by William Teach | October 7, 2011 9:41 am
The actual take-away from the Washington Post editorial is that Obama should appear to be more upset, because it looks bad politically for him to be so blase’ about blowing half a billion dollars on a company that was bound to fail
(Washington Post) ONCE THE OBAMA administration’s paragon of a clean-energy future, Solyndra has gone bankrupt, taking a $527 million Energy Department-guaranteed loan with it. President Obama, however, has no regrets. “Hindsight is always 20-20,” he told George Stephanopoulos of ABC News. “It went through the regular review process. And people felt like this was a good bet.” Solyndra didn’t pan out, Mr. Obama conceded, but that’s the sort of risk the United States must take to compete with countries, such as China, that subsidize solar power.
This answer, which Mr. Obama essentially repeated at a news conference Thursday, was unsatisfactory – in tone and substance. When a profit-making venture blows half a billion taxpayer dollars, the president should be more upset about it. Much of the criticism Mr. Obama is taking over Solyndra is political. But not all of it.
Taxpayer money we’ll never see repaid, due to the restructuring of the loan by the DOE, which put the taxpayers way down the list of creditors through bankruptcy. But, hey, it’s not Obama’s money. It’s Someone Else’s.
The important lesson is that the government “is a crappy vc” – venture capitalist – as then-White House economic adviser Lawrence Summers put it in an internal e-mail. Government can foster clean energy by subsidizing basic research, whose fruits become available to a variety of entrepreneurs, and by setting broad incentives that shift demand in favor of alternative energy. Subsidizing selected technologies or companies, by contrast, is a game that taxpayers often lose, as the history of boondoggles from synthetic fuels to the fast breeder reactor suggests. We suspect China will learn this lesson, too.
The real lesson is that government shouldn’t play games with taxpayer money by giving it to companies whose board members were big campaign donors, especially when those companies were bound to fail. The real lesson is that government shouldn’t provide the main capital for any company, playing favorites, especially for political reasons.
The administration insists the Solyndra losses were in a good cause – several, actually: fighting global warming, creating construction jobs and building a clean-energy manufacturing base. But it could have pursued those public goods at less risk and cost. The lost $527 million, as well as the private capital drawn to the firm by the federal seal of approval, is money that now cannot be used for any good objective. Instead, the country just has a bigger pile of debt to pay back, with interest.
And there is a big problem: spending taxpayer money on a “good cause” which has never been shown to show a profit, meaning these companies will never survive without massive taxpayer subsidies. Remove the tax breaks from the oil and coal industries (they do not receive subsidies) and they’ll survive. Yes, the costs would go up, and be passed on to the consumer in the short term. But, eventually, the prices would come back down a bit. Remove the subsidies from the “green” sector, and it would collapse overnight.
Someone ought to send Obama a bill for the $527 million plus interest.
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