Politics, like life, can be quite convoluted. While reading my favorite Washington Post writer this morning, Dana Milbank, he shared some very interesting historical facts about the loan program that allowed funds to be awarded to the solar company Solyndra.
Since the solar-energy company went belly-up a few weeks ago — leaving taxpayers on the hook for $535 million in loan guarantees — a business that was once the poster child for President Obama’s green-jobs initiative has instead become a tool for Republicans to discredit most everything the administration seeks to do.
Sen. Orrin Hatch of Utah used Solyndra to argue against worker-training benefits. Sen. Jim DeMint of South Carolina used it to argue that the federal government should stay out of autism research. Disaster relief, cancer treatments, you name it: Solyndra has been an argument against them.
Yes, Republicans have been using the fiasco of Solyndra as their poster child against, not only the Obama administration as a whole, but more generally, against the use of government funds to promote private business initiatives.
And this week, the government faced the prospect of a shutdown because House Republicans added a provision to the spending bill to draw more attention to — what else? — Solyndra.
“Because of some of the horrible weather we have had over the past several weeks, we have all agreed to add emergency funds we didn’t originally plan in this bill, and Republicans have identified a couple of cuts,” explained Senate Minority Leader Mitch McConnell, including “a cut to a loan-guarantee program that gave us the Solyndra scandal.”
Now just wait, I am about to get to the good part. I had been under the impression that the Obama adminstration had “birthed” (pardon the pun, the use of this word is NOT to be confused with the crazy “birther” movement”)this loan program as part of the stimulus bill. Au Contraire my friends!
What McConnell neglected to mention is that Solyndra was cleared to participate in this loan-guarantee program by President George W. Bush’s administration. He also did not mention that the legislation creating the loan-guarantee program, approved by the Republican-controlled Congress in 2005, received yes votes from — wait for it — DeMint, Hatch and McConnell.
What I love is that Milbank does not leave out the culpability of the Obama administration for its role in this debacle. However, what is blatantly clear, is that the choice of Solyndra for government loans did not happen in an Obama Administration vacuum.
“Loan guarantees aim to stimulate investment and commercialization of clean energy technologies to reduce our nation’s reliance on foreign sources of energy,” Bush’s energy secretary, Sam Bodman, announced in a press release on Oct. 4, 2007. The release said the Energy Department had received 143 pre-applications for the guarantees and narrowed the list down to 16 finalists — including Solyndra.
But that was before Obama’s presidency, and views back then were different. They were more like the March 2008 press release from Bush’s Energy Department, announcing that it was funding research projects on photovoltaic technology. “These projects are integral to President Bush’s Solar America Initiative, which aims to make solar energy cost-competitive with conventional forms of electricity by 2015,” the announcement said.
Among the winners listed in the press release? Solyndra.
My point, before I hear people start crying about Dems always blaming Bush, is that maybe the time isn’t to assess fault, but to find better ways to invest taxpayer money. Government funds to stimulate initiatives is not new, pretty sure NASA has influenced many technological advances with government money. I don’t mind government investment in the future, the issue is how do we best invest those tax dollars!
Moon,
I agree with your overall conclusion, while I think NASA isn’t the best example of tax-payer funded private research to benefit society. NASA is a federal operation and used the federal contracting process to drive private-sector R&D for technologies that were to be used by NASA for the US Space program. This was the “military-industrial complex” at its finest. That society has benefited greatly from many of the technologies orginating in the space program was only a by-product, not the original goal. Another example of this flow is the microwave oven, originally marketed as a “radar range”. This household essential was developed from the technology used in airborne radar, the “minute magnetron” to be exact.
As to your point, the Obama administration didn’t invent the government R&D grant process, but they sure got stung by it. The paper trail would indicate that the Bush admin was looking to give Solyndra the loan garantees, but backed out due to reservations about the company, not solar energy in general. Where the Obama admin went wrong, is in not heeding the earlier warnings, and proceeding with “co-signing” the loan.
Let’s think about this in terms we can all understand: We have a friend. He has built what he thinks is a better mouse-trap. He has approached private investors and private banks. They have looked at not only his mouse-trap, but also the entire mouse-trap market. They have decided that his mouse-trap is not a “market changer” or, our friend isn’t an acceptable credit risk. So he comes to us. We happen to believe that mice are a problem that needs to be dealt with now. We believe that any company that is in the business of building mouse-traps has merit. Unfortunately, we are not in the position of giving direct loans to companies. We would buy the mouse-traps for use by our agencies, military, etc., but our friend needs capital to go from concept to production. So, even after private investors and banks (those in the business of lending money with the expectation of a return) have declined the opportunity to invest in our friend’s company, we (who are not in the business of, well, business) decide we know better. So we tell the banks to go ahead and loan our friend the money. If he mismanages the money, or he can’t compete in the mouse-trap market, because the Chinese are building cheaper mouse-traps, the bank doesn’t have to worry. We’ll garantee the loan. When our friend fails, we have to spend money we don’t have to make good on our friend’s debt. Afterall, we swore sureity on the debt.
What the Obama administration is getting pasted with is the lack of due dilligence. Poor financial decision-making, which could indicate a trend, considering a whole bunch of money was spent with the promise of stimualting the economy, and little result to show for it. He is not solely to blame. This is how government operates. It is, by its very nature inefficient and wasteful. This thing happens all the time. The reason it’s getting so much press is:
#1. The US Government is broke. Yes, Broke. If it cannot live within its means, it needs to cut its budget, and demonstrate it can steward our money, before it comes and asks for more of it, in the form of tax increases.
#2. The economy sucks. At a time when people are out of work, and the government has yoked the US energy sector with so much regulation, so many bans, etc., it appears to be folly when large sums of money are spent on a company that makes something that cannot even compete in the US market, let alone the global market.
#3. The Economy appears to be getting worse. People are looking for the Return on Investment (ROI) on the huge stimulis that was sold to them as the means to save the economy. Well, the money has been spent, and the results have been poor. Solyndra is used as the answer to the question: “why hasn’t it worked”.
The only way we can change this is for government to get out of the business of, well, business. Infrastructure? Check. Governement builds roads, bridges, dams etc. Consumption? Check. The US Government is one of the largest single consumers of “stuff” in the world, from toilet paper and lightbulbs (cf’s of course) to computers and fighter-planes. This is where govenment spending can have an impact on the economy. But outside of this, the government needs to get out of the process, and their only role is to ensure that these businesses operate by the same rules as other businesses, whether foreign or domestic, if they want to sell their goods and services in the US.
That was Elena’s article, not mine. Mine is the one down below on the subject of Banana Man. Hers is about facts. Mine is about gossip. sigh…….
Steve,
I primarily agree with you, however, are there business that have succeeded with government money? I would say GM is a good example. However, too big to fail is the problem in this country right now. We need lots of small businesses to reinvigorate our middle class. Having said that, I still believe saving GM saved several hundred thousand jobs so for me, that was an example of worthwhile tax dollar investment.
Elena,
I would agree that in certain cases, a government rescue is needed. FDIC taking over troubled banks is a good example. The Chrysler bail-out (which was re-paid with interest) of the 1980’s was a smart move. In the case of GM, I have no heartburn with the loan, as long as it’s repaid with interest. What I have MAJOR heartburn with is the way the bankruptcy was handled. Secured creditors ie. those who held GM corporate bonds were told to “take a hike” by the administration, and the UAW was given ownership in the new company. Bankruptcy law specifies that secured debt holders are to be addressed first. The administration used coercion to make sure that the union got taken care of, at the expense of the law. but this is a different topic. The Small Business Admin has great programs whereby small, woman-owned, veteran-owned, disabled veteran-owned companies can get small loans to help get them started. No issue with this, as the financial risk exposure to the taxpayer is small.
But the Solyndra case is different. What we have in these situations is not sureity on a loan to rescue a troubled enterprise that is somehow vital to our economy and national security (as was Chrysler in the 80’s, as was GM in the oughts). This is essentially playing in the private capital/equity market. This is garanteeing loans for un-proven businesses. If the government wants to foster an environment to develop these sorts of businesses, let them do it through the tax code. This way, they aren’t “picking winners and losers”.
I don’t see anything wrong with your premise Steve. Government picking winners and losers always carries the risk of Cronism.
100% agree, without equivacation. We don’t need a Zibatsu here.
The question is not who initiated the program; the question is when did the current administration become aware of financial troubles at Solyndra and what did it do about the problem? This is similar to the GPS interference issue related to Lightsquared. The initial request was initially supported by the Bush Administration. But the Obama Administration has aggressively supported Lightsquared and attempted to influence the testimony of a four-star general to Congress, even after it became clear that GPS interference was likely. Cronyism appears to be an issue, because Lightsqured is a strong supporter of the current administration.
Dana Milbank. HAHAHAHAHA. It’s incredible…..even the name is a joke by now!
pokie, different people like different people. You know, how I like Rachel Maddow. She is one of the most courteous people out there. And yes, I know she is very liberal–sometimes a little too much so for me. However, I do like watching her because of her good manners and style. I also like Joe Scarborough even though I don’t agree with him on some things. I like his style MOST of the time.
It really shouldn’t be a rerision-fest.
Do you have a favorite commentator? I will promise to try not to laugh.
Greg Gutfeld. He’s now on “the five” with Bob Beckel, who I like too.
Gutfeld is awesome, Andy Levy is right up there too: http://www.youtube.com/watch?v=TOjUKwoHUyw
Dana Milbank is a joke to you Slow? Why, his commentary, although you may not agree, is certainly well written and thoughtful. Exactly what part of this story do you find so funny?
There sure are a lot of hypocrites in the Repugnican party.
How does a company burn through half a billion dollars in a year, and how does the government not know what they were spending per year to sustain itself? Like most things Obama wants he wants it now, don’t think about it just pass it now. Jobs Bill anyone?