Rick Perry

Rick Perry Pushed Crony Capitalism in Texas. Will He Do the Same at Dept. of Energy?

Former Texas governor supported taxpayer-funded slush funds for favored businesses, including some that went bankrupt.

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PETE MAROVICH/EPA/Newscom

It was 2006 and Texas Gov. Rick Perry was well ahead of the curve.

More than 10 years before he would be picked to serve in Donald Trump's presidential administration, he was already promising to make things great again, through the power of his government.

"Our prosperity is dependent on coming up with the next big idea that will fuel the economy of tomorrow," he told a group of businesses executives and political appointees in a speech on August 30 of that year. "That is the greatness of America, a place where entrepreneurs risk capital to make amazing ideas a reality."

It might come as some surprise that Perry's passionate comments in defense of entrepreneurialism and free markets were being made to the members of the Emerging Technology Fund, then Perry's newest and boldest step into taxpayer-funded economic development. Over the next five years, the ETF would spend more than $342 million in public money on 153 different grants and awards. At the same time, the fund came under fire from state auditors and independent fiscal watchdogs for being opaque and self-serving. It funneled money to some prominent donors of Perry's political campaigns, allowed board members to have contracts with companies applying for handouts, and funded at least one business that later declared bankruptcy.

That is the contradiction that sums up Rick Perry's time as governor of Texas. While presiding over a period of strong economic growth and claiming to be a believer in free markets, Perry stoked the furnace with taxpayer dollars and openly encouraged crony capitalism not only in state government, but local governments, too.

"If you hook a prospective employer on the line for your community," he promised in 2005 while speaking to the Texas Economic Development Council. "Give my office a call and we'll see what we can do to help reel them in."

Perry was never shy about—as his new boss might put it—the art of the deal, but some of those deals went bad. In 2007, Perry's ETF invested $2 million in Xtreme Power, a Texas-based battery manufacturer that was trying to develop large-scale energy storage technology. The company filed for bankruptcy in 2014, joining a long list of tech firms that have chased the golden goose of large-scale energy storage and public-sector handouts.

Another investor in Xtreme Power: the federal government. The U.S. Department of Energy, in 2012, gave Xtreme Power a $279,000 grant.

Now, Perry has been tapped by Trump to run the federal Department of Energy—a department Perry once famously forgot to remember that he wanted to eliminate, something he apparently now forgets. Unlike its portrayal in a recent hit television show, the Department of Energy is less of a shadowy government agency conducting research into alternate dimensions and more of a clearinghouse for millions of dollars of federal subsidies, boondoggles, and handouts.

According to the Cato Institute, the Department of Energy spent about $17 billion in 2016 on nuclear weapons research, development, and security, along with environmental cleanup of nuclear weapons sites. The other $10 billion of the department's $27 billion annual budget was spent on subsidies for everything from research into fusion energy to propping up wind and solar programs. There's no shortage of questionable spending included in the department's ledgers, and getting a grant is as easy as "vowing to expand production of energy-efficient gas furnaces." That's what Carrier, the Indiana-based air conditioning company that was the first recipient of the Trump administration's largesse, promised to do in 2013 in exchange for a $5.1 million grant from DoE, according to a National Review investigation.

A presidential administration that wants to offer taxpayer-funded bribes to American companies as a backdoor method of directing the economy would likely get a lot of use out of the Department of Energy's grant programs. Appointing someone like Perry to run the show makes sense, at least from Trump's point of view.

Michael Quinn Sullivan, president of Empower Texans, a nonprofit that advocates for fiscal responsibility from the state government, concedes that Perry is not without his flaws but argues that he is a good choice to run the Department of Energy. Sullivan points to Perry's history of holding the line on state budgets and trimming the overall size of government in Texas. Those things, not questionable spending programs like the ETF, should be the former governor's legacy, he says.

Perry's previous calls for abolishing the department are not hypocrisy to Sullivan, but rather an encouraging sign.

"I worry whenever I see cheerleaders for a government agency picked to run that agency," he told Reason in a phone interview Tuesday. "Perry is going to be much more likely to ask the questions like 'should we even be doing this?'"

Perhaps he will, but Perry didn't seem too keen on asking those questions about the ETF, and there were red flags almost from the day the fund was assembled. Board members and members of application review committees were not required to sign conflict of interest disclosure statements. Those people were the first to review a potential project and determine whether it should be awarded taxpayer money, state auditors noted in 2011. Meetings were not open to the public, and even though the ETF board was required to abide by Texas' open records law, application information was treated as confidential and was not disclosed to the public.

The lack of transparency created an environment where cronyism could thrive. One member of the ETF's advisory committee had consulting contracts with at least two recipients of ETF awards at the time that those recipients received those awards, auditors later found. Since there were no minutes of the ETF's meetings—the most basic form of public accountability expected of government bodies—the auditors couldn't determine, after the fact, whether that committee member had advocated or voted for the awards.

A Dallas Morning News investigation found that $16 million from the fund went to firms in which major Perry contributors were either investors or officers, while $27 million went to companies founded or advised by six members of the ETF advisory board.

Citing the poor results and negative reviews from the state auditor, Texas Gov. Greg Abbott shuttered the ETF program shortly after taking office in 2015.

Source: Bureau of Labor Statistics; Google

The ETF, its funding of companies like Xtreme Energy, and its eventual shuttering amid ethical and economic concerns, is perhaps the most high profile example of the problems with Perry's view of the relationship between government and the economy. Yet it's hardly the only example of how cronyism flourished in Texas during his tenure.

Before the ETF, there was the $295 million Texas Enterprise Fund, created in 2003 during Perry's first term as governor. Texas Instruments, Vought Aircraft, Home Depot, Citgo, and Tyson Foods were among the companies that benefitted from the TEF between 2003 and 2007. Perry was so prolific in handing out subsidies to get companies to relocate to the Lone Star State that the TEF was recognized by Site Selection Magazine, a trade publication that essentially advises corporations about which governments are likely to give them the best goodies, as Texas' "not-so-secret-weapon" in landing major companies.

Sullivan called the Texas Enterprise Fund "a slush fund for corporate welfare." Those blemishes aside, he said, Perry was a strong advocate for free market policies that got government out of the way.

There's no doubt that Texas' economy has boomed over the past two decades, powering through the 2008 recession and emerging from it as one of the best states in the country to live and work. The unemployment rate in Texas peaked at 8.4 percent in mid-2009, when the national rate was hovering around 10 percent. Take a look at a chart showing the state's labor force—the measure of the number of people working—and you'd think the so-called Great Recession was a myth.

Those things happened in spite of and not because of programs such as the Emerging Technology Fund and the Texas Enterprise Fund, which were financied by a largely unseen process that drained dollars out of Texans' wallets in order to plump up favored companies' bottom lines. Perry should be—and has been—praised for his efforts to improve the underlying conditions of Texas' economy. He should also be held accountable for approving government programs that amounted to nothing more than corporate welfare.

For now we're left to wonder which version of Rick Perry will show up to run the Department of Energy. Will we get the passionate defender of free markets who cut government budgets and wanted to once abolish the federal department he's next in line to run? Or will we see more crony capitalism?

NEXT: What's really the matter with North Carolina?

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  1. Yes. Yes he will.

    1. Perhaps. But Trump hasn’t promised federal funds to keep companies in the US, though Pence did it with Indiana taxpayer funds. Secondly, Perry said he wanted to get rid of the DOE, so that’s a good sign, and Trump may hold him to it.

      Still, what Trump will do is a big guess. But I think Perry would like to engage in big money corporate welfare for the money he might make from it. Whether he does, remains to be seen.

  2. “Is that *not* what its for?”
    – Solyndra Executive, genuinely curious

    1. Where would funding come from if not the government?

      Checkmate.

    2. +1 “Was that wrong?” speech

  3. Rick Perry has glasses now. That old Rick Perry didn’t have glasses. Therefore the new Rick Perry will be the opposite of the old Rick Perry because he wears glasses.

    1. That guy with the glasses is Rick Perry? Are you sure?

    2. Kind of like Spock’s beard? Hmmm….

      1. That a really cruel thing to say about Mariette Hartley and Nurse Chapel, Swiss.

      2. I quite enjoy Spock’s Beard.

    3. Its weird that there isn’t a single quote from Rick Perry about either his disagreement with Abbot shuttering his program or a desire to continue to hand out money at DoE.

  4. OT: Merry Christmas

    So this morning I had an appointment with my doctor. While I was there, both the check-in and check-out nurses had the nerve, the unmitigated gall, to wish me Merry Christmas! Me! An atheist! You know what I did? I looked both of them right in the eyes and said “Thank you, and to you as well.” It’s already become Donald Trump’s America.

    BTW, the visit was to confirm that I do in fact have a UTI. Merry Christmas indeed.

    1. BTW, the visit was to confirm that I do in fact have a UTI

      *searches for Shocked Face*

      1. Shut up, you! This was not because of the stones. The last one I had fired out over a month ago.

        1. You’re almost as bad as Fist’s and his Prostate Denial.

          Oh, I did relate your anecdotes about your digging out kidney stones out of your urethra with a paperclip to Dr. ZG. Her response (roughly translated): “Your friend, he is either brave when very drunk, very cheap and never buys his wife a new dress, or incredibly stupid and stubbornly deluded as invincible.”

          1. Tell her some of each, I wasn’t drunk. Although being in a lot of pain will make you do things similar to when you’re drunk.

            1. Also, it was a plastic coated paper clip that I soaked in alcohol for about 10 minutes. I was like kidney stone MacGyver.

              1. With chewing gum also?

                1. I may have been chewing gum to keep from biting my tongue, but I’m not 100% sure.

                  1. That would be gums. I’m sorry to hear that. Hopefully this will make you forget.

                    1. Why thank you kindly sir.

                      *doffs cap*

        2. This was not because of the stones

          You had an… encounter with Keith Richards?

          1. Where do you think the UTI came fro?

    2. I’m free with god blessing right back in their faces. What do I care if I don’t believe in it? It’s a very kind sentiment.

      I also like to goddamn. Me, a puny mortal, inviting a supreme being to punish my enemies. That’s pretty hardcore.

  5. I’m unsure this says what you mean it to say. Perry has first-hand experience at how bad the government is at picking winners and losers in emerging energy technology so he will automatically engage in the same behavior at DoE?

    Also, wasn’t reason just cheerleading Texas’s “libertarian” growth? The following seems more like Trumpism on a state scale.

    Before the ETF, there was the $295 million Texas Enterprise Fund, created in 2003 during Perry’s first term as governor. Texas Instruments, Vought Aircraft, Home Depot, Citgo, and Tyson Foods were among the companies that benefitted from the TEF between 2003 and 2007. Perry was so prolific in handing out subsidies to get companies to relocate to the Lone Star State that the TEF was recognized by Site Selection Magazine, a trade publication that essentially advises corporations about which governments are likely to give them the best goodies, as Texas’ “not-so-secret-weapon” in landing major companies

    .

    1. I know right? For a guy named reason, he sure does have a lot of conflicting positions.

      1. Hugh, you’re being an asshole about the wrong thing. Boehm holds the same opinion, only offers no defense but:

        Those things happened in spite of and not because of programs such as the Emerging Technology Fund and the Texas Enterprise Fund,

        So he is towing the company lion, I am questioning the company lion.

        1. Gotta be an asshole about something.

        2. I can only assume you’re referencing the video they published the other day, where some guy who doesn’t work for reason made a claim about Texas’ libertarian bonafides. You do realize that publishing an interview with a person doesn’t necessarily mean that the interviewer, much less the publication, endorses what they say, right?

          1. I pretty much assume that when reason chooses to publish something NOT by their own staff about how libertarian something is without publishing a “yeah-but” that they are, in fact, endorsing and giving voice to an opinion. You are totally right that writers for reason can publish opinions that reason itself does not endorse. You are totally wrong that every time someone says reason pushes something that you need to trot out this fact.

            1. You are totally wrong that every time someone says reason pushes something that you need to trot out this fact.

              It should be repeated.

              1. It should be repeated that Hugh is totally wrong, or repeat the fact that “Publication doesn’t constitute endorsement”?

                I agree about the latter. However, i think its not a matter of either/or but a matter of degree.

                e.g. if Reason didn’t think Steve Chapman ‘makes good points’, he wouldn’t be published here.

                I think if something is touted in a headline (e.g. “California Should Be More Like Texas”), that constitutes an editorial endorsement. If it specifies it as the view of a guest-writer (e.g. “Erica Grieder: California Should be More Like Texas”), its not.

                Reason is an editorial-magazine by default, so its not always so cut & dried as it might be in a newspaper, where Editorial & Op-Ed is clearly distinguished.

                1. I would say that because reason is an editorial magazine almost anything they choose to push that isn’t written by one of their regular contributors is an editorial position — unless they stake a different editorial position in the attached article. Reason DOES broadly agree with Shika Dalmia on immigration, but not entirely. So while she may make a point that goes off the reason plank, if she writes 10 articles in a row about why Trump is going to be bad for immigration,and Nick Gillespie chimes in with one and nobody takes the contra, it isn’t crazy to think that reason thinks Trump is going to be bad for immigration. Hugh wants to make this individualist argument that you can’t collectivize opinion and say reason as a magazine has one, and it simply isn’t true. Reason does have an editorial opinion as an entity that is (hopefully) the intentional craft of its editors.

          2. Hugh,
            Has anyone ever told you have a friendly demeanor and intelligent remarks? Please cite if they did.

  6. Yes, but he’s going to help kill off a few agencies we all want to see go, if he can just remember the names…

    1. Eliminate first, remember later!

      1. I saw, I came, I conquered!

      2. We have to eliminate them to remember what they are.

        1. One of my favorite Pelosi quotes.

    2. He should just cut/fire any program or employee whose name he can’t remember.

  7. Don’t expect much. The guy is a moron who has been on the taxpayer’s teat his entire life.

    1. Sometimes I think all of Trump’s appointments are just for trolling the left.

      1. Just sometimes?

        1. It’s the sole criteria well that and being a crafty soulless corporate rapacious bottom liner.

    2. You must be confused, he wears glasses.

  8. This article might reach a larger audience at someplace like The Rolling Stone, but while Boehm is fearing the future of energy with Rick Perry in charge, let’s look at what Obama has done for us as the current director of “a clearinghouse for [Billions] of dollars of federal subsidies, boondoggles, and handouts.”
    Evergreen Solar ($25 million)
    SpectraWatt ($500,000)
    Solyndra ($535 million)
    Beacon Power ($43 million)
    Nevada Geothermal ($98.5 million)
    SunPower ($1.2 billion)
    First Solar ($1.46 billion)
    Babcock and Brown ($178 million)
    EnerDel’s subsidiary Ener1 ($118.5 million)
    Amonix ($5.9 million)

    And gee, while most of us pay $.02 to $.14 per thousand watts for electricity, some of our current Leader’s friends are able to produce(before bailing out with our money) electricity for maybe $.68 per WATT.

    1. while Boehm is fearing the future of energy with Rick Perry in charge, let’s look at what Obama has done for us as the current director of “a clearinghouse for [Billions] of dollars of federal subsidies, boondoggles, and handouts.”

      You’re going to bring up Obama? What about BOOOOOSH!!!?

    2. You forgot to include the billions in [glorified golf-cart] subsidies.

      In September 2012, the Congressional Budget Office estimated that the U.S. government was on course to subsidize EV production and sales to the tune of $7.5 billion through 2019

      1. U.S. government was on course

        Well, there you go. He was just teeing up.

  9. Or will we see more crony capitalism?

    I will cover up my eyes, and it will go away.

  10. Science Deniers.

    I’ll probably post this a few times today.

      1. Why is that guy named Gina? His parents must have hated him.

        1. His first name is Man, but he thought it was too common.

    1. “The agency changes its view on fracking and water without evidence”

      Well, that’s never happened before, right?

  11. Fuck you cut spending.

  12. Bitch when he appoints people with no government experience, bitch when he appoints politicians… bitch, bitch, bitch.

  13. Perry has been blessed by having stupid opponents.

    Remember that whole kerfuffle about him giving HPV vaccines to young girls? It instantly went from all of Perry’s buddies got sweetheart jobs with Merck, to Perry wants to give your daughters vaccines so they can have tons of sex. So every right thinking person kind of had to side with Perry against the crazy antivaxxers, and the cronyism issue went away.

    A similar thing happened with the I-35 alternate route. Pretty much anyone who’s been stuck in traffic in Austin or DFW thinks that it would be nice to have an alternate route for all those Mexican trucks to go around major cities, but instead it became some crazed referendum on NAFTA. So Oklahoma blocked the roads the trucks could use, but not the actual trucks, and that was the end of that crazy scheme.

    1. The Trans Texas Corridor. It was supposed to be a massive highway with designated truck lanes and railroad tracks from Laredo to Dallas, via Houston. It was killed as much because Texas adores eminient domain, and TxDOT was planning on using ED lavishly. I worked for TxDOT at the time, in a different division, but I recall that another problem was that the first set of contracts went to a company from Spain that would have been able to keep the money from tolls for, basically, the rest of time.

      1. yeah you would think the massive ED abuses and zero bid contracts might have shut down the program. But nope, it was the complaints that it would just bring in more Mexicans that killed the trans-Texas corridor.

        FWIW I think it was a sound idea. Seriously, the flight from Austin Bergstrom to DFW is shorter than the drive from ABI to Round Rock at rush hour, but the execution was definitely lacking.

        1. It’ wasn’t a bad idea. In fact, inter-city passenger rail between Austin, Dallas, and Houston would be a great idea.

          I didn’t recall the terror over the hoards of invading Mexicans, but now that you’ve reminded me, I’m depressed over it again.

      2. Am I misremembering that the toll scheme was not particularly different from what the state was already doing, specifically all the toll roads around Austin?

        1. It’s been such a long time that I don’t remember, but my very vague memory is that it was very similar.

  14. I probably wouldn’t have my doctorate and would be working a less satisfying job without the intervention of the DOE to fund my mostly useless thesis on distillation. That said, I think a libertarian strong point is being able to separate personal benefit from political views. Thanks for the help DOE, I hope you get disassembled!

    1. There will always be plenty of dissembling where the DoE is concerned.

    2. DOE to fund my mostly useless thesis on distillation

      This sounds to me like you spent too much time boozing at college.

      1. Given what we were doing, the research group was TRAGICALLY short on booze jokes.

    3. Yes “I got mine” adherents speaking up on what’s good for everyone has a particularly rancid odor of hypocrisy to it.

  15. Pretty sure I mentioned this sort of thing back when Perry was first named. Having been here through his governorship, I am all too aware of his crony habits. No, he’s not all bad, but he’s all crony, and has been for a while.

    1. Well, sure. The only significant powers the Governor of Texas has are to veto/sign bills, make various appointments to fixed-term positions when vacancies open up, and to hand out the cash from a few slush funds. The first only applies during the short period the legislature is in session anyway, so the job is almost entirely about appointing cronies and handing out cash to cronies.

    2. Unfortunately, that’s historically how Texas politics works. The Democrats here are pretty much the same only with the requisite SJW baggage and a belief in magic instead of math.

  16. 153 grants and only one recipient went bankrupt? Sounds like they were too conservative and only gave grants to companies that didn’t need it.

    I am having trouble getting upset about DOE funding basic research into fusion energy. That seems pretty much on target to me.

  17. Of the $17 B they spend on nuclear weapons, about $6 B is spent on cleaning up their messes according to the 2017 budget. (“Environmental management”)

  18. James Richard Perry – the phony rightwing

    http://www.newswithviews.com/N…..igh127.htm

  19. “Will we get the passionate defender of free markets who cut government budgets and wanted to once abolish the federal department he’s next in line to run? Or will we see more crony capitalism?”

    Yes.

  20. And yet the people of Texas kept electing him to sit in that chair.

  21. For now we’re left to wonder which version of Rick Perry will show up to run the Department of Energy. Will we get the passionate defender of free markets who cut government budgets and wanted to once abolish the federal department he’s next in line to run? Or will we see more crony capitalism?

    Will reason.com continue playing the libertarian con? You are asking if Rick Perry who was always a crony capitalist will do something else that he was rumored to do, as if it was a real thing.

  22. Rick Perry has no business in the administration. He should be sitting on death row for the murder of Todd Willingham.

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