Let’s face it, when something goes wrong, people tend to focus on it, in some cases clouding over the bigger, better picture. I was happy to discover that is exactly what seems to be the case in terms of the federal government’s stimulus program, which by and large looks like a success.
A USA Today story this week notes that while Solyndra has become a center of controversy in Washington and beyond, the stimulus as a whole enabled important new solutions to come to market, significantly pumped up stocks of many fund awardees, and created jobs in the tech arena.
“The stimulus has helped spark an 82 percent gain in the stocks of 11 health care technology companies since President Obama took office and a 263 percent gain in the three public companies that took $7.8 billion of federal financing to build next-generation vehicle factories,” according to USA Today, which partnered with International Data Corp. to conduct a study on the outcomes of the stimulus program. “It contributed to a 79 percent jump in stocks of the four leading energy-efficiency companies identified by IDC, including diversified companies such as Johnson Controls and Honeywell. Companies involved in developing smart electric grids, nine big tech firms that are also in many other businesses, have risen 54 percent.
“All these match or exceed the 51 percent gain in the Standard & Poor’s 500-stock index, and beat the 4.9 percent average annual gain in venture funds raised in 2008, according to Cambridge Associates,” USA Today added in a Nov. 21, 2011 piece.
The stimulus effort also had a positive impact on jobs, according to the USA Today piece.
“The number of permanent jobs created or saved in the government’s loan guarantee programs is about 40,000, plus several thousand more construction jobs,” USA Today said. “More than three-fourths of the permanent jobs are at Ford.”
The article goes on to say that the stimulus legislation “has sparked adoption of electronic medical-records software and nurtured an electric-car industry that will sell at least 20,000 cars this year. At least 19 companies have gone public or filed for IPOs after getting stimulus money, from Solazyme’s $21.8 million grant to build a pilot biofuels refinery to a $1.6 billion loan guarantee letting BrightSource Energy build the world’s biggest solar-generation plant of its kind, according to securities-disclosure filings.”
Noting that “government bridged a bond market gap that has lingered since the 2008 financial panic,” Scott Sandell, a partner at New Enterprise Associates, the nation’s largest venture firm, was quoted in the USA Today as saying: “Across all the clean-tech sectors we invest in, there has been a tremendous paucity of capital at any stage of a company’s development where there’s any risk. Trust me, it’s been a barren landscape.”
The federal government helped things along by earmarking about $100 billion for tech spending of this sort – two thirds for energy technology and most of the balance to support the move to electronic medical records.
And to gauge the success of this program, USA Today tapped IDC, which analyzed more than 45 companies involved in the stimulus effort that are public or have registered for IPOs; USA separately reviewed recipients (including Ford) of the 38 completed or pending Energy Department loan guarantee programs.