My syndicated column today expounds on the green phony, crony capitalism that has flourished — and flopped — in the Age of Obama. The latest developments breaking in the Solyndra scandal last night? Obama’s White House tried to rush the $535 million loan review, prompting complaints from financial officials. The White House, naturally, denies any improper intervention, politicization, and string-pulling.
According to the Washington Post: “The August 2009 e-mails, released exclusively to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators..’We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),’ one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, ‘We would prefer to have sufficient time to do our due diligence reviews.'”
The answer to the question “What did they know and when” is this: They KNEW Solyndra was a risky, lousy deal for taxpayers. They KNEW on Aug. 19, 2009 that the financial models their credit reviewers used predicted Solyndra would run out of cash in September 2011. They KNEW it would fail. But they forged ahead, took our money to prop it up, and pimped the company in front of the TV cameras, anyway.
Cue: Screw up, move up, cover up in 3, 2, 1…
Obama’s Big Green Boondoggles
by Michelle Malkin
With the scandalous bankruptcy of Solyndra (a shady California solar power company that received $535 million in stimulus funds and is now under investigation by the FBI) hanging overhead, President Obama wisely whitewashed any mention of “green jobs” out of his latest address to Congress.
But buried in the details of his latest government jobs bill released this week — Spawn of the Spendulus, Porky’s II, Night of the Keynesian Dead — are yet more big green boondoggles that will reward cronies, waste taxpayer dollars and make no dent in the jobless rate.
After pouring half a billion bucks into Solyndra, the company filed for Chapter 11 last month and laid off 1,110 employees. Obama administration officials met with Solyndra execs at least 20 times; the green cheerleader-in-chief personally visited and promoted the company in 2009 before his administration fast-tracked approval for the loans.
Solyndra is now the third solar company to go belly-up this year. Yet the Energy Department is doubling down on failure. As the FBI and House GOP investigators launch a probe into Enron-style accounting problems with Solyndra’s books, DOE is doling out more than $850 million in new loan guarantees for another California solar firm sponsored by NextEra Energy, along with nearly $200 million more for separate solar manufacturing facilities on the West Coast.
Obama claims new “investments” in environmentally friendly school construction projects will put thousands of Americans back to work immediately. (Never mind that Big Labor-backed rules and executive orders will raise the cost of the projects, slow their implementation and freeze out the vast majority of non-union contractors.) Among the new green pork initiatives: $25 billion for green roofs, green cleaning, installation of renewable energy generation and heating systems, and “modernization, renovation, or repair activities related to energy efficiency and renewable energy.”
But how are existing green construction spending programs working in practice?
A brand-new report from Texas Watchdog, a nonprofit, nonpartisan investigative group, sheds inconvenient light on Obama’s $5 billion stimulus-funded Weatherization Assistance Program. In Texas alone, the $327 million program has spent more than $226,000 on each of the 1,041 jobs the program is claimed to have created or saved.
Intended to “green” low-income homes, at least three of the original participating organizations have been shut down due to chronic mismanagement, fraud allegations and shoddy workmanship. Baylor University economist Earl Grinols summed up: “First, it is not an appropriate government function to provide weatherization of private homes. Second, even viewed as a stimulus measure, it is not very effective as a stimulus based on cost-per-job, and third, it appears not to be well-managed.”
Nearly 31 months after Porkulus One was signed, the Texas housing agency still hasn’t spent $91.6 million in allocated weatherization/green construction funds. Millions cannot be accounted for by auditors and inspectors.
Now, multiply that by 49 other states. A review of the weatherization boondoggle last year revealed state-trained workers were flubbing insulation jobs in Indiana, according to the Associated Press. In “Alaska, Wyoming and the District of Columbia, the program (had) yet to produce a single job or retrofit one home. And in California, a state with nearly 37 million residents, the program at last count had created 84 jobs.”
The Washington Examiner’s Tim Carney, a vigilant chronicler of green subsidies, notes that time and again, it’s Obama insiders and Democratic operatives pocketing all the green while the unemployment hovers at double-digits. To wit: “Al Gore acolyte Cathy Zoi was Obama’s assistant secretary for energy efficiency and renewable energy while her husband was an executive at a company that received direct subsidies from the Obama administration and profited from the Cash-for-Caulkers bill Zoi’s division implemented.” Treasury Department Chief of Staff Mark Patterson lobbied for Goldman Sachs on ethanol subsidies while holding down his job in the administration. And last year, another Obama pet project — Illinois-based FutureGen, a near-zero emissions coal power plant — received a $1 billion stimulus earmark despite having been previously defunded over doubts about the feasibility and efficiency of the project.
An Obama green job trainee with seven certificates, Carlos Arandia, spoke for all non-crony Americans when he asked last fall: “What is the point of giving somebody the tools to do something but to have nowhere to use them?” Perhaps the White House can find a way to weatherize all the Grand Canyon-sized taxpayer sinkholes that “green job” spending has created.
Update There’s a House hearing on Solyndra going down right now in DC.
Here’s how the NYTimes previewed the Democrat defense:
The tone is not expected to be friendly; the Republican leaders of the committee say that the Energy Department may have directed the money to a company with investors who were also donors to the Obama election campaign, and that the department may be preparing to give aid to other companies with iffy commercial prospects.
Democrats on the committee are putting forward the argument that they were misled by officials of the company, Solyndra — an argument that may be impossible for the Energy Department itself to make, since the department has been an observer on the Solyndra board since February.
Update 10:49am: The Dems are trotting out their “Blame Bush” mantra at the House hearing — Democrat Rep. John Dingell’s leading the charge.
Philip A. Klein addressed the meme this morning:
In prepared testimony released ahead of the hearing before the House Energy and Commerce committee, the director of the Department of Energy’s loans office, Jonathan Silver, emphasizes that the program that eventually granted a $535 million loan guarantee to the troubled firm was created during the Bush administration.
Not only that, Silver says, “Solyndra submitted its initial application in 2006, and much of the extensive due diligence on the transaction was conducted between 2006 and the end of 2008.”
He says that “by the time the Obama administration took office in late January 2009, the loan programs’ staff had already established a goal of, and timeline for, issuing the company a conditional loan guarantee commitment in March 2009.” Ultimately, the Obama administration issued the loan guarantee that March, which Silver argues, was “on the exact timeline that had been developed by the Bush administration…”
But Rep. Cliff Stearns, R-Fla., chairman of the oversight subcommittee that is conducting the Solyndra investigation, said that there’s a problem with that version of events. “In reality, on January 9, 2009 — at the end of the Bush administration — the DOE Credit Committee voted against offering a conditional commitment to Solyndra, saying that the deal was premature and questioning its underlying financial support,” Stearns said in his opening statement. “Only after Obama took control, and the stimulus passed, was the Solyndra deal pushed through.”
Update 10:59am: DOE loan chief Jonathan Silver refuses to answer/name which White House officials he met with — “I can’t recall.”
Solyndra official names Carol Browner’s office. Surprise, surprise.
Democrat Rep. Markey trots out next line of White House defense: Big Oil is worse!
House GOP asks White House OMB about these emails:
OMB says despite the e-mail’s explicit concern about the financial models used to determine the company’s credit worthiness, OMB “staff” had no qualms moving forward. Uh-huh.
Via USA Today:
Even if Solyndra’s collapse is nothing more than good intentions gone awry — a big if — it is a cautionary tale about why government should be extremely wary about betting tax dollars on specific companies. If there’s one thing the marketplace virtually always does better than government, it’s picking individual successes in an uncertain and highly competitive business. In fact, government involvement can unfairly tilt the playing field toward one company and away from competitors.
USA TODAY OPINION
Opinions expressed in USA TODAY’s editorials are decided by its Editorial Board, a demographically and ideologically diverse group that is separate from USA TODAY’s news staff.
Most editorials are accompanied by an opposing view — a unique USA TODAY feature that allows readers to reach conclusions based on both sides of an argument rather than just the Editorial Board’s point of view.
What the government can do is create an environment that makes it possible for the best companies to emerge and thrive. Government can fund basic research that is too expensive and too uncertain for struggling companies. It alone can set clear rules, provide a productive tax environment and fiercely defend American companies from unfair foreign competition. One reason for Solyndra’s demise was a huge drop in solar panel prices that might have been caused by China’s heavily subsidized solar panel manufacturers dumping below-cost panels on the world market.
You can bet you’ll hear a lot more about Solyndra as the campaign season intensifies, and rightly so. This is a stain on Obama’s stimulus program. At the same time, context is important. The Obama administration inherited the Solyndra application from the Bush Energy Department, and Solyndra is one of 42 projects in the Energy Department’s $30 billion portfolio of clean energy loan guarantees. The department says none of those other projects is in trouble; we’ll see.
Moving the nation away from its reliance on oil and coal would unquestionably have huge benefits for the environment and for national security. The most efficient way to attain that goal — raising the price of fossil fuels to reflect their real cost via a carbon tax or a cap-and-trade plan — isn’t going anywhere in the current political environment. That leaves a variety of next-best options worth pursuing, but trying to pick winners among individual start-up companies ought to be at the bottom of the list.
Update: Via Philip Klein — “A March 2009 OMB email on Solyndra warned “this deal is NOT ready for prime time” 10 days later, loan gar was granted.”
Update: As I’ve noted before, there are Solyndras by a different name failing all over the country.
Here’s one from Arizona via the Goldwater Institute:
When state legislatures reconvene in January, a priority for many will be passing some kind of “jobs” bill. What form that might take is open to debate, but there are already lessons to be learned on what not to do.
In 2009 the Arizona legislature, like many other states, passed a bill providing “tax incentives” (AKA subsidies) for renewable-energy industries. The legislature partly responded to pressure from those who thought they’d found the next big thing in “green jobs.” It also followed on the heels of a new solar panel factory in Tucson, Arizona.
Now that solar panel factory is closing only three years into its tenure. And it’s not alone. Another plant in Massachusetts has closed. Especially notable, a company called Solyndra, with a half billion dollars in federal loan guarantees, has declared bankruptcy.
That’s not a great track record, and it proves a point: Government makes a lousy venture capitalist.
Venture capitalists lose their money sometimes, but that’s the point: it’s their money. Government has no business risking taxpayer resources or disrupting tax systems to favor some businesses over others in an effort to directly create jobs.
Unfortunately, the Arizona legislature did it again in creating the Arizona Commerce Authority, with its ability to directly subsidize companies. The legislature would have doubled down on this bad bet with SB 1041 last session but for Governor Brewer’s veto.
Update: Now, the Treasury Inspector General will investigate. It seems a bit fox-guarding-the-henhouse-ish given Treasury Department official Mark Patterson’s own green lobbying conflicts of interest, but we’ll see…
The Treasury Department’s inspector general has opened a new front in the investigation of the government loan to Solyndra, the now bankrupt company that had been touted as a model of President Obama’s ambitious green energy program, ABC News and the Center for Public Integrity/iWatch News have learned.
The new probe involves the $535 million loan, arranged by the Energy Department, but actually processed by the Federal Financing Bank, a government lending institution that falls under Treasury’s control. Already, the FBI and the Energy Department’s inspector general have executed search warrants at Solyndra’s headquarters and questioned company executives.
“We’re going to look at everything the FFB had to do with its role in this thing,” Rich Delmar, a spokesman for the Treasury Department’s inspector general, told ABC News and iWatch News.
Earlier this month, iWatch News and ABC News disclosed that Solyndra received a rock-bottom interest rate of 1 to 2 percent — lower than those affixed to other Energy Department green energy projects. The low rate was set even as an outside agency, Fitch Rating, scored Solyndra as a B+ — “speculative” — investment. Energy Department officials said the bank set the rate, based on formulas including the payout length, and that Solyndra did not receive special treatment.
While we were out there, while we were building it – cause it is a half a billion dollar plant – everyone already knew that China had developed a more inexpensive way to manufacture these solar panels. Everyone knew that the plant wouldn’t work. But they still did it. They still built it.