom Carnahan. His brother is Congressman Russ Carnahan (D-MO), and his sister is Robin Carnahan, the Missouri Secretary of State. His father was governor and his mother a U.S. Senator.
WCG applied for a whopping $90 million in Obama’s stimulus package. In addition, WCG has successfully sought property tax exemptions where it is putting up windmills.
According to no-lesser light than Vice-President Biden, the stimulus made the difference in allowing CEO Carnahan to proceed with a project that the free market had deemed unviable. According to Alyson E. Raletz, a columnist for the St. Joseph News-Press:
Vice President Joe Biden told a crowd at a mid-Missouri factory Thursday what Tom Carnahan hesitated to admit to himself about a Northwest Missouri wind energy project.
A $300 million, 100-turbine wind farm slated for DeKalb County "was on hold" until recently, Mr. Biden said. Banks and investors were turning away the Wind Capital Group, which has been eyeing a location six miles south of King City for its next farm, because of economic conditions.
"We never really liked to say it out loud," said Mr. Carnahan, president/founder of Wind Capital Group…A few months ago, the banks were closed. Banks now have confidence to move forward ... The stimulus changed everything."
WCG did not get its $90 million, but it got something just as good. According to a company press release:
…the federal stimulus package, included several provisions that encouraged the development of wind energy projects…Key among these provisions is the extension of the federal production tax credit (PTC), which would have otherwise expired, providing an incentive to construct wind energy projects in 2009 and 2010. The ARRA (stimulus) also established a new, temporary Department of Energy loan guarantee for renewable energy, which has provided better access to lending markets for wind energy providers.
The same press release states that the project “will use turbines built by GE Energy and transformers built by members of the UAW union at the ABB plant in Jefferson City, Missouri.” That’s nice. CWG’s initial projects used turbines built in India.
Biden claimed, “Clean energy, renewable energy ... where nobody has to do anything except the wind blow.” Biden apparently believes in free lunches. Too bad there are not any. Taxpayers have to work harder and longer to subsidize wind’s economic inefficiencies. For the privilege, they get to pay higher electric bills.
It is not known how much CEO Carnahan’s family went to bat for him. It really doesn’t matter. The appearance is what counts. He might claim that he should not be precluded from seeking help from the government if other companies are doing the same. But that’s just the point. No private party should benefit from government intervention in the economy.
The problem with divorcing wind technology from the rigors of the free market is that decisions about who gets what are ultimately decided in favor of those who can best game the system. Tom Carnahan is especially well positioned to do so.
Peter Flaherty is NLPC President. Spencer Meads contributed research to this posting.