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WILLIAM TUCKER: Sequestration Follies – Will Nuclear Reactors Start Melting Down Next Week?

By William Tucker

If Congress insists on sequestering 2.3 percent of the federal budget, we will be forced to shut down the Nuclear Regulatory Commission and reactors will start melting down next week.

Now how did have government enthusiasts missed that one in their efforts to scare people into thinking the world is going to end if we try to rein in federal spending?

To read the papers this week, you’d wonder how this country ever survived before we had a federal government spending 24 percent of GNP and borrowing a trillion dollars a year to do it.  Departing Energy Secretary Steven Chu tells us the effort to convert to renewable energy will be stopped in its tracks if the Sequester is imposed.  The Superfund will end, air pollution monitoring will fall by the wayside and oil spills will gush forth if Congress imposes the “severe budget cuts,” according to Environmental Leader.  The American Association for the Advancement of Science predicts energy research and development will “fall off a cliff” if the cuts go through.  And just think, all this represents only 2.3 percent of federal outlays!  Just think of all the things the government must be doing with the other 97.7 percent!

Of course what we’re seeing here is the old “Washington Monument Syndrome” that sunk Newt Gingrich when he tried to rein in federal spending in the 1990s.  Want to cut spending?  That’s easy.  We’ll close down the Capital Mall, shutter all the National Parks and take away your Social Security check.  See how you like that!  The press plays into this, the public remains gullible and before you know it we’re back on track for national bankruptcy.

What’s really going on here, however, is a question of whether we’re going to have a private economy or an economy run by the government.  To see what that means, there’s no better place to look than energy.  And there’s no better place to start in energy than nuclear power.

Go back to the end of World War II when the energy that had been unlocked from the atom was still a dazzling mystery and there was tremendous public enthusiasm for its potential.  The technology had been developed by the government, of course – specifically the Army Corps of Engineers.  And once the Army had control of it, of course, it didn’t want to give it up.  It took a tremendous effort by Los Alamos scientists and others to pry it loose from the military and set up the civilian “Atomic Energy Commission” to oversee its introduction into general use.

But the AEC became very possessive and was reluctant to let it go as well.  The AEC became a claustrophobic bureaucracy that convinced itself that it was the only agency in the world that could understand the technology.  Utility companies were chafing at the chance of using the new technology but the AEC parceled it out very abstemiously.  By the early 1950s, Democrats who controlled Congress were arguing that the government itself should build any new reactors.  President Eisenhower was enough of a free-enterpriser to choke on this so he threw the technology open with the Atoms for Peace program. 

It wasn’t until the late 1960s when concerns began to grow about air pollution, however, that nuclear got its big push.  At one point the Sierra Club was proposing reactors as an alternative to damming Glen Canyon.  (The technology was still new and they hadn’t found enough things to object to about it yet.)   When the environmental movement got going, however, it turned on nuclear and soon the AEC was under fire as a “schizophrenic” organization that was supposed to promote nuclear and regulate it at the same time.

In fact, nuclear didn’t need that much promoting.  The myth circulated today is that the wave of reactor construction from 1970 to 1990 was somehow subsidized by the federal government.  It did no such thing.  Solar and wind energy today receive more tax credits and Department of Energy subsidies in one year than nuclear ever received during its entire golden age.  What supported nuclear is that the utilities were still operating under the old franchise system where they were guaranteed a profit on their investment.  That made utilities feel fairly confident in committing themselves to a long-term project that in those days might reach the extraordinary level of $1 billion.

Then came the creation of the Nuclear Regulatory Commission, Three Mile Island and the current regime where a decision on whether employees will be able to ride a bicycle inside the reactor compound requires an eight-month review from Rockville

The NRC has finally approved two new reactor projects – the first licenses issued since the 1970s.  But don’t expect any more.  The process is too uncertain, too expensive, too time-consuming for any sensible utility executive to undertake.  Everybody in the utility industry knows we’re taking a huge gamble by converting out electricity to natural gas.  Look what’s happening in New England right now where cold weather has set utility companies bumping up against home heating and prices are soaring.  The administrators of the New England grid last week that their territory would be in huge difficulty right now if not for Indian Point.  But natural gas still functions largely outside the reach of the federal government while nuclear is a wholly administered government enterprise and that makes all the difference.

So what is the federal government doing with all that money it spends on energy?  Well, departing Secretary of the Interior Ken Salazar was in Boston this week warning of all the horrible things that are going to happen if the government is required to tighten its belt and preaching about the wonders of offshore wind and how New England will soon be reaping the benefits of all the permits that Interior is going to grant.    

This is insane.  Any comparison of electricity costs tells you that offshore wind is the most expensive technology there is, even more expensive than solar in some instances.  So who’s going to pay for all this?  If these windmills are ever built – and environmental groups are already lining up to oppose them – the electricity will be so expensive it will have to be subsidized by the government.  Then government officials will be able to argue that if anyone tries to reduce federal spending, everybody’s electric bills will soar  – and they will be right.  As the late economist Arthur Nelson posed in his Third Law, “The more a subsidy distorts the market, the harder it is to get rid of it.”  Sooner or later, people adjust to the distortions.

Is there any way out of this?  None of the options are very pretty.  As long as we live with the illusion that there’s some renewable energy utopia waiting for us and all we need is a “bridge fuel” to get us there, we will continue to squander time and money on unproductive technologies.  But someday someone is going to take a look at thorium or small modular reactors and realize that if we’d just let people invest in these things, they would soon be paying off.  Then we’d finally be on the road to solving our energy problems.