Michelle Flowers says it took eight months for her to get her food stamp benefits reinstated after they lapsed last year — and she only got it done, she said, because she was laid off from her job at a call center and finally had time.
The battery recycler Ascend Elements was riding high in 2023, flush with hundreds of millions of dollars in federal funding.
The seed money provided to the Massachusetts company, which launched in 2017, was one of several large bets the Biden administration placed on the green future as it essentially created a venture capital arm at the Department of Energy and other agencies. In the movies, VCs almost always score big through their early investments in future behemoths (e.g., PayPal or Meta when it was Facebook). In real life, those jackpots are the exception, not the rule – many of the deals go south.
Alas, Washington isn’t Hollywood, and the government isn’t spending celluloid dollars. In April, Ascend Elements filed for bankruptcy, leaving U.S. taxpayers out nearly $320 million.
Government funding of private companies is receiving new scrutiny as the Trump administration is upping the ante on such efforts by demanding that the feds receive an equity stake for their largesse. While this approach is leading the government into uncharted waters, experts say the operative concept – using taxpayer money to make risky bets on private companies – has a long and troubled history. The bankruptcy of Solyndra, a maker of niche solar panels the Obama administration had given $535 million in 2009, became shorthand for the problems that occur when government tries to pick winners and losers in the marketplace.
“It generally doesn’t work,” said Steven Neil Kaplan, a professor of entrepreneurship and innovation at the University of Chicago’s Booth business school. “There are three problems with it, namely that the government doesn’t usually have the best information; two, it’s going to be political; and three, the incentives aren’t in place to pay for performance.”
It is still too early to assess the Trump administration’s investments in private corporations, but the hundreds of billions of dollars shoveled out the door by the Biden administration through the Investment Infrastructure and Jobs Act provide some insight into the challenges the government faces when it turns into a venture capitalist. RealClearInvestigations’ review of one sliver of that spending – $1.68 billion in grants awarded in 2023 under the umbrella of “Energy, Efficiency and Renewable Energy, Energy Programs, Energy” – demonstrates how difficult it can be to follow the money and assess the impact when taxpayer funds are doled out to private corporations.
