One factor favoring President Obama’s reelection, according to a recent article by political scientist Alan Lichtman, is the absence of scandal in his administration.
Lichtman may have spoken too soon.
The reason can be encapsulated in a single word: Solyndra.
That’s the name of a company that manufactured solar panels in Fremont, Calif. (which voted 71 percent for Obama in 2008). It was the first company to receive a loan guarantee from the Department of Energy as part of the 2009 stimulus package. This wasn’t small potatoes. The loan guarantee was for $535 million.
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It was, Vice President Biden said, “exactly what the Recovery Act was all about.” Energy Secretary Steven Chu, a Nobel Prize winner, said it would help “spark a new revolution that will put Americans to work.” It was part of the Obama administration’s program to create so-called green jobs, which we were told were the key to future economic growth.
The beauty part is that a loan guarantee doesn’t require the federal government to shell out cash unless and until the recipient defaults on the loan. If the company’s business plan works out, the loan costs the government virtually nothing.
Obama paid a visit to Solyndra on a trip to California in May 2010. “It is here that companies like Solyndra are leading the way toward a brighter, more prosperous future,” he said. Hailing the green-jobs loan-guarantee program, he went on, “We can see the positive impacts right here at Solyndra.” The White House even prepared a video about the company. The Solyndra personnel sound articulate and intelligent, and seem to be really nice guys.
Unfortunately, there were other things going on at Solyndra for those with eyes to see. As my Washington Examiner colleague David Freddoso reported, an audit of the company performed by PriceWaterhouseCoopers two months before Obama’s visit noted that the firm had accumulated losses of $558 million in its five years of existence. The auditor noted that Solyndra “has suffered recurring losses from operations, negative cash flows since inception, and has a net stockholders’ deficit that, among other factors, raises substantial doubt about its ability to continue as a going concern.”
One of the original investors in Solyndra was Oklahoma billionaire George Kaiser, who was also a major contributor to Obama’s 2008 campaign. In early 2011, Kaiser and other investors provided an additional $75 million in financing to Solyndra. They did so on condition, approved by the Energy Department, that they receive priority over previous creditors, including the government.
On August 31, while Obama was vacationing on Martha’s Vineyard, Solyndra filed for bankruptcy. On September 8, the day of Obama’s “American Jobs Act” speech to a joint session of Congress, FBI agents conducted searches of Solyndra’s headquarters and the homes of the firm’s CEO and founder. Newspaper accounts speculate that the government may wind up losing the whole $535 million.
The House Energy and Commerce oversight subcommittee conducted a hearing on Solyndra on Wednesday. Documents have been sought not only by Republicans but also by Democrat Henry Waxman (Calif.), former chairman of the committee.
It’s possible the subcommittee will find nefarious goings-on at Solyndra. Was the administration’s decision to grant a loan guarantee of half a billion dollars influenced by a major campaign contributor? Did the Energy Department disregard obvious caution flags about the company? Did somebody slip somebody a bribe?
But let’s assume for the time being that there was no criminal conduct here, no violation of government procedures, no fraud. Let’s assume everyone in the administration acted in good faith. There’s still a scandal — the scandal of the government handing out hundreds of millions of dollars to unproven and speculative businesses. Even the shrewdest venture capitalists lose money on most of their investments. But when they lose, it’s their money, not ours.
The scandal is still going on. The Energy Department has been busy handing out more loan guarantees in the past few weeks — $150 million to 1366 Technologies of Lexington, Mass. (73 percent for Obama in 2008), 80 percent of $344 million to Solar City of San Mateo, Calif. (72 percent for Obama in 2008). Will one of them be the next Solyndra?
The real scandal is the “green jobs” loan-guarantee program itself. And the ones getting scammed are American taxpayers.
The dollar amounts are what are so staggering. With a 500+million dollar loan, I could buy all my vendors, buy out all my competitors and monopolize the packaging industry in my corner of the country.
No doubt, you could probably put a man on the moon for that much.
Just thinking about the smallish company that I work for that employs around 80 people, with a $500M loan we could sell our product for nothing for more than thirty years before going under.
I would be interested in seeing the money trail. It makes me wonder if perhaps this is just another version of the union to democrat tax payer money laundering scheme. In this case the tax payer money goes to businesses destined to fail only to end up paying back investors who then donate to democrat campaign funds.
And so we have OB's new "American Jobs Act" This should be the main reason for not passing it. The money will be sent to Liberal companies for repayment of contributions to the campaign, union shops to help boost their pensions, states to continue propping up "entitlement" programs and more "green" jobs. This is a disgrace to the American taxpayer. 1100 jobs lost at a cost of $535 million? This administration should be arrested for embezzlement.
…or the Obama administration could have given each of the 1100 employees that are being let go a check for $486,363 and saved us the trouble of hearings, prosecutions, unemployment checks…
I am tempted to chalk this up to government incompetence and bureaucratic foolishness, but that would be an insult to incompetents and fools throughout this fair land. This is blatant cronyism, driven by blind “green” ideology and that is the BEST case scenario.
This is a deliberate and reckless disregard of all financial safeguards to protect the taxpayer’s money in pursuit of a political agenda. This one just might not go away if there is any evidence that PWC told the administration of their auditor’s findings a full two months prior to this folly.
How about the $2 BILLION loan guarantee to a corporate arm of the French government?
This was for a uranium enrichment plant in Idaho (Eagle Rock.) But why? Another company (Lousiana Energy Services) was already building a similar plant in New Mexico but without taxpayer involvement. A US company, US Enrichment, had been denied a loan guarantee for dubious reasons.
This was just a sweet heart deal for the French government, saying them 10s of millions in interest costs.
At least Eagle Rock is not likely to go bankrupt.
Bet there are a lot of fishy loans in our government portfolio.
Dubious loans and gross mismanagement are typical of DOE. The history is loaded with examples of money spent on projects approved on political bases rather than sound technical information. Yucca Mt, Clinch River Breeder reactor, the Supercollidor come to mind.
