[House Hearing, 112 Congress]
[From the U.S. Government Publishing Office]




 
    THE GREEN ENERGY DEBACLE: WHERE HAS ALL THE TAXPAYER MONEY GONE?

=======================================================================

                                HEARING

                               before the

                  SUBCOMMITTEE ON REGULATORY AFFAIRS,
               STIMULUS OVERSIGHT AND GOVERNMENT SPENDING

                                 of the

                         COMMITTEE ON OVERSIGHT
                         AND GOVERNMENT REFORM

                        HOUSE OF REPRESENTATIVES

                      ONE HUNDRED TWELFTH CONGRESS

                             FIRST SESSION

                               __________

                            NOVEMBER 2, 2011

                               __________

                           Serial No. 112-120

                               __________

Printed for the use of the Committee on Oversight and Government Reform


         Available via the World Wide Web: http://www.fdsys.gov
                      http://www.house.gov/reform



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              COMMITTEE ON OVERSIGHT AND GOVERNMENT REFORM

                 DARRELL E. ISSA, California, Chairman
DAN BURTON, Indiana                  ELIJAH E. CUMMINGS, Maryland, 
JOHN L. MICA, Florida                    Ranking Minority Member
TODD RUSSELL PLATTS, Pennsylvania    EDOLPHUS TOWNS, New York
MICHAEL R. TURNER, Ohio              CAROLYN B. MALONEY, New York
PATRICK T. McHENRY, North Carolina   ELEANOR HOLMES NORTON, District of 
JIM JORDAN, Ohio                         Columbia
JASON CHAFFETZ, Utah                 DENNIS J. KUCINICH, Ohio
CONNIE MACK, Florida                 JOHN F. TIERNEY, Massachusetts
TIM WALBERG, Michigan                WM. LACY CLAY, Missouri
JAMES LANKFORD, Oklahoma             STEPHEN F. LYNCH, Massachusetts
JUSTIN AMASH, Michigan               JIM COOPER, Tennessee
ANN MARIE BUERKLE, New York          GERALD E. CONNOLLY, Virginia
PAUL A. GOSAR, Arizona               MIKE QUIGLEY, Illinois
RAUL R. LABRADOR, Idaho              DANNY K. DAVIS, Illinois
PATRICK MEEHAN, Pennsylvania         BRUCE L. BRALEY, Iowa
SCOTT DesJARLAIS, Tennessee          PETER WELCH, Vermont
JOE WALSH, Illinois                  JOHN A. YARMUTH, Kentucky
TREY GOWDY, South Carolina           CHRISTOPHER S. MURPHY, Connecticut
DENNIS A. ROSS, Florida              JACKIE SPEIER, California
FRANK C. GUINTA, New Hampshire
BLAKE FARENTHOLD, Texas
MIKE KELLY, Pennsylvania

                   Lawrence J. Brady, Staff Director
                John D. Cuaderes, Deputy Staff Director
                     Robert Borden, General Counsel
                       Linda A. Good, Chief Clerk
                 David Rapallo, Minority Staff Director

 Subcommittee on Regulatory Affairs, Stimulus Oversight and Government 
                                Spending

                       JIM JORDAN, Ohio, Chairman
ANN MARIE BUERKLE, New York, Vice    DENNIS J. KUCINICH, Ohio, Ranking 
    Chairwoman                           Minority Member
CONNIE MACK, Florida                 JIM COOPER, Tennessee
RAUL R. LABRADOR, Idaho              JACKIE SPEIER, California
SCOTT DesJARLAIS, Tennessee          BRUCE L. BRALEY, Iowa
FRANK C. GUINTA, New Hampshire
MIKE KELLY, Pennsylvania


                            C O N T E N T S

                              ----------                              
                                                                   Page
Hearing held on November 2, 2011.................................     1
Statement of:
    Friedman, Gregory H., Inspector General, U.S. Department of 
      Energy; Elliot P. Lewis, Assistant Inspector General, U.S. 
      Department of Energy; W. David Montgomery, Ph.D., senior 
      vice president, National Economic Research Associates, 
      Inc.; Greg Kats, president, Capital-E; and Brett McMahon, 
      vice president of business development, Miller & Long 
      Concrete Construction......................................     5
        Friedman, Gregory H......................................     5
        Kats, Greg...............................................    49
        Lewis, Elliot P..........................................    21
        McMahon, Brett...........................................    61
        Montgomery, W. David.....................................    28
Letters, statements, etc., submitted for the record by:
    Friedman, Gregory H., Inspector General, U.S. Department of 
      Energy, prepared statement of..............................     8
    Kats, Greg, president, Capital-E, prepared statement of......    51
    Lewis, Elliot P., Assistant Inspector General, U.S. 
      Department of Energy, prepared statement of................    23
    McMahon, Brett, vice president of business development, 
      Miller & Long Concrete Construction, prepared statement of.    63
    Montgomery, W. David, Ph.D., senior vice president, National 
      Economic Research Associates, Inc., prepared statement of..    30


    THE GREEN ENERGY DEBACLE: WHERE HAS ALL THE TAXPAYER MONEY GONE?

                              ----------                              


                      WEDNESDAY, NOVEMBER 2, 2011

                  House of Representatives,
      Subcommittee on Regulatory Affairs, Stimulus 
                 Oversight and Government Spending,
              Committee on Oversight and Government Reform,
                                                    Washington, DC.
    The subcommittee met, pursuant to notice, at 10:06 a.m., in 
room 2154, Rayburn House Office Building, Hon. Jim Jordan 
(chairman of the subcommittee) presiding.
    Present: Representatives Jordan, Buerkle, Labrador, 
DesJarlais, Kelly, Kucinich, and Cummings (ex officio).
    Staff present: Drew Colliatie, staff assistant; Tyler 
Grimm, professional staff member; Christopher Hixon, deputy 
chief counsel, oversight; Kristina M. Moore, senior counsel; 
Michael Whatley, professional staff member; Jaron Bourke, 
minority director of administration; Lisa Cody, minority 
investigator; Ashley Etienne, minority director of 
communications; Jennifer Hoffman, minority press secretary; and 
Carla Hultberg, minority chief clerk.
    Mr. Jordan. The subcommittee will come to order. We want to 
welcome our guests and our panel today. Mr. Kats is on his way. 
We have been informed that he will be here in just a few 
minutes. So we will get started with opening statements and 
then get right to our testimony.
    Today's hearing continues the committee's oversight and 
examination of this administration's effort to use taxpayer 
dollars to fund a massive green energy experiment. The 2009 
stimulus directed around $90 billion toward green initiatives, 
including loan guarantees for green energy firms, money to 
weatherize homes, green jobs training grants, and many other 
projects.
    The President told the American people that, ``green jobs 
would be a major force not just for environmental conservation, 
but for economic recovery.'' The President said that we will 
harness the Sun and the winds and the soil to fuel our cars and 
to run our factories. And he promised that our country would 
create millions of green jobs, which would help us compete in 
the global economy. However, over 2\1/2\ years into this 
experiment, the available evidence demonstrates these efforts 
have wasted vast sums of taxpayer dollars, and have possibly 
caused economic harm.
    Even the Washington Post editorial board recently noted 
that ``green jobs offer a dubious rationale for Federal support 
of clean-energy technology. To the extent that government 
creates jobs by subsidizing particular companies, it does so by 
shifting resources that might have created jobs elsewhere.''
    This committee welcomes and embraces new businesses and 
technologies with the aim of increasing environmental 
conservation, but it is important that we--that these be 
brought about by market forces, not political whims. Today we 
have a panel of expert witnesses who can speak to how the 
administration's green energy efforts have panned out and where 
we should go from here.
    The inspectors general from both the Department of Labor 
and Department of Energy have done thorough work evaluating the 
challenges we faced as the economy has undergone these green 
initiatives. In an audit released in September, the Department 
of Labor's inspector general found that a $500 million program 
for training people with so-called green skills has so far 
produced only 1,336 jobs that have lasted over 6 months, with 
$163 million already spent. This amounts to $121,856 per 
successful green trainee.
    While these numbers are abysmal, the truth of the matter is 
even worse. Many of these people who went through this training 
to obtain, ``green skills'' are likely worse off because of it. 
Instead of spending time looking for sustainable work or 
acquiring marketable skills, they acquired skills that are 
simply not valued in the marketplace today. This is yet again 
another well-intentioned government program that appears to 
harm many of the people it was designed to help.
    In his inauguration speech, the President stated in areas 
where government initiatives fail, ``programs will end.'' And 
those of us who manage the public's dollars will be held to 
account to spend wisely, to reform bad habits. The available 
evidence seems to indicate that programs put forth by this 
administration aimed at promoting green energy and green jobs 
failed, and, frankly, should end. With an unemployment rate 
still over 9 percent and nearly $15 trillion accumulated in 
debt, the American people deserve more than to see their 
government going further into the red with programs that simply 
aren't doing the job.
    With that, I would yield to my good friend from Cleveland 
for his opening statement.
    Mr. Kucinich. Thank you very much, Mr. Chairman.
    I think it is right to critically analyze the performance 
of specific programs, and that is the purpose of this 
committee, and I appreciate your role as chair in doing that. 
The attention that has been focused on the Solyndra matter is a 
case in point. These are legitimate questions that have to be 
asked. But the concern that I have is that the run-up to this 
meeting, and generally to the critical analysis of the 
administration's inability to be able to bring forward a 
massive greenworks program, should not in any way deter us from 
moving forward with an effort on the part of the Federal 
Government to create a transition in our economy toward more 
sustainability in our energy and in our manufacturing.
    For example, I have long been an advocate of plussing up 
the NASA budget for the purposes of looking at areas of 
developing green microtechnologies where you could 
theoretically--now, it is theoretical--create millions of new 
jobs involved in the design--in the concept, design, 
engineering, manufacturing, installation, and maintenance of 
millions of wind and solar microtechnologies that would lower 
our carbon--reduce our carbon footprint, lower our energy 
costs, and enable an economic--an overall economic stimulus 
through jobs and lower energy costs.
    America cannot rely on coal, which is a nonsustainable form 
of energy, one that is damaging to our environment, for our 
long-term energy needs. We cannot rely on oil for our long-term 
energy needs. If we really had an accurate cost of a gallon of 
oil, we would have to factor in the use of our military, which 
has been increasingly used to be able to secure oil--access to 
oil around the world. And we can't rely on nuclear, which is a 
very shaky form of energy with respect to its security and the 
disposition of nuclear--the securing of nuclear waste. So we 
have to challenge the administration to come forward with new 
possibilities. And today, hopefully, we will hear from the 
Department of Defense about some of the directions that they 
are going in that might lead to some possibilities for the 
larger economy.
    America inevitably is going to have to go in a direction of 
green. Our economy must go in that direction. There is money to 
be made in those directions. The fact that we have seen failure 
at the beginning, which is important to note, because it--we 
need to know what not to do, should not cause us to conclude 
that there is little or no hope of being able to not just 
restore public confidence, but be able to restore our economy. 
Because in the end, that's what we are all concerned about, 
getting Americans back to work, and finding ways where America 
can seize the opportunity to catch the wave that is inevitably 
building of green technologies, and particularly with respect 
to energy.
    So I want to again thank the chair for holding this 
hearing, and I look forward to hearing the witnesses' 
testimony.
    Mr. Jordan. I thank the gentleman. I think he makes good 
points.
    I would just point out we are all for--I would think 
Members on this side of the aisle are for any new technologies 
that can help meet our technology energy needs. We just think 
the market is a much better and more efficient way of getting 
us there versus the kind of program we are going to hear about 
today from our witnesses.
    Mr. Kucinich. Would my friend yield?
    Mr. Jordan. Be happy to yield.
    Mr. Kucinich. Of the things that I remember a few years 
ago, and this was in an investor's advice that was being given 
to people who were interested in energy stocks, this may have 
been 6 years ago, people were being told not to invest in green 
energy, or wind and solar energy because they were being seen 
as ``fads,'' but to put the investment dollar into oil, coal, 
nuclear. Now, the market sometimes will go for the short-term 
gain, using whatever resources are there, to max them out 
immediately for maximum profit, without any necessary concern 
about the society at large and about the future potential.
    So, you know, I understand, you and I have had an agreement 
on the government not interfering in the market with respect to 
the bailout. We both voted the same way on that. But I am also 
saying that market forces are not always according to Adam 
Smith's invisible hand here.
    Mr. Jordan. Does the gentleman from Tennessee--or excuse 
me, we now have our vice chairman walking in. Does the 
gentlelady from New York wish to make an opening statement?
    Ms. Buerkle. Thank you, Mr. Chairman.
    Mr. Jordan. The gentlelady is recognized for 5 minutes.
    Ms. Buerkle. Thank you, Mr. Chairman.
    At a time when people across the United States are 
struggling to rebuild our economy and create jobs, I would like 
to thank our chairman for calling this hearing to evaluate the 
process and the substance of the MACT regulations.
    Sorry about that. Wrong hearing.
    Thank you, Mr. Chairman. Thank you for calling this 
hearing. I will yield back my time. Thank you.
    Mr. Jordan. The gentleman from Maryland, distinguished 
ranking member of the full committee, is recognized.
    Mr. Cummings. Thank you very much, Mr. Chairman.
    I want to associate myself with the comments of Mr. 
Kucinich, and saying that I think we have to be very careful 
and not throw the baby out with the bathwater. I think 
government does have a role to play here, and a very important 
role. The Recovery Act provided some $49 billion to a variety 
of green energy projects, and that funding has been used to 
develop crucial new technologies, train workers for the 21st-
century jobs, and improve our national security.
    The Departments of Energy, Defense, and Labor, and the 
General Services Administration have been instrumental in this 
effort; however, only the inspectors general from the 
Departments of Labor and Energy are here today. The title of 
today's hearing is ``Where Has All the Taxpayer Money Gone?'' 
One of the largest recipients of the Federal dollars for green 
energy programs is the Department of Defense. In a 2010 
Memorandum of Understanding with the Department of Energy, the 
Defense Department said, ``Energy efficiency can serve as a 
force multiplier, increasing the range and endurance of forces 
in the field, while reducing the number of combat forces 
diverted to protect energy supply lines, as well as reducing 
long-term energy costs.''
    In addition, we are developing green jobs here at home. The 
Brookings Institution estimates that in my home State, for 
example, the green jobs in Maryland employ some 43,207 
residents, and pay out an average of $44,790 per year, which is 
higher than the median salary in my State. At a time when the 
middle class of nearly every State is shrinking, these figures 
are indeed good news.
    Finally, if we are going to remain competitive in the 
global economy, we must be willing to make investments going 
forward. According to a report released by the Pew Charitable 
Trusts in March, China and Germany are leading in green energy 
investments, and other countries like Italy, Mexico, and 
Argentina are rapidly increasing their investments. The United 
States, on the other hand, is falling behind. If we are not 
willing to make long-term investments, we risk limiting our 
competitiveness in the years to come, something we simply 
cannot afford to do.
    So I want to thank the witnesses for being here today. I 
look forward to your testimony. And I want to, as we look at 
this particular problem, I want to know how it is that, you 
know, are we looking at one situation here? Are we doing a 
blanket indictment of all our efforts in this regard? Because I 
think if we are going to paint with one brush this entire 
effort, I think that would be a major mistake.
    And with that, I yield back.
    Mr. Jordan. I thank the gentleman.
    Does anyone else wish to make an opening statement?
    All right. With that, we will introduce our panel. We first 
have Mr. Gregory Friedman, who is the inspector general at the 
U.S. Department of Energy. We want to thank the Honorable 
Gregory Friedman for being here today. Mr. Elliott Lewis, the 
Assistant Inspector General for Audit at the U.S. Department of 
Labor. We also have with us Dr. David Montgomery, senior vice 
president, National Economic Research Associates, Inc., and is 
formerly Assistant Director of the CBO, as well as Deputy 
Assistant Secretary for Policy at the U.S. Department of 
Energy. As I indicated earlier, Mr. Kats is on his way. And we 
also have with us Mr. Brett McMahon, who is president of Miller 
& Long, D.C. And we appreciate our panel being here.
    We are going to go ahead and swear you guys in. When Mr. 
Kats gets here, we will do that. This is a rule of the 
committee. So if you would just please stand up, raise your 
right hands.
    [Witnesses sworn.]
    Mr. Jordan. Let the record show that everyone answered in 
the affirmative.
    You guys know the rules. Five minutes, you know, you get 
the light system there. So stick to that as best you can. And 
we will start right down the row here with Mr. Friedman. You 
are recognized for your 5 minutes.

  STATEMENTS OF GREGORY H. FRIEDMAN, INSPECTOR GENERAL, U.S. 
  DEPARTMENT OF ENERGY; ELLIOT P. LEWIS, ASSISTANT INSPECTOR 
GENERAL, U.S. DEPARTMENT OF ENERGY; W. DAVID MONTGOMERY, PH.D., 
 SENIOR VICE PRESIDENT, NATIONAL ECONOMIC RESEARCH ASSOCIATES, 
INC.; GREG KATS, PRESIDENT, CAPITAL-E; AND BRETT MCMAHON, VICE 
   PRESIDENT OF BUSINESS DEVELOPMENT, MILLER & LONG CONCRETE 
                          CONSTRUCTION

                STATEMENT OF GREGORY H. FRIEDMAN

    Mr. Friedman. Thank you, Mr. Chairman.
    Mr. Chairman and members of the subcommittee, I appreciate 
the opportunity to testify today at your request on the work of 
the Office of Inspector General concerning the Department of 
Energy's implementation of the American Recovery and 
Reinvestment Act of 2009. The intent of the Recovery Act was to 
quickly stimulate the economy and create jobs, while fostering 
an unprecedented level of accountability and transparency.
    The Department received $35.2 billion in Recovery Act 
funding, dramatically increasing the budgets traditionally 
available for initiatives such as home weatherization, 
environmental cleanup, science projects, and loan guarantees to 
advance energy technologies. With the passage of the Recovery 
Act, the Office of Inspector General immediately launched 
efforts to assist the Department. We have issued 68 reports 
covering all major Recovery Act initiatives and activities, 
initiated over 100 Recovery Act-related criminal 
investigations, and conducted 300 fraud awareness briefings 
around the country for nearly 16,000 Federal contractors, 
State, local, and other officials.
    Based on our body of work, we found the efforts by the 
Department to use Recovery Act funds to stimulate the economy 
was more challenging than many had originally envisioned. Our 
reviews identified a fairly consistent pattern of delays in the 
pace at which Recovery Act funds had been expended by grant and 
other financial assistance recipients. As of October 22, 2011, 
according to the Department's own records, recipient 
organizations had spent only 55 percent of available Recovery 
Act funds.
    In terms of the Department's ability to meet the Recovery 
Act goals, we found that weatherization work, for example, was 
often of questionable quality. In one recent State-level 
report, we found that 9 of the 17 homes visited failed 
inspections because of substandard workmanship. The success of 
the weatherization program was affected by other management 
issues as well. For example, one major subrecipient gave 
preferential treatment to its own employees and their relatives 
for weatherization services over other eligible residents who 
were elderly or who had special needs.
    The Loan Guarantee Program could not always readily 
demonstrate through documentation how it resolved or mitigated 
relevant risks prior to granting loan guarantees. And one of 
the Department's environmental management sites, relying on 
Recovery Act funding, adopted an approach to radioactive waste 
processing that could have cost about $25 million more than 
necessary.
    Further, the Office of Inspector General is investigating 
various Recovery Act-related schemes, including submission of 
false information, mischarging, and misrepresenting test 
results. To date, these investigations have resulted in over 
$2.3 million in monetary recoveries, as well as a number of 
criminal prosecutions. This includes a series of cases 
involving fictitious claims for travel per diem, resulting in 
the recovery of $1 million alone in Recovery Act funds.
    The Recovery Act established extremely challenging goals 
for the Department. Notwithstanding the Department's intense 
effort to meet these goals, we have a number of overarching 
observations about the Recovery Act's implementation. These 
included, first, the demanding nature of the Recovery Act's 
implementation placed an enormous strain on the Department's 
then-existing infrastructure. Second, dealing with a diverse 
and complex set of departmental stakeholders complicated 
Recovery Act startup, administration, and execution. Third, 
although shovel-ready projects were the symbolic goal of the 
Recovery Act, in most cases execution was more challenging and 
time-consuming than had been anticipated. Fourth, 
infrastructure at the State and local levels was overwhelmed. 
Ironically, in several States those charged with implementing 
the Recovery Act's provisions had been furloughed due to 
economic conditions in those States. Fifth, the pace of actual 
expenditures was significantly slowed because of the time 
needed to understand and to address specific requirements of 
the Recovery Act. And finally, recipients of Recovery Act 
funding expressed their frustration with what they described as 
overly complex and burdensome reporting requirements. In 
summary, a combination of massive funding, high expectations, 
and inadequate infrastructure resulted at times in less than 
optimal performance.
    Over the next year we will further review Recovery Act 
expenditures in a number of high-risk areas, and our 
investigative efforts continue. Additionally, we are evaluating 
how the Department plans to deal with the loss of over 4,000 
environmental management jobs by the end of this year, a 
significant downsizing of the work force that was dedicated to 
Recovery Act-funded work. Further, we are refining our 
observations on the Department's implementation of the Recovery 
Act, and are drafting a report to highlight other lessons 
learned from this experience.
    Mr. Chairman, this concludes my statement. I would be 
pleased to answer any questions that you or the subcommittee 
may have.
    Mr. Jordan. I thank the gentleman for his testimony.
    [The prepared statement of Mr. Friedman follows:]

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    Mr. Jordan. Mr. Lewis, you are now recognized.

                  STATEMENT OF ELLIOT P. LEWIS

    Mr. Lewis. Good morning, Mr. Chairman and members of the 
subcommittee. Thank you for inviting me to testify today on the 
OIG's recent report regarding the Department's Green Jobs 
program.
    As part of our oversight responsibilities, and in response 
to a congressional request, we conducted this audit to 
determine how the Employment and Training Administration had 
defined green jobs; how they used the $500 million in funds 
provided by the Recovery Act; and what the grantees had 
reported achieving with respect to training and placement of 
workers, including employment retention.
    The OIG's findings and recommendations are based on the 
latest data reported by the grantees to ETA as of June 30, 
2011. We found that ETA defined green jobs as jobs associated 
with products and services that use renewable energy sources, 
reduce pollution, and conserve natural resources. ETA derived 
this definition from the Green Jobs Act, the Energy Policy Act, 
and from its own data base of occupational requirements and 
worker attributes.
    The Recovery Act mandated that funds be used for projects 
that prepare workers for careers in energy efficiency and 
renewable energy as described in the Workforce Investment Act. 
Therefore, we determined that the definition of green jobs used 
by ETA to award grants was in compliance with the requirements 
of the Recovery Act.
    The second objective of our audit was to determine how the 
funds had been used. We found that of the $500 million 
provided, ETA awarded the majority of the funding, or $435 
million, for training programs to prepare workers, help 
targeted populations overcome barriers to employment, help 
participants obtain industry-recognized credentials, and place 
them into green jobs. Overall, our audit found that although 
ETA obligated all of the $490 million in grants as of June 30, 
2011, grantees had reported expenditures of $163 million, or 33 
percent of the amount awarded, while approximately 73 percent 
of the training and nontraining grant periods had already 
elapsed.
    Our audit also evaluated what grantees had reported 
achieving with respect to training and placement of workers, 
including employment retention. We found that with 61 percent 
of training grant periods having elapsed, grantees had reported 
achieving limited performance targets for serving and placing 
workers. Grantees reported that 53,000 individuals were served, 
42 percent of the targeted 125,000; 47,000 participants 
enrolled in training, about 40 percent of the targeted 115,000; 
26,000 participants completed training, 27 percent of the 
targeted 97,000; and 8,000 participants were placed into 
employment, 10 percent of the program's goal of 80,000; and 
finally, 1,300 participants retained employment for more than 6 
months, about 2 percent of the planned 70,000.
    It is important to emphasize that these training programs 
are still under way, and we would expect to see changes in the 
reported results by the time the programs are completed.
    In response to our audit, ETA officials stated that they 
expected performance to significantly increase over time due to 
an initial lag during the startup phase of the grants. However, 
ETA could not demonstrate that grantees were on target to meet 
planned outcomes, nor was there a plan to ensure that they 
could. In addition, according to interviews we conducted with 
ETA regional officials early this year, grantees had expressed 
concerns about the overall poor economic conditions, and that 
green jobs had not materialized, and therefore job placements 
had been much less than expected. As a result, we are concerned 
as to whether grantees will effectively use the funds and 
deliver targeted employment outcomes by the end of their 
grants.
    Accordingly, we recommended that ETA evaluate the Green 
Jobs program, and in so doing obtain a current estimate of 
funds each grantee will realistically spend given the current 
job market and the demand for green job-related skills. This 
will help the Department identify and correct any performance 
issues before the grants expire, and assess whether the grant 
funds will remain unspent, and could therefore be recouped and 
returned to the U.S. Treasury so they can be available for 
other purposes.
    In response to our recommendations, ETA stated that it has 
put in place appropriate measures to monitor progress and 
provide technical assistance to help ensure ultimate grant 
success for those grantees that may be at risk of not 
delivering all of their outcomes. ETA further stated that it 
has obligated all of its Recovery Act funds, and that it 
expects all funds will have been expended by September 30, 
2013, as required by the Office of Management and Budget.
    In conclusion, Mr. Chairman, based upon the results of our 
audit, we believe the Department has an opportunity to evaluate 
the performance of the Green Jobs program while it is under way 
in order to correct any performance issues and maximize 
outcomes.
    Mr. Chairman, thank you for the opportunity to testify on 
our work, and I would be pleased to answer any questions that 
you or any members of the subcommittee may have.
    Mr. Jordan. Thank you, Mr. Lewis.
    [The prepared statement of Mr. Lewis follows:]

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    Mr. Jordan. Dr. Montgomery, you are now recognized.

                STATEMENT OF W. DAVID MONTGOMERY

    Mr. Montgomery. Thank you, Mr. Chairman and members of the 
subcommittee. I was honored by your invitation to testify 
today. And I think I can summarize my testimony in five points.
    First is that the project failures and wasted money that we 
are discussing today are not isolated examples of improper 
execution of an otherwise worthwhile and potentially successful 
program. The entire concept of using stimulus funds to create a 
green economy through energy spending is misguided.
    Second point I would make to develop that is that green 
energy has none of the characteristics that are required to 
make effective use of stimulus funding. In countering a 
recession, the objective is to expend funds as quickly as 
possible--and Mr. Friedman has pointed out that that hasn't 
been happening--and also to phaseout that spending as the 
economy improves. This kind of stimulus objective is simply 
inconsistent with the Department of Energy's mission. Applying 
this public works approach to energy would repeat the cycle of 
boom and bust that has contributed to the failure of most of 
our past efforts to deploy and--to develop and deploy new 
energy technology.
    My third point would be that the Recovery Act funds have 
also been applied at the wrong end of the research, 
development, and deployment spectrum, where there is the least 
economic rationale for government involvement and the highest 
likelihood of waste and failure. I point out in my written 
testimony the great disproportion that existed in the 
Department of Energy even before the stimulus funds compared to 
other research organizations in terms of how much money goes 
into basic research and how much goes into funding for large-
scale demonstration projects. The stimulus program made that 
far, far worse.
    Now, the reason that economists give for a government role 
in R&D is the inability of private researchers to appropriate 
the full value of their research. This is a serious problem 
across the board in basic and in some applied research, but it 
is only a problem at the deployment and commercialization stage 
if there is no market for their product.
    The second point is that peer review makes it possible for 
government research organizations to do a good job of 
allocating funds to basic research, but government has proven 
over and over again that it cannot consistently pick winners in 
the application of known technology.
    And finally, there is a reason why so much money goes into 
this deployment and technology demonstration and why it fails. 
These are the projects that have electoral significance. They 
attract lobbying, rent seeking, and porkbarrel politics, and 
therefore come to be chosen independent of either their 
economic or technical merit.
    My fourth point would be that the kinds of up-front funding 
provided by the Recovery Act basically create hothouse plants. 
And I think this has a lot do with what we saw in Solyndra and 
with other bankruptcies that we are seeing today. Some of these 
hothouse plants will survive--my wife is occasionally lucky--
but it is the exception.
    And again, there is a reason for the failures. Up-front 
funding is not a universal substitute for the lack of a market. 
Green is not enough. Green technology that produces energy that 
costs more than its current fossil or nuclear substitutes is 
not going to be purchased, and consumers are not going to be 
willing to pay enough to cover the cost of ongoing business for 
many of the projects that are being funded under the Recovery 
Act. The Recovery Act, therefore, has turned into a back-door 
and ineffective substitute for what Congress has decided it 
does not want, a price on carbon. If there is no price on 
carbon, there is going to be not much of a market for green 
technology, and these projects will fail. In other words, if it 
is not a good idea to put a price on carbon, it is an even 
worse idea to loan money and fund projects that need it in 
order to survive.
    So that, I think, would be my final point, that, in my 
opinion, it is very likely that most of the Recovery Act 
projects will fail in one of three senses. Some will fail to 
survive even with the subsidy that is provided in up-front 
funding and loans if the value of their product in the market 
isn't enough to cover the ongoing costs of producing it. And I 
think, to be fair, many of these projects were originally 
conceived with the hope that there would be a price on carbon, 
as Mr. Kucinich pointed out.
    Second, the Recovery Act funding will fail to jump-start 
technologies or industries, because if every new venture has to 
have an up-front subsidy in order to overcome the capital 
barrier that exists because we don't put a price on carbon and 
don't have a market demand for green technology, then things 
will end with the Recovery Act projects.
    And finally, it seems to me that these projects will fail 
to provide a return to the taxpayer ever if the Recovery Act 
fails to--if the Recovery Act is supporting projects that can't 
pass the cost-benefits test on their own.
    Thank you, Mr. Chairman.
    Mr. Jordan. Thank you, Mr. Montgomery.
    [The prepared statement of Mr. Montgomery follows:]

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    Mr. Jordan. Mr. Kats, if you would please rise. We just 
need to swear you in. You walked in just after we swore 
everyone else in. So if you would just please stand up and 
stand and raise your right hand.
    [Witness sworn.]
    Mr. Jordan. All right. Thank you, Mr. Kats. Sorry about 
that. We know were you caught in traffic. We welcome you to the 
committee, and you are now recognized for 5 minutes.

                     STATEMENT OF GREG KATS

    Mr. Kats. Thank you very much, Mr. Chairman and members of 
the subcommittee. My background is in finance. I have a MBA 
from Stanford. I worked as the Director of Financing for Energy 
Efficiency and Renewable Energy in the Department of Energy for 
the last 10 years. I have been involved in private-equity 
financing for clean energy. I have been involved in funding 
billions of dollars of clean energy projects, both at a project 
development and a venture capital perspective.
    The way I look at it is from a finance perspective, and I 
can say that our international competitors, Japan, Germany, and 
China, are not sitting still. They are heavily subsidizing this 
race to a clean-energy future, which is a transition that 
pretty much all companies, certainly the U.S. military, and the 
large majority of governments now recognize we are involved in. 
So the support for ARRA funding and clean energy, although it 
has had a steep ramp-up and had some teething problems, on 
balance was well timed and has been very important in 
supporting the U.S. ability to compete in this critical area.
    A recent Brookings study found that between 2003 and 2010 
in this clean energy area, there has been an 8.3 percent job 
growth. It has been one of the most important areas of job 
growth domestically and is an area that our competitors are 
investing in. So in terms of economic opportunity and job 
growth, it has been an important driver for the economy.
    The U.S. military is committed to clean energy because, in 
its view, and based on its actual experience, clean energy 
allows them to deliver their military purpose and security more 
cost-effectively than reliance on fossil fuels. So the security 
dimension of clean energy has become much more important. The 
U.S. military has been very clear on this particular issue.
    There was a--several independent nonpartisan reviews about 
the impact of ARRA funding on clean energy. The Council of 
Economic Advisers in November 2010 found that as of the third 
quarter of 2010, between 2.7 and 3.7 million new jobs had been 
created from this ARRA funding, and that it had a positive 
impact on GDP of 2.7 percent. In May 2011, U.S. Congressional 
Budget Office found that in the first quarter of 2011, the 
impact of this ARRA funding had been an increase of between 1.1 
and 3.1 percent GDP growth, and an increase in full-time 
employment of between 1.6 million and 4.6 million people. These 
success stories are being built on.
    As discussed, this very steep ramp-up in funding was hard 
to deliver because the personnel were not there. As that 
funding gets deployed in the field, we expect to see an 
increase in economic productivity and an increase in 
employment.
    The last point I would make is that the OMB in its 1705 
Loan Guarantee Program assumed and budgeted for a 12.85 percent 
default rate, an almost 13 percent default rate. Solyndra, and 
more recently Beacon, which went bankrupt, represented about 
1.6 percent of that total funding. We expect to receive back a 
portion, that is recover a portion, of that funding. So the 
total default rate to date, based on these two companies, will 
be about 1 percent. That is less than one-tenth of the 
projected default rate expected for and planned for by OMB.
    About 90 percent of ARRA funding goes to large, clean-
energy-generation projects. The large U.S. companies like 
General Electric who are competing in international markets 
have found this funding critical to their ability to compete 
and to expand and build on jobs. Funding for Johnson Controls, 
for example, in building a 3,000-person clean battery bank--
excuse me, production facility in Michigan, will create 3,000 
direct jobs and many more indirect jobs at a cost of under 
$100,000 per job.
    So it is not a perfect story, but given the rate of ramp-up 
expected from this funding, the success story, I think, has 
been pretty clear. At least 1 million to 3 million jobs 
created, a lot of strengthening of U.S. competitiveness on this 
critical international issue. And for investors in clean 
technology, it is really a commitment to the future. It is 
really a vote for those who are optimistic about America's 
capacity to compete successfully in this critical market.
    Thank you.
    Mr. Jordan. Thank you, Mr. Kats.
    [The prepared statement of Mr. Kats follows:]

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    Mr. Jordan. Mr. McMahon, you are recognized for 5 minutes.

                   STATEMENT OF BRETT MCMAHON

    Mr. McMahon. Thank you very much, Chairman Jordan, Ranking 
Member Kucinich, and other members of the subcommittee. My name 
is Brad McMahon. I am the president of the recently founded 
Miller & Long DC, Inc. We are a Washington, D.C.-based 
subcontractor. My previous employer, Miller & Long Co., Inc., 
was founded in D.C. in 1947. It is one of the Nation's oldest 
and largest subcontractors. The company regularly employs 
approximately 1,500 people as form building carpenters, cement 
finishers, reinforcing rodmen, layout engineers, equipment 
operators, laborers, everything that you could think of under 
the Sun for our particular trade. We have provided employment 
for over 75,000 D.C.-area residents over the last 64 years.
    During my 19 years in construction, I personally have 
overseen over 50 high-rise concrete structures, and have been 
proud to provide employment for over several thousand 
construction workers, both here in D.C. and in the Carolinas.
    Also active in a number of organizations here locally, 
including the D.C. Construction Trades Academy at Cardoza 
Senior High School, where we provide the only vocational 
training available for construction workers in the District of 
Columbia.
    I first heard the term ``green collar jobs'' about 4 years 
ago. Like many, I was not sure what the term meant. And since 
so much of the focus seemed to center around my industry, I 
thought it would be wise to at least learn some more about it.
    I learned over time that the term was actually a lot more 
political than actual. It became clear that it was just a new 
label on jobs that actually have existed for years. A lot of 
the public relations effort has gone into trying to claim there 
is something new here, and, unfortunately, that is not the 
case.
    Considering this--consider, please, the following example, 
because I thought this was the clearest I have ever seen, by a 
gentleman named Mark Anderberg from the Texas Workforce 
Development Commission in a report labeled ``Green Collar 
Workers and Other Mythical Creatures.'' In it, if you have the 
testimony in front of you, you will see the picture of two 
different toilets. One is a low-flow toilet; one is the old-
fashioned one. And the question that begs from this is what are 
the skill differences for installing these two things? What is 
the possible difference between installing this one and that 
one? And the problem is there isn't one. However, the claim is 
that somehow they are trying to say that there is a new job 
created because you can install the low-flow toilet instead of 
the old one.
    For a nonconstruction example, I would hope we could all 
agree that the skills necessary to drive an electric car are 
the same skills necessary to drive the largest SUV. The same 
driver can operate either vehicle just as the same plumber 
could install either toilet. The difference is in the product 
and not the operator. However, a great deal of effort and tax 
dollars have gone to the purpose of convincing the public that 
the plumber who installs a low-flow toilet should now be called 
a green collar plumber, and that the new label should count as 
a new job. This kind of thing makes those of us in construction 
wonder where somebody would come up with that idea.
    There is something important about the new label that I did 
not understand at first. If the new label is more than just a 
political talking point, but is actually a formal, new, capital 
O ``Occupation Title'' per the U.S. Department of Labor, then a 
new problem is created. When a new occupation is designated for 
the construction industry, a new set of standards is developed. 
In addition to the antiquated and complex determination of a 
prevailing wage, a new apprenticeship training standard is 
established, even though in this case the only difference is in 
nomenclature, not in skill set.
    With that understanding, I will relate how this program 
unfolded in the District of Columbia. On October 4, 2007, I 
attended a meeting in the D.C. Department of Employment 
Services. The purpose of the meeting was to discuss the rollout 
of the Green Collar Jobs initiative. The meeting was basically 
handled by the staff from the Center for American Progress. The 
handout we received is attached to this document. I kept it 
because it laid out the goals of their program very clearly. It 
even included, for the first time I had ever received one from 
a D.C.-based meeting, a bar chart schedule detailing new 
mandatory apprenticeships that will be required to work on any 
project covered by the then brand-new at that time D.C. Green 
Building Act.
    This proposal was a great concern to me because it took my 
company 26 years to get our apprenticeship program passed by 
the D.C. Apprenticeship Council. In fact, the only reason we 
were finally accepted was because the Apprenticeship Council at 
that point had its first and only nonunion member. Union 
control over apprenticeship boards is a common roadblock for 
the 87 percent of construction workers who have chosen the 
merit shop over unions.
    So when a new occupation gets its own apprenticeship 
training standards, the participating employers must apply to 
have their program accepted. Having spent the better part of 
three decades getting our current program accepted, we were not 
looking forward to going through the whole process again.
    In the District, there is a local hiring ordinance known as 
First Source, which includes mandatory registered 
apprenticeship participation. First Source only applies to 
those projects that receive a certain level of assistance from 
the District Government. What is shown in this handout is that 
the advocates were planning to take the First Source mandatory 
apprenticeship concept to a new level. The inset here from the 
project schedule is taken from that handout. The advocates were 
planning to make new green collar apprenticeship mandates apply 
to every project covered by the new D.C. Green Building Act. 
Unfortunately, the District of Columbia Green Building Act 
actually covers every brick and stick, public or private, 
inside the city limits of Washington, D.C. And we were 
basically looking at being barred from working inside the 
District.
    Thank you.
    Mr. Jordan. Thank you, Mr. McMahon.
    [The prepared statement of Mr. McMahon follows:]

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    Mr. Jordan. We appreciate everyone's testimony.
    Mr. Friedman and Mr. Lewis, based on your testimony, it 
looks like both this weatherization program and the Green Jobs 
training program are, by, I guess, anyone's conclusion, just a 
complete failure. And I want to start with you, Mr. Lewis, and 
walk through this. Based on your testimony, I think I got the 
numbers right, $490 million is out the door, but only $163 
million has been spent. Is that accurate?
    Mr. Lewis. Correct. That was as of June 30.
    Mr. Jordan. Okay. And how many of the $163, $162.8, $163 
million spent, how many people have been trained?
    Mr. Lewis. Completed training, 26,000 people.
    Mr. Jordan. And how many now have a job that--how many have 
been successful, been trained, and actually are working in this 
area and have a job for any length of time, let's say 6 months?
    Mr. Lewis. Of the 26,000, about 8,000 people were placed 
into a job.
    Mr. Jordan. Do you know the math on that? So we have spent 
$163 million and trained 20-some thousand; only 8,000 have 
actually received a job. Do you know how much we are spending 
per person?
    Mr. Lewis. I didn't. I had not calculated that.
    Mr. Jordan. Several thousand dollars probably, right?
    Mr. Lewis. Yes.
    Mr. Jordan. Maybe even close to--I mean, maybe 
approaching--well, it wouldn't be quite 100,000, but lots of 
money spent per job. Do you see any way--in fact, what were the 
targets that the Department of Energy had laid out?
    Mr. Lewis. Department of Labor.
    Mr. Jordan. Department of Labor, I am sorry.
    Mr. Lewis. The total grants added up to a plan to train 
about 97,000 people. We are at 26,000 had been trained at this 
point. I do believe at the end of June there were around 20,000 
people that were in the program.
    Mr. Jordan. All right. Do we know anything about the folks 
in this program? Have they been laid off? Are they on 
unemployment? What do we know about the people in the program? 
Do we know?
    Mr. Lewis. Some of the people in the program were 
unemployed, although there were--some of the grants were also 
designed to target incumbent workers, so workers who were 
already employed, but wanted to upgrade their skills to qualify 
for a green job or to maintain a job.
    Mr. Jordan. Okay. And so I guess there are two perspectives 
to look at. You have several thousand people who have been 
trained. Some of them may have been receiving some kind of 
benefit from the taxpayer. Now the taxpayer is helping them get 
trained. So they could be receiving unemployment and getting 
these additional dollars spent. Most of them are not getting a 
job. So we've got the harm to the taxpayer, but, frankly, also 
the harm to the individual who went through this training and 
has maybe not a whole lot to show for it.
    Mr. Lewis. If we have trained them in something that there 
is not a job for, then, yes, we are not doing them the best 
benefit.
    Mr. Jordan. Do you think there is any way we can recover--
you said $490 million out the door, but only $163 million 
spent. Is there any way we can recover the additional over 
$200-some million?
    Mr. Lewis. Of course, those numbers were as of June. So 
this quarter, which we don't have the reports in yet, there 
would be more funding spent. I don't know how much.
    Mr. Jordan. Isn't there at some point when you say this 
program is not working? This actually reminds me of another 
program we have had hearings on, the HAMP program, which was 
designed to help 4 million homeowners stay in their homes and 
helped a few thousand. Lots of money out the door, but lots of 
money hasn't. So is there any way you think we can get the 
money back, not do any more harm to people, put them in 
training that is not going to benefit them, and actually get 
the money back for the taxpayer?
    Mr. Lewis. Yeah. And that is what we have asked the 
Department to do, to look at how much at this point has not 
been spent. And if it isn't going to be----
    Mr. Jordan. So is it--the inspector general of the 
Department, is your recommendation that we stop the program?
    Mr. Lewis. I would want to have more information from the 
Department.
    Mr. Jordan. How much more do you need? When you look at 
these numbers and how bad they are, how much more do you need 
to say this is just not working?
    Mr. Lewis. Well, I don't know. You know, I know there is 
20,000 people in the mill at the end of June. You know, whether 
these numbers are going to pick up, there is something we 
haven't seen, I can't say.
    Mr. Jordan. I mean, at some point we say how much longer do 
we give----
    Mr. Lewis. But the placement numbers are very far behind.
    Mr. Jordan. Yeah, very bad. And is there ever a chance to 
catch up to the targets they said they were going to hit?
    Mr. Lewis. They could catch up to their targets for 
serving. They would have to make a significant increase to 
catch up with their placement targets.
    Mr. Jordan. Exactly.
    Mr. Friedman, real quickly, because I have about 40 seconds 
here, the weatherization program, you mentioned, I think, in 
your testimony, if I got it right, 9 of 17 homes you visited--
was this homes or commercial?
    Mr. Friedman. Homes.
    Mr. Jordan. Okay. So homes you visited did not pass 
inspection.
    Mr. Friedman. That is correct.
    Mr. Jordan. How were these 17--did you select them, did the 
Department of Energy tell you? How were these 17 selected?
    Mr. Friedman. They were not selected by the Department of 
Energy. We don't work that way, Mr. Chairman.
    Mr. Jordan. Okay. You just randomly picked them or----
    Mr. Friedman. They were picked in conjunction with the 
States in some cases. This is one example. There are other 
examples in other jurisdictions of rejection rates because of 
inadequate work and poor quality work.
    Mr. Jordan. But based on your sample, over half----
    Mr. Friedman. That is correct.
    Mr. Jordan [continuing]. Over half the homes didn't meet 
the requirements.
    Mr. Friedman. In that jurisdiction, that's correct.
    Mr. Jordan. So I want to ask you the same question I asked 
Mr. Lewis: Is this weatherization program, based upon what you 
have seen out there, over half the homes not meeting the 
criteria that is outlined and meeting the standard, is this a 
program we should end?
    Mr. Friedman. Mr. Chairman, that is a long--requires an 
extensive answer. So give me a minute or two, if you don't 
mind. This program has been in effect since the mid-1970's. The 
funding, on an annualized basis for the last several years, has 
been about $400 million a year.
    Mr. Jordan. It seems to me it doesn't matter how long it 
has been in existence. If it is bad, it is bad, and it should 
have ended a long time ago. Maybe that is a reason that--but 
that shouldn't prohibit us from doing the right thing and 
ending it if it's that bad.
    Mr. Friedman. Absolutely. And I am not suggesting that is 
the case. What I am suggesting is the fact that the program has 
a long history, it is a mixed bag. I wouldn't say it is a total 
failure. There have been some successes, a number of successes. 
The Department reports that over 500,000 homes have been 
weatherized around the Nation. So there have been some 
successes, there have been some failures. I think--I would 
suggest that we fix it, not necessarily end it.
    Mr. Jordan. Okay. Not a total failure, just a failure in a 
lot of ways.
    With that, I will yield to my friend from Ohio, the 
gentleman Mr. Kucinich.
    Mr. Kucinich. Mr. Friedman, you are not recommending, 
though, that the U.S. Government suspend all weatherization 
programs; is that correct?
    Mr. Friedman. That's correct.
    Mr. Kucinich. And this recent audit was 9 of 17 weatherized 
homes visited--that were visited failed inspections because of 
substandard workmanship. You are not concluding, based on that, 
that all weatherization programs don't work; is that right?
    Mr. Friedman. That's correct. But, Mr. Kucinich, let me put 
this in some perspective. We visited 10 or 20 States around the 
Nation, and this was reflective of one particular jurisdiction, 
the work of one particular community action organization. There 
were problems in a number of jurisdictions that need to be 
corrected if the program is going to be continued. The purpose 
of--what we were trying to achieve is a sort of a lessons 
learned. Here is what has gone wrong; here is what needs to be 
corrected if the political judgment is to continue this program 
going forward.
    Mr. Kucinich. Let's look at this. I mean, who uses 
weatherization programs? Primarily lower-income people. So we 
don't want to be in a position as a subcommittee in 
recommending that lower-income people don't get the help that 
they need. We want to do everything we can to lower their 
energy costs. So I think that this subcommittee has to be very, 
very careful about drawing any sweeping conclusions about 
failures that may exist in some areas.
    And I will certainly yield to my friend.
    Mr. Jordan. I think the gentleman makes a good point, but 
we certainly don't want to, whether it is a green jobs training 
program or a weatherization program, have a program that 
doesn't work; on one hand gives peoples false hope, on the 
other hand doesn't give them the standard that they are 
entitled to get if we are going to have the program.
    Mr. Kucinich. You and I are 100 percent in concurrence on 
saying that if Federal dollars are being spent, we expect the 
workmanship to be good. That is one of the reasons why I 
support Davis-Bacon requirements. It is a workmanship issue.
    And so I think that, you know, we are on the threshold of 
another winter. It snowed here last weekend. Temperatures are 
dropping. There is poor people shivering in their homes. We 
don't want to tell them that they are not going to have access 
to a weatherization program. I just want to be very careful 
about that.
    On the issue of workmanship, though, 100 percent in 
agreement with you. And we will get Mr. Friedman's help in how 
we tighten that up.
    Now, Mr. Kats, in the time that I have remaining, you know, 
there is an assertion being made here that somehow this green 
energy and the potential for profit in it is some kind of a 
myth. You are an investor in this, right? Isn't this your 
background?
    Mr. Kats. Yes, that's correct.
    Mr. Kucinich. I mean, can investors make money investing in 
green energy or not?
    Mr. Kats. Yes, they can. And----
    Mr. Kucinich. Do they?
    Mr. Kats. Yes, they do. There have been an increasing 
number of IPOs and sales to large corporates from firms that we 
have invested in. I am on the board of Tendril, for example, 
which is a smart grid company that has benefited from ARRA 
funding. Beginning last year they were in 100,000 homes, end 
this year it will be 4.2 million homes. We expect to get a 10X 
return on that. Some companies we have----
    Mr. Kucinich. You want to explain that for the uninitiated, 
a 10X return?
    Mr. Kats. So investments are made in the hope that we are 
going to make money. That doesn't always happen. Part of the 
portfolio is expected to not perform well, and others are 
expected to perform well. In the case of clean energy, we are 
seeing more and more companies that are performing well over 
time. And as they get purchased, or as they go public, the 
investors are returned money. And the expectation is that the 
money that they receive back exceeds the money they put in.
    Mr. Kucinich. Let me ask you this, the Department of 
Defense is spending a lot of money on green energy research, is 
it not.
    Mr. Kats. Yes.
    Mr. Kucinich. Why?
    Mr. Kats. They believe it reduces the cost for delivering 
support services in the field. They believe it reduces adverse 
security concerns. They believe it strengthens the military. 
They believe that clean energy is a more cost-effective way of 
delivering their obligation.
    Mr. Kucinich. Have you worked with people in the Department 
of Defense on any of these energy issues?
    Mr. Kats. Yes, I have. They're very excited about it. They 
think that it strengthens security in a lot of different ways, 
and on a cost-effectiveness basis, is a smart investment 
strategy.
    Mr. Kucinich. And I think it would be interesting for us to 
have a hearing just with the Department of Defense on this 
issue because what we're seeing is that those people who are 
inevitably charged to intervene on energy-related issues, with 
the geopolitics being what they are, are themselves cognizant 
of the imperative of moving toward green energy, and if the 
institution that drives one of the largest parts of the Federal 
Government is showing an interest in green energy, I think that 
not only should this committee pay attention to that, but I 
also think that Wall Street ought to be paying attention to 
that as well.
    Thank you, Mr. Kats. Thank you, Mr. Chairman.
    Mr. Jordan. I thank the gentleman. Just one followup 
question if I could with Mr. Friedman.
    Half of the homes that you looked at that did not meet the 
standard, do you know who did the work, was it a union 
contractor or nonunion contractor, do you know?
    Mr. Friedman. Well, Davis-Bacon--I don't know in those 
particular instances. Davis-Bacon, for the first time in its 
35- or 40-year history was introduced to the weatherization 
program as a result of the operation of the Recovery Act.
    Mr. Jordan. So it is likely--we were talking about union 
contractors doing this work?
    Mr. Friedman. I don't know. I can't answer that question.
    Mr. Jordan. But what you're saying, Davis-Bacon is being 
applied now, right, with the stimulus? It's a requirement now, 
correct?
    Mr. Friedman. I apologize, let me hear--I missed your 
statement. Go ahead, please.
    Mr. Jordan. Davis-Bacon is now required?
    Mr. Friedman. Correct.
    Mr. Jordan. You're charged with looking at stimulus dollars 
out the door?
    Mr. Friedman. Correct.
    Mr. Jordan. Your testimony was half the work done was not 
to standard, 9 out of 17?
    Mr. Friedman. Correct.
    Mr. Jordan. And so is it likely to conclude who did the 
work?
    Mr. Friedman. I can't make that conclusion because it could 
have people who were nonunion who were being paid Davis-Bacon 
wages.
    Mr. Kucinich. Would my friend yield?
    Mr. Jordan. Would be happy to yield.
    Mr. Kucinich. Since we're both from Ohio, I bet you a bag 
of Buckeyes that they weren't union contractors. Thank you.
    Mr. Jordan. I now yield to Dr. DesJarlais, gentleman from 
Tennessee.
    Mr. DesJarlais. Thank you, Mr. Chairman. I guess just to 
kind of bring things back in focus, we're here today as a 
subcommittee of oversight and reform to take a look at stimulus 
oversight in this case, and the hearing, of course, is entitled 
The Green Energy Debacle: Where has all the taxpayer money 
gone? And that's really why we're here. We're all here to make 
sure that all the good taxpayers are getting the best for their 
tax dollars, and I think, clearly, the stimulus program has not 
lived up to its expectation.
    So, Mr. Friedman, just to kind of maybe try to put a cap on 
the weatherization issue, we've been beating that horse here 
for a while. I think about $5 billion of the stimulus money was 
set aside for weatherization projects for paid contractors and 
nonprofit groups to make the homes of low-income Americans more 
energy efficient.
    Being from Tennessee, I think that the program has revealed 
countless instances of waste, fraud, and abuse, and in an audit 
in Tennessee, the Inspector General found that 246 energy 
measures installed in 41 homes revealed only a third were shown 
to meet Department-directed minimum energy savings-to-
investment ratios.
    So your office has done investigations of stimulus funded 
weatherization projects in many different States. Tennessee may 
be one, but what are some of the most egregious examples of the 
waste your office has uncovered?
    Mr. Friedman. Well, first, mischarging, that is, charging 
for work that was never accomplished. These are some of the 
schemes that we are currently investigating and have 
investigated. Second, paying premiums for products that could 
be purchased at lower cost. Third is charging for work that was 
never done in general. Fourth is abusing the priority sequence 
of those who could or should be receiving, were eligible to 
receive the weatherization work. And those are four or five of 
the most significant finds, and of course, the whole question 
of substandard, the quality of work issue. In some cases, it 
was actually life threatening.
    Mr. DesJarlais. Is it true that weatherization funds can be 
used to purchase brand new refrigerators or air conditioners?
    Mr. Friedman. I don't want to give you an inaccurate 
answer. Certainly, furnaces would be appropriate. I don't know 
about--did you say refrigerators?
    Mr. DesJarlais. Refrigerators, air conditioning.
    Mr. Friedman. There are programs that will give premiums 
other than weatherization for purchasing new appliances that 
are energy efficient. I don't believe it was covered under the 
weatherization program.
    Mr. DesJarlais. I'm not sure that would be found anywhere 
in the Constitution, that that would be a right, but rumor has 
it that is the case. How much weatherization money do you think 
we could recover at this point of the $5 billion?
    Mr. Friedman. I would suspect that there would be very 
little that's recoverable at this point.
    Mr. DesJarlais. Okay. Changing gears just a little bit, I 
think there was an article in maybe The Washington Post this 
morning, but were the State and local governments ready to 
receive the massive amounts of money that were allocated to 
them from the Department of Energy as part of the stimulus?
    Mr. Friedman. Unfortunately, they were not and that was an 
issue that I think was predictable, and we, in fact, did 
anticipate that that would be a problem.
    Mr. DesJarlais. So you don't think it was very wise to send 
millions of dollars to local governments who were in the 
process of laying off workers because of the recession, they 
couldn't handle this influx of money, they weren't ready and 
that contributed to the waste?
    Mr. Friedman. Well, not meaning to make a joke out of a 
very serious subject, but it's been equated to attaching a long 
hose to a fire hydrant, that the infrastructure--both at the 
Federal, State, and local level simply was not there to accept 
the burden.
    Mr. DesJarlais. Okay. So you think that that was a great 
contributor to the inefficiencies and the waste that the office 
has seen?
    Mr. Friedman. Certainly.
    Mr. DesJarlais. Okay. Thank you. Mr. Montgomery, you state 
in your testimony the mission of the Department of Energy and 
the purpose of the Recovery Act were not consistent. Could you 
please expand on this point for us?
    Mr. Montgomery. Yes. The requirements of an effective 
energy technology development program are essentially stable 
long-term funding. It also requires a careful selection 
process, especially if the money is being put at the R&D stage, 
and that involves proposals. It involves peer review. It 
involves the formation of a program in which the R&D stage is 
set.
    None of that fits with the classic prescription for 
stimulus, which is get the money in fast and turn it off 
quickly when it's no longer needed. That's exactly the opposite 
of what the Department of Energy needs, and it's the way we 
have killed any number of useful programs in the past. For 
example, the Solar Energy Initiative, I remember back in the 
1970's and early 1980's, was cut off just as it was beginning 
to get going somewhere, and in terms of production and bringing 
costs down.
    Mr. DesJarlais. Based on your decades of experience in 
energy policy, does the entire concept of promoting green jobs 
make economic sense?
    Mr. Montgomery. Not through programs like the Recovery Act. 
I would say that green jobs are a solution in search of a 
problem. It's not a way of dealing with climate change. It is 
not a way of dealing with the government's responsibilities for 
R&D. It's not a way of dealing with the other environmental 
issues that we face, and it is certainly not a necessity for 
getting the U.S. economy to grow. It's something that may or 
may not happen if we put policies in place for those other 
objectives, but it is not a program that has policies 
significant to itself.
    Mr. DesJarlais. Okay. And I'm out of time. Thank you, 
gentlemen.
    Mr. Jordan. I thank the gentleman from Tennessee. Will now 
recognize the vice chairman, followed by Mr. Kelly and Mr. 
Labrador--oh, excuse me. Mr. Kelly is up first.
    Mr. Kelly. Thank you, Mr. Chairman. Mr. Montgomery or 
Doctor, let's stay with you.
    I know in the opening statements we talked about one of the 
problems with our dependency on oil is that there's also a 
military investment made. If we were to do it domestically, if 
we had a really aggressive domestic energy policy, where we 
actually use our own resources--we know that a third of the 
world's coal is underneath our surface. We know that in Western 
Pennsylvania it's now being called the Saudi Arabia of natural 
gas. We have oil onshore, oil offshore. We've done an awful lot 
to hinder that development.
    And certainly, I listened to John Hoffmeister early in the 
spring. He said there's 2 million jobs, a minimum of 2 million 
jobs waiting right now in the energy sector if we were to have 
an energy policy, a strategy that was aggressive. And I'm 
listening to what you're saying. So the cost of military, it's 
true we do spend a lot of money in the military. But we 
wouldn't have to do it if we produced it in our own country. I 
mean, we wouldn't be spending petro dollars in countries whose 
ultimate goal is to annihilate us and we're funding that 
process.
    I have a difficult time when I hear that, yeah, we want 
jobs, we want jobs right now, but we keep gaming ourselves, you 
know, and this investment that we've made--and only in 
government, by the way. I come from the private sector, and I 
love this idea of these green jobs and you have to go at them, 
when you don't have to worry about a positive return on 
investment, you can waste a lot of taxpayer money.
    There's hardworking Americans whose money has been invested 
and I keep hearing this, there's an element of risk. And I 
understand there's an element of risk, but when you take hard-
earned American tax dollars, and you throw it at an agenda 
rather than at a strategy, and you see the waste, I mean, it 
must really rankle somebody like you, your whole life you have 
watched this happen. And only in this town, only in this town 
can you squander money and not worry about it because there's 
an endless supply of it. If you don't have enough money for 
that project, don't worry, we'll get more money. We'll just 
raise taxes and we'll throw some more money at that and we'll 
re-allot money to you.
    I think that's really where we're at today when we ask 
about this money has been wasted. There's nobody in the private 
sector that would continue to squander the capital that we're 
squandering right now on a reelection agenda and not on an 
energy policy that makes sense for America.
    And I want to hear words. Would it be possible, without 
government subsidies, for these green jobs to go forward? 
Because you know what, I'll tell you what, in my district, one 
of the local business owners, he has a marquee out in front of 
his place. He puts down ``green jobs equals red ink.'' And I 
tell you what, I think that guy has a better feel for what's 
going on about policies right now than a lot of folks inside 
this Beltway.
    So I mean, really without the subsidies, we talk about--
well, yeah, General Motors is willing to invest in the Volt. 
Well, no kidding. They've got a safety net underneath them. I 
mean market-driven means you can drive it off the lot, somebody 
wants to buy it, not you're going to throw somebody $7,500 of 
taxpayer money, Federal money, and $3,500 of Pennsylvania money 
for somebody to drive that car off the lot.
    And we're already seeing, by the way, and I know this 
because I'm a Chevy dealer, this great idea that we're going to 
produce 16,000 of these Volts this year. Well, we're selling 
about 500 a month. You do the math. There's 10,000 Volts that 
are going to have no home to go to. Being a dealer, I know 
whose driveway they end up in, or whose lot they end up in.
    Just tell me, without the government subsidies, who would 
venture into this wonderland, and I mean wonderland, wondering 
if they could possibly work if it was their own money?
    Mr. Montgomery. Thank you, Mr. Kelly. I think I heard three 
questions. Let me go back to the first one which was----
    Mr. Kelly. More frustrations than questions, I've got to 
tell you.
    Mr. Montgomery. Thank you. No, I think there were--well, 
there were three topics I would like to talk about.
    The first one is energy security. Most of the green jobs 
that we are hearing about now are either in the weatherization 
area, which we've heard talked about, classifying 
construction--certain construction jobs as green, or they have 
to deal with generating electricity because in the short term, 
the technologies that we are deploying are largely electricity-
related technologies. And the electricity technologies are 
already being supported by things like the State level 
renewable portfolio standards, and requirements of the various 
public accounts, California's requirements for renewable 
energy, and that's making a market. Again, it's created by 
government, but it's created by regulation.
    The opportunities in the near term for actually changing 
our oil imports are very, very limited on the green technology 
side because biofuels are going to be a long time to develop. 
They require serious breakthroughs in order to accomplish 
something.
    Electric vehicles I think you've described very accurately, 
that the market just does not exist for electric vehicles with 
the current price of electricity and the current price of those 
vehicles, except for people to whom they're a very expensive 
toy or people who will be given them for free.
    So what are we going to do about energy security? Green 
jobs program is not affecting energy security because if you 
define energy security as either reducing the amount of world 
oil supply that's produced by our enemies or reducing U.S. oil 
imports, their production is probably the most rapid way that 
we can do something about it. The transportation sector is 
going to be very hard to get off oil, and electricity doesn't 
consume oil, so putting money into electric technologies 
doesn't affect our oil balance at all.
    As far as government subsidies go, yes, I think that if--
once Congress makes--made the decision that there was not going 
to be a price of carbon in the market, that there was not going 
to be a cap and trade program or a carbon tax, that means that 
most--that any technology that was depending on that, any 
technology that's going to produce renewable energy at a cost 
that's 25 percent higher than burning coal is not going to have 
a market beyond what's created by the State renewable portfolio 
standards, which gets into a third and important issue, I 
think, and maybe you will let this have some debate among the 
panelists.
    But it's that Mr. Kats mentioned that investors can make 
money on clean energy. Well, certainly they can if they are 
selling into, you know, wind turbines into a market where the 
RPS, the renewable portfolio standard, says utilities must buy 
wind. Well, investors are going to make money selling wind. 
Actually most of the wind is--there's another trade issue about 
where the wind turbines are being purchased.
    My question is, if a venture that was funded largely by 
private equity and made it 10 times return for its private 
equity investors when it was sold to a big company, why did it 
need Recovery Act funding? It seems to me that we are in a 
situation where if you--if you--if you can make a profit on 
doing something through private equity, you don't need the 
Recovery Act funding, and if there's not a market for the 
product, the Recovery Act funding is not going to be enough to 
create a sustained industry.
    Mr. Jordan. Thank you, doctor. Now recognize vice chairman.
    Ms. Buerkle. Thank you, Mr. Chairman, and thank you to our 
panelists for being here this morning.
    Now, many of us came to Congress in part of the 2010 
elections because of the economy, because of jobs, because of 
the state of what was going on in our country, and this notion 
that the government can spend money to create jobs, and the 
stimulus which was touted as you know never going to get 
unemployment above 8 percent, we see that we've now got 
unemployment and it's been there for 24-plus months at 9 
percent or hovering around 9 percent. So the Keynesian 
economics didn't work.
    Now, we're being pushed another stimulus, well, we need an 
additional stimulus because the first stimulus wasn't enough. 
Now we're going to have a second stimulus, and we're going to 
spend money. And when I'm out in the district and I hear from 
some of the supporters of this notion, they say, well, it 
creates jobs and we want to create jobs. And we all want to 
create jobs. We want to get this economy back on track, but the 
government can't do that. It's the private sector's job. The 
private sector can do it.
    So we look at the stimulus, and my question is for Mr. 
Friedman. All of these jobs that were created, these green 
jobs, what happens when this money is spent? What happens to 
those jobs?
    Mr. Friedman. Ms. Buerkle, the Department's $35 billion 
plus its loan guarantee authority that came with the Recovery 
Act, there are a lot of different ways in which it was spent, 
but let me give you one example.
    As I reported in my testimony, the Department used a 
substantial amount of money to advance its environmental 
remediation program, remnants of the Manhattan Project at sites 
around the country, and the money has dried up. The money has 
come to an end, and between 4,000 and 5,000 people will be 
losing their jobs between now and the end of December of this 
year.
    So you have to look at each bucket somewhat separately, and 
certainly in the case of the money that was spent for creation 
of these jobs, they come to an end, and which is unfortunate 
for those individuals.
    Ms. Buerkle. And so the arguments that we hear, well, let's 
spend this money and create jobs, these are short-term jobs, 
and we will far better served to get a good, solid 
transportation bill in place which would have shovel-ready jobs 
eventually, and those jobs and the funding would be available 
rather than this temporary spending.
    Mr. Friedman, I just want to talk a little bit about 1705 
loan program, and my question is--and I realize you're going to 
be looking into this or you are looking into it and you may not 
be able to comment on certain portions of it. And this kind of 
goes to what Mr. Kelly was talking about, this notion that when 
the government is funding something, it's an endless pit, you 
know, there's just more money--if it doesn't work, we'll just 
pour more money into it.
    When a program like Solyndra, when you identify that 
there's such a significant loss, is anything done to make a 
change midway through that program and say this isn't working 
and we need to restructure this program so it does work, so 
we're not throwing good money after bad, and we're not wasting 
American taxpayers' money?
    Mr. Friedman. Well, Ms. Buerkle, I can talk about the audit 
work that we've done with regard to the loan guarantee program. 
The most recent report was issued in March of this year of 
which we identified problems in the way the Department 
documented, the way it addressed risks, and mitigated those 
risks. I can certainly talk about that, but in terms of the 
specific case that you're referring to, we have acknowledged, 
as has the FBI and the Department of the Justice, that we have 
an ongoing criminal investigation, and I can't comment beyond 
that.
    Ms. Buerkle. And last, I have a few seconds left here, 
aside from Solyndra, is your office concerned that there will 
be other losses with programs where we've given money to them 
and that the government, aka, the American taxpayers, will also 
sustain losses?
    Mr. Friedman. Well, I--at this point I'm not in a position 
to--I have not evaluated every loan guarantee in the portfolio, 
so I'm not in a position to get--to project or to anticipate 
what may occur or may not occur. So I can't give you really a 
thorough answer.
    Ms. Buerkle. Thank you very much. Mr. Chairman, I yield 
back.
    Mr. Jordan. I thank the gentlelady. I now recognize the 
gentleman from Baltimore, ranking member of the full committee, 
Mr. Cummings, and then Mr. Labrador.
    Mr. Cummings. Mr. Friedman, one of the things you said that 
was very interesting is that the--that part of the problem was 
that when these funds went to the States that, in some 
instances, the employees who were responsible for dealing with 
these had furloughs were an issue? Sir?
    Mr. Friedman. Yes.
    Mr. Cummings. And was that--did you find that the case in 
many instances?
    Mr. Friedman. There were several jurisdictions, States in 
which that was the case, Mr. Cummings, and it was there's an 
irony there which is really unfortunate, which is that here we 
come to the States with a program that is designed in part to 
stimulate the economy and to create jobs, and yet, the very 
people who would administer the program and apply the mechanics 
to the program, make it work, were furloughed because of the 
State--the condition of the State's economy. It is an 
unfortunate irony if that's the right word for it.
    Mr. Cummings. And the--and to get these--I mean, it sounds 
like, and I think Mr. Lewis said something to this effect, 
also--it seems as if there was an effort to get the programs up 
and running in a certain amount of time, and in an effort to do 
that, a lot of times all the mechanisms weren't in place to 
effectively accomplish that. Would be that be a fair statement, 
Mr. Lewis?
    Mr. Lewis. Certainly, one of the premises of the Recovery 
Act was to get money out there quickly. There are a lot of 
programs--we did have a lot of new grantees that had not 
applied for the program before.
    Mr. Cummings. And the DOE $535 million loan guarantee to 
Solyndra and the subsequent bankruptcy are well-known, and on 
Monday we learned that Beacon Power Corporation, which received 
$43 million in stimulus funds through the loan guarantee 
program, filed for bankruptcy on October 30th. Now, Mr. 
Friedman, isn't it true that DOE'S loan programs office was 
specifically designed to provide funding for companies that 
because of the type of funding find it difficult to obtain 
funding from the private sector? Is that an accurate statement?
    Mr. Friedman. Earlier, I think before you returned to the 
room, I indicated I can't, because of the criminal 
investigation, discuss particular----
    Mr. Cummings. I'm sorry.
    Mr. Friedman. In terms of the generic question, you're 
absolutely correct. That was the reason for the program, and 
that was the reason that the office was created as well.
    Mr. Cummings. And isn't it true that these companies are 
generally pursuing--I think this would be in your purview--
pursuing cutting-edge technology from battery production to 
solar to even nuclear power? Is that an accurate statement?
    Mr. Friedman. I believe that's accurate, yes.
    Mr. Cummings. Isn't it true that the list of companies 
funded through DOE's office involves almost 50 companies who 
have operations throughout the United States and, therefore, 
when we see some failures, wouldn't that be expected given the 
high-risk nature of what they do?
    Mr. Friedman. I'm a little reluctant to get into the 
question of risk and outcomes, but obviously there is a risk, 
otherwise these firms would not need government--or the 
government loan guarantee.
    Mr. Cummings. And when you look back on what you found, 
what were your recommendations?
    Mr. Friedman. Well, we recommended with regard to the 
March--the third of our reports, which was March 2011, we 
recommended that the Department develop a much more robust 
system for documenting how it evaluates the risks with each 
individual applicant and how those risks are mitigated.
    Mr. Cummings. Did this funding come under Delaney, Mr. 
Delaney.
    Mr. Friedman. I'm sorry?
    Mr. Cummings. Did this money come under Mr. Delaney's 
watch?
    Mr. Friedman. Well, I am a member of the Recovery Act 
Accountability and Transparency Board so I guess arguably all 
the Recovery Act money was within the purview of the board and 
Mr. Delaney, so the answer I suppose is yes, but this is a 
Department of Energy program outside of that.
    Mr. Cummings. I got you. Well, let me tell you why I ask 
that. One of the things that he said was that he was trying to 
put in mechanisms by which he would prevent these things from 
happening, and I was just wondering were there prevention 
efforts here, and if so, why did we have so many problems?
    Mr. Friedman. Is that directed to me?
    Mr. Cummings. Yes.
    Mr. Friedman. Certainly, there was a system of due 
diligence that was exercised by the Department. Was it 
adequate? You know, that remains to be seen, and the due 
diligence effort, at least presumably, would have been to 
identify the risks, to determine what mitigating circumstances 
or what mitigating factors are or controls can be put in place, 
was the risk--were the risks tolerable and how you proceed from 
there. So, yes, there was a due diligence process in place. The 
adequacy I'm not sure I can comment on.
    Mr. Cummings. Thank you, Mr. Chairman.
    Mr. Kelly [presiding]. I now recognize Mr. Labrador.
    Mr. Labrador. Mr. Chairman, I yield my time to you.
    Mr. Kelly. Thank you, sir.
    Mr. McMahon, I really--these hearings are a great value, I 
think, for the American people because it's the only time they 
really get to see how their money is being spent. I look at 
this as more of a stewardship than anything else. I know it is 
an elected office, but really, we're stewards of American 
taxpayer money and we have to be responsible to them for the 
way this money is being spent. So I've been here 9 months, but 
I come from the private sector as you do.
    Can you discuss a little bit these green jobs? We found out 
in a prior hearing that a bus driver who's driving a diesel 
bus, when he switches over to an alternative energy bus now 
becomes--we've created a green job. So the fact that the 
American public gets gamed so many times with these marketing 
efforts to take whatever it is that we're trying to achieve, 
and I really struggle sometimes to go back home and tell people 
in northwest Pennsylvania we're spending your money the right 
way. They say, really, we don't see it that way. So tell me, 
again, some of the green jobs that you see in your construction 
business.
    Mr. McMahon. It's true. It's quite fascinating, because 
actually it's all the same jobs that currently exist. The goal 
here is to create a new label. It is--it's just a misnomer to 
think that somebody who works--who cuts wood from the 
sustainable forest has any skill that's any different from 
somebody who cuts wood that doesn't come from one. But if you 
were to ask the Department of Labor, this current Department of 
Labor, that is a new skill-set somehow. It literally is--we've 
had carpenters for a long time. We've had sheet metal workers, 
reinforcing steel people that maybe they turn bolts to erect a 
wind turbine, but it's no different than building a coal-fired 
furnace a couple of years ago, literally.
    And you will have people, you know, we've done--LEED 
standards was started in early 1990's here in D.C. Actually. I 
actually worked for the guy who helped write them originally 
back in the early nineties, and we've done probably north of a 
hundred LEED-certified buildings, several hundred million 
square feet, just through the company ourselves, but there's no 
skill-set difference between these two people.
    The idea here really, what they're trying to do in the 
District is really quite nefarious, and it's nice that they 
just kind of laid it all out here. They're trying to take a 
zoning law, the D.C. Green Building Act, and claim that somehow 
there was a new skill-set required to actually work on things 
covered that were considered green. Therefore, create this 
place where they create a new apprenticeship standard.
    I mean, I know that we as a company and every other merit 
shop contractor in the District area, we would all have had 
our--you know, literally decades of apprenticeship standards 
trying to get them passed, we'd have them tossed, and 
therefore, we'd be barred, and this wasn't the only 
jurisdiction that that was attempted. Texas, northern Virginia, 
some of those places where attempting to use a zoning bill, 
claim that somehow the skill-set required a new apprenticeship 
standard and then people would have to recertify their program.
    If I could just quickly answer one quick question, I heard 
the ranking member discussing about Davis-Bacon wages. Back in 
Title X of the Energy Act that passed at the end of 2007, there 
was something included called the Clinton-Sanders amendment. It 
altered the Workforce Investment Act. For the first time, you 
were required to actually have a union as a partner in order to 
qualify for any training grant funds.
    Furthermore, the union, in a particular jurisdiction or 
covered by a particular trade, would have effectively veto 
power over any grant money that was expended. So it is in the 
law that--they altered the Workforce Investment Act, which up 
to this point had never considered union or nonunion 
affiliation as far as grant funding. This actually requires 
that you have a union as a partner in order to qualify for the 
grant funding under the Green Jobs Act that the Inspector 
General is telling us about.
    Mr. Kelly. Thank you. And I do think, again, this is a 
forum for people like you coming out of the private sector, 
getting a chance to actually speak to the American people.
    Mr. Lewis, Department of Labor, tell me some of these jobs 
that we were training people for, the skills that we're 
training them in?
    Mr. Lewis. Well, some of them are very technical. They are 
very technical skills related to the green energy industry, but 
some are, as you've heard this morning, they're jobs that can 
be just as easily applied to other industries. So they could be 
teaching people to weld for a green manufacturing entity, but 
they could use that skill-set elsewhere.
    Our real concern, and the results of this job at this point 
is still interim, is that, you know, whether you call it a 
green job or not, we simply don't see the people getting a job, 
any job. The rate of placement to what they had intended for 
this program, and compared to our other programs, is 
significantly lower.
    Mr. Kelly. And I don't doubt for 1 second the intention, 
and I think government does this a lot, that the intentions are 
always great. It's just that I've seen much better results 
coming out of the private sector, when it's your own skin in 
the game and you have to measure twice and cut once. You know 
you have that dollar to spend one time and that's your dollar 
and there's no backup. There's no safety net. So once it's 
gone, it's gone, and I think that's the whole purpose of the 
hearing today.
    Every penny we're talking about comes out of the American 
taxpayers' pocket, and not only do they deserve a positive 
return on that, they should expect that from us. And when we 
get to a point that we can no longer objectively describe where 
their money went and that we have to relabel it or game it in 
order to make a failure look like it worked, I mean--I would 
say, Mr. McMahon, you and I have made many decisions in our 
life, and we go before the people that we represent and we say, 
look, you know, I made a mistake, I got to tell you, this isn't 
working. But we also don't have the benefit of unlimited 
sources of revenue, capital, that we don't have to 
collateralize, and I think that's the danger of these programs.
    Well-intentioned or not, we end up in a situation where we 
continue to throw good money after bad because we can't stand 
and tell people, you know what, it was a bad policy. It was a 
bad program. And we need to backtrack now.
    We have money that's been appropriated but not yet spent. 
There's got to be a way to pull that money back and put it 
somewhere where it's actually going to have a positive effect.
    I can say I really appreciate all of you being here today. 
I know it's tough to take time out of your personal lives and 
come here, but it's important for the American people to 
understand that we do have an accountability that we must face 
with them, and if it's truly only going to be about reelection, 
then we shouldn't run again. It has to be about actually 
reforming, what it is that we're doing, and if we're not doing 
it the right way, stand up and say we made a mistake and we're 
going to change it.
    So, again, thank you so much for being here, and at this 
point, the hearing is adjourned. Thank you.
    [Whereupon, at 11:31 a.m., the subcommittee was adjourned.]

                                 
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