Saturday, September 17, 2011


One aim of the Obama administration, and its allies in Congress, has been to drive up the costs of the nation's traditional energy sources - oil, gas and electricity - in order to advance its goal of a "green" driven economy. The idea is to make new technologies - wind, solar, and biomass - which are presently costly, inefficient and unreliable, appear attractive relative to cheaper, efficient and reliable older technologies. The strategy has yielded mixed results. While renewable sources have failed to make much of a contribution to the nation's energy needs, some progress has been made in fleecing consumers. Oil and gas prices have risen, in part, due to the administration's reluctance to issue new drilling permits. Obama's proposal to remove tax incentives for oil exploration, if enacted, will also have an inflationary effect. Passage of "cap and trade" legislation would have caused electricity prices to soar. The bill made it through the Pelosi House before failing in the Senate. Democrats still hope that they can achieve similar results by regulatory fiat - the EPA has passed rules limiting CO2 emissions from factories, oil refineries and electric utilities.

The government hasn't always been intrusive in matters best left to private initiative. In the late 19th century there was a recognized need to replace horses as the chief mode of transportation. As a New York Times article points out,

Back then, 100,000 to 200,000 horses lived in the city (New York). A typical horse produced from 15 to 30 pounds of manure (with the average output about 22 pounds) and about a quart of urine a day, usually distributed along the course of its route or deposited in the stable…

…The manure piles attracted huge numbers of flies, and one journalist writing in Appleton Magazine in 1908, charged that each year 20,000 New Yorkers died from “maladies that fly in the dust, created mainly by horse manure.”

…The horses posed another sanitation problem when they dropped dead — sometimes from overwork, sometimes from disease (like horse distemper and other maladies that caused horses to swell overnight). In 1880, New York City removed 15,000 dead horses from its streets. But sometimes a big carcass would simply be left to rot until it had disintegrated enough for someone to pick up the pieces.

Yet the federal government didn’t plow taxpayer money into the production of primitive, yet pricey gasoline powered motor vehicles. The market was allowed to respond to the problem and the result was Henry Ford’s assembly line. In our time, a “green” Henry Ford has yet to emerge.

Common sense dictates that new technologies should be well developed before being put into large scale practice. For Obama, politics will trump common sense every time. And politics was the impetus behind the Solyndra scandal. The loan guarantee to a company clearly headed toward bankruptcy was just a small part of the first "stimulus" bill but it exemplifies the bill’s true focus, not job creation, but payouts to Democratic constituency groups and campaign contributors. However, there's more to the affair than just logrolling.

Former federal prosecutor Andrew McCarthy (NRO) has written a lengthy review of the facts of the case. I've excerpted some passages.

McCarthy describes the Solyndra scandal as

...not just Obama-style crony socialism as usual. It is a criminal fraud. That is the theory that would be guiding any competent prosecutor’s office in the investigation of a scheme that cost victims — in this case, American taxpayers — a fortune.

In 2003… the Justice Department famously charged Martha Stewart with securities fraud. Among other allegations, prosecutors cited public statements she had made in press releases and at a conference for securities analysts — statements in which she withheld damaging information in an effort to inflate the value of her corporation and its stock.

That’s exactly what President Obama did on May 26, 2010, with his Solyndra friends about to launch their initial public offering of stock.
The solar-panel company’s California factory was selected as the fitting site for a presidential speech on the virtues of confiscating taxpayer billions to prop up pie-in-the-sky clean-energy businesses.

...the company was hemorrhaging money and, even with the loan, would lack the necessary working capital to turn that equation around. Yet they caved under White House pressure to sign off in time for Vice President Joe Biden to make a ballyhooed announcement of the loan in September 2009. An OMB e-mail laments that the timing of the loan approval was driven by the politics of the announcement “rather than the other way around.”

[An aside - Timing is a major tactic of Obama politics. Two examples. Troop levels will be reduced in Afghanistan on September 15, 2012, during the thick of the fighting season, but just before the election. The pernicious effects of the tax rate increase and full Obamacare implementation will be felt in 2013 and 2014, after the election].

Continuing with McCarthy's column -

Why so much pressure to give half a billion dollars to a doomed venture? The administration insists it had nothing whatsoever to do with the fact that Solyndra’s big backers include the George Kaiser Family Foundation. No, of course not. George Kaiser, an Oklahoma oil magnate, just happens to be a major Obama fundraiser who bundled oodles in contributions for the president’s 2008 campaign. Solyndra officers and investors are said to have visited the White House no fewer than 20 times while the loan guarantee was being considered and, later, revised. Kaiser, too, made several visits — but not to worry: Both he and administration officials deny any impropriety. You’re to believe that the White House was just turning up the heat on OMB and DOE because Solyndra seemed like such a swell investment.

Solyndra’s backers disclosed the auditors’ bleak diagnosis in March 2010. The government had thus been aware of it for two months when President Obama made his May 26 Solyndra speech — the speech Solyndra backers were clearly hoping would mitigate the damage.

As president, Obama had a fiduciary responsibility to be forthright about Solyndra’s grim prospects — in speaking to the American taxpayers whose money he had redistributed, and to the American investors who were about to be solicited for even more funding. Instead, he pulled a Martha Stewart.

The president looked us in the eye and averred that, when it came to channeling public funds into private hands, “We can see the positive impacts right here at Solyndra.”
He bragged that the $535 million loan had enabled the company to build the state-of-the-art factory in which he was then speaking. He said nothing about how Solyndra was continuing to lose money — public money — at a catastrophic pace. Instead, he painted the brightest of pictures: 3,000 construction workers to build the thriving plant; manufacturers in 22 states building an endless stream of supplies; technicians in a dozen states constructing the advanced equipment that would make the factory hum; and Solyndra fully “expect[ing] to hire a thousand workers to manufacture solar panels and sell them across America and around the world.”

Not content with that rosy portrait, the president further predicted a “ripple effect”: Solyndra would “generate business for companies throughout our country who will create jobs supplying this factory with parts and materials.” Sure it would. The auditors had scrutinized Solyndra and found it to have, from its inception, a fatally flawed business model that was hurtling toward collapse. Obama touted it as a redistribution success story that would be rippling jobs, growth, and spectacular success for the foreseeable future.

...with numbing predictability, the Obama administration proceeded with an unjustifiable restructuring. In exchange for lending some of their own money and thus buying more time, Solyndra officials were given priority over taxpayers with respect to the first $75 million in the event of a bankruptcy — the event all the insiders and government officials could see coming from the start, and that hit the rest of us like a $535 million thunderbolt last week.

(My emphases)

Will Obama will receive the same punishment meted out to Martha Stewart?
Certainly. As soon as Bill Clinton is jailed for lying to a grand jury.
Apparently, Democratic presidents committing felonies face no consequences for their actions.

At least Obama and friends have learned their lesson, no?
No. Michelle Malkin writes that the money continues to flow into the green sinkhole.

No comments:

Post a Comment