Congress recently acted at the last minute to renew a giant tax subsidy for Wall Street investors and the richest Americans. Sadly, in almost all cases, such dead-of-night maneuvers to increase corporate subsidies and tax breaks for the wealthy are hardly breaking news.
But when Democrats and progressives applaud this continued subsidy for the wealthy and Wall Street -- in fact when they agree to a "compromise" that allows for the export of U.S. oil to win this corporate subsidy, that is worth our closest attention.
The facts are not in dispute. Via the 2016 Omnibus spending bill, Democrats and most progressives in Congress agreed to lift the ban on the export of U.S. oil in exchange for a tax break for those who install solar panels on homes. This credit was sought by Wall Street because it benefits big investor-backed companies like Solar City -- but it will be paid for mostly by renters and lower-income Americans who can't afford to install solar panels where they live.
I know from experience I just lost the attention of 90 percent of my audience. Once something is called "solar energy" it is seen by many as automatically beneficial. Clearly Democrats and progressives in Congress had such feelings when the agreed to a massive tax credit for wealthy Americans, paid for by poor Americans. But for the few truly curious and for those still open to argument even after "solar" is uttered, here are the facts:
Even though roof-top solar is still up to three times more expensive than large-scale solar installations, it is favored by Wall Street because it generates billions in profits. These investors have figured out how to win taxpayer subsidies and game the utility pricing system.
Big Wall-Street backed companies usually provide long term solar leases to customers, not solar installations owned by the homeowners. They use tax breaks and other incentives to generate a 15 to 20 percent return on investment for their investors. Poor customers and renters subsidize that generous profit by paying higher bills. The biggest winners -- Wall Street leviathans like Goldman Sachs, JP Morgan Chase and Citi Group -- help bundle these subsidized solar leases into "securities," just as they bundled sub-prime mortgages before the housing crash.
In California alone, poorer customers now subsidize richer customers to the tune of $160 million per year. The California Public Utilities Commission estimates that "net metering," which is what the local subsidy is called, will total $1.1 billion per year by 2020 -- and all of those costs are passed from the wealthy customers and Wall Street investors to poorer customers. In other words, it is a subsidy of the rich paid for by the poor.
The biggest rooftop solar players, like Solar City, saw their stock surge after the credit was extended. They are highly profitable because they both take generous taxpayer subsidies while paying nearly poverty wages. They are not unionized - which is of particular concern to people like me who help keep families in the middle class with union jobs in the energy sector.
Beyond a doubt, the two major problems facing America today are the threat of climate change and the still growing gap between rich and poor. As a nation, we need to commit ourselves to solving both of these enormous challenges.
And the good news is there are many ways we can do both -- including much needed new investments in the kind of large scale, cost-effective solar installations that allow the general public to use green power. Greater investments in energy efficiency are much cheaper than rooftop solar, and they can be directed to poorer families to help address the growing issue of energy poverty.
The fact that such large-scale solar investments and energy efficiency programs usually pay living wages to the workers who build and maintain them is an added benefit.
Sure, rooftop solar sounds good. But a subsidy for the wealthiest Americans using the least efficient renewable energy systems at a cost of lifting the ban on oil exports, with the bill paid for by the poorest?
How does that sound to you?
That is what just happened.