The Great Destroyer: Barack Obama's War on the Republic (26 page)
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Authors: David Limbaugh
BOOK: The Great Destroyer: Barack Obama's War on the Republic
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Moreover, the federal money mostly did not benefit lower-income homeowners, but went to the Washington Athletic Club and a few hospitals. “Who’s benefitting from this program right now—it doesn’t square with what the aspiration was,” said Howard Greenwich of Puget Sound Sage. “I think what it boils down to is who’s got the money.”
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Also in his address, Obama casually conceded, “Now, there are costs associated with this transition [to his cap-and-trade scheme]. And some believe we can’t afford those costs right now. I say we can’t afford not to.” But what were these costs? The ATR ticked off the items: gasoline prices would rise 58 percent, natural gas prices by 55 percent, heating oil prices by 56 percent, and electricity by 90 percent; annual energy costs for a family of four would increase $1,241; aggregate GDP losses would be $9.4 trillion, aggregate cap-and-trade energy taxes would be $5.7 trillion; job losses would be almost 2.5 million; the national debt would increase by $12,803 per person and $51,212 per a family of four; GDP losses for a single year would reach $400 billion by 2025 and would exceed $700 billion by 2012; net job losses would reach nearly 1.9 million by 2012 and perhaps as high as 2.5 million by 2035, and we could lose 1.4 million manufacturing jobs by 2035.
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FROM $1.3 MILLION TO $24.2 MILLION PER “PERMANENT” JOB21
The green jobs component of the stimulus failed to improve the economy, but Obama would not relent. A month after his energy speech—in July 2010—reports showed that the economy had created private-sector jobs for six months in a row. Emboldened, Obama announced he was “accelerating the transition to a clean energy economy and doubling our use of renewable energy sources like wind and solar power—steps that have the potential to create whole new industries and hundreds of thousands of new jobs in America.”
Specifically, Obama said that his Department of Energy was awarding almost $2 billion in “conditional commitments”—meaning loan guarantees—to solar companies Abengoa Solar and Abound Solar Manufacturing, claiming Abengoa would create 1,600 construction jobs in Arizona and Abound would support 2,000 construction jobs and 1,500 permanent jobs in Colorado and Indiana. With these government loan guarantees, the money is loaned by the Treasury bank—not private lenders—pursuant to congressional authorization, so federal money is at risk from the beginning.
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Blogger Ed Morrissey quantified how much the government was putting on the line in exchange for the relatively small number of jobs that might be created, finding we were placing $2 billion at risk to create a total of 5,100 jobs. That yields a potential cost of $392,156 per job—and only 1,500 of those would be permanent jobs, with the rest to end as soon as construction is complete. Morrissey concluded, “That means we will spend over $1.3 million per ‘permanent’ job in building this ‘green economy,’ which looks more like a red-ink economy with even a cursory check of the numbers.”
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So far, the government has forked out $70 million for Abound, and the company recently announced it would lay off 70 percent of its work force.
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Blogger Ed Morrissey quantified how much the government was putting on the line in exchange for the relatively small number of jobs that might be created, finding we were placing $2 billion at risk to create a total of 5,100 jobs. That yields a potential cost of $392,156 per job—and only 1,500 of those would be permanent jobs, with the rest to end as soon as construction is complete. Morrissey concluded, “That means we will spend over $1.3 million per ‘permanent’ job in building this ‘green economy,’ which looks more like a red-ink economy with even a cursory check of the numbers.”
23
So far, the government has forked out $70 million for Abound, and the company recently announced it would lay off 70 percent of its work force.
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Over two years the DOE ended up awarding Abengoa three separate loan guarantees totaling $2.78 billion for solar and ethanol plants. This is especially troubling, considering the concern didn’t even seem to need U.S. government-backed loan guarantees because in 2010 it qualified for private bank loans worth $161 million in eleven countries.
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A $1.45 billion loan guaranty would “create or save” sixty permanent jobs at its Solana solar plant—amounting to $24.2 million per job; a $1.2 billion loan guaranty to a solar facility in the Mojave desert would produce seventy permanent jobs at $17.1 million a pop; and a $132 million guaranty to Abengoa Bioenergy Biomass of Kansas for a Dodge City ethanol plant would create sixty-five permanent jobs at $2 million each.
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SOLYNDRA: “INFUSED WITH POLITICS AT EVERY LEVEL”25
A $1.45 billion loan guaranty would “create or save” sixty permanent jobs at its Solana solar plant—amounting to $24.2 million per job; a $1.2 billion loan guaranty to a solar facility in the Mojave desert would produce seventy permanent jobs at $17.1 million a pop; and a $132 million guaranty to Abengoa Bioenergy Biomass of Kansas for a Dodge City ethanol plant would create sixty-five permanent jobs at $2 million each.
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The
Titanic
of Obama’s green energy program was Solyndra, a California-based solar panel manufacturing company the Obama administration propped up with $535 million in federal loan guarantees, with taxpayers on the hook in the event of a default. The Treasury Department facilitated the loan with the support of the Energy Department, and the terms of the loan were approved by the White House Office of Management and Budget.
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Titanic
of Obama’s green energy program was Solyndra, a California-based solar panel manufacturing company the Obama administration propped up with $535 million in federal loan guarantees, with taxpayers on the hook in the event of a default. The Treasury Department facilitated the loan with the support of the Energy Department, and the terms of the loan were approved by the White House Office of Management and Budget.
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This was unbridled liberalism, with the best of ostensibly good intentions and nary a concern for whether it was a viable enterprise that had the slightest prospect for success—a microcosm of the administration’s grander failure, the $868 billion stimulus bill. In fact, Solyndra received the administration’s first loan guaranty under the stimulus bill.
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Obama showed not the least reticence about his support for the project or any concern that its possible failure would dent the credibility of his clean energy pursuits, obviously having lived a political life mostly sheltered from accountability. Accordingly, he and his energy secretary Steven Chu made celebratory visits to the company’s headquarters in the Silicon Valley. The cautionary warnings of House Republicans and government auditors that this wasn’t a good investment didn’t impress the administration.
Showing zero humility, the administration continually showcased Solyndra as a model project for America’s future. Much fanfare accompanied the groundbreaking ceremony with Secretary Chu in attendance and Vice President Biden’s image proudly on display through a video feed. “The announcement today is part of the unprecedented investment this administration is making in renewable energy and exactly what the Recovery Act is all about,” Biden triumphantly declared. “By investing in the infrastructure and technology of the future, we are not only creating jobs today, but laying the foundation for long-term growth in the 21
st
-century economy.”
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During Obama’s visit to Solyndra, he enthusiastically told its employees that his administration’s financial support for the project was creating hundreds of jobs.
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“We can see the positive impacts [of the stimulus] right here at Solyndra,” he boasted.
st
-century economy.”
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During Obama’s visit to Solyndra, he enthusiastically told its employees that his administration’s financial support for the project was creating hundreds of jobs.
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“We can see the positive impacts [of the stimulus] right here at Solyndra,” he boasted.
Not everyone believed the rhetoric, however. Skeptics of the company’s viability included not only Republicans, but apparently the firm’s own employees, with one former worker later declaring, “Everyone knew that the plant wouldn’t work.”
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Indeed, in April 2010, even before Obama’s visit, auditor PricewaterhouseCoopers said that Solyndra’s losses and negative cash flow raise “substantial doubt about its ability to continue as a going concern.” As the
New York Times
reported, “Behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public.”
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Indeed, in April 2010, even before Obama’s visit, auditor PricewaterhouseCoopers said that Solyndra’s losses and negative cash flow raise “substantial doubt about its ability to continue as a going concern.” As the
New York Times
reported, “Behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public.”
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We later learned that despite the administration’s public braggadocio, it had internally discussed Solyndra’s potential collapse for quite some time. As early as 2009, Brad Jones of Redpoint Ventures sent an email warning Larry Summers, director of the National Economic Council, that Solyndra was a bad bet. Arguing that the Energy Department did not seem “well-equipped to decide which companies should get the money and how much,” Jones said that while his own firm was backing Solyndra, the company had received its loan even though it had no profits and revenue short of $100 million. “While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money,” Jones observed. Summers candidly replied, “I relate to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly. What should we do?”
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In a
Washington Post
expose based on “an analysis of thousands of memos, company records and internal e-mails,” the paper found that Summers was not the only Obama official concerned about Solyndra and about Obama’s larger green energy agenda. The communications uncovered by the
Post
showed “vigorous debate within the Obama White House about whether the solar-panel manufacturer was a smart bet. They also highlight the angst inside the West Wing about whether the president’s initiative to support clean energy was ill-equipped to live up to its promises, or could, as some hoped, help validate Obama’s use of $80 billion in stimulus to build a clean-energy industry.”
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Washington Post
expose based on “an analysis of thousands of memos, company records and internal e-mails,” the paper found that Summers was not the only Obama official concerned about Solyndra and about Obama’s larger green energy agenda. The communications uncovered by the
Post
showed “vigorous debate within the Obama White House about whether the solar-panel manufacturer was a smart bet. They also highlight the angst inside the West Wing about whether the president’s initiative to support clean energy was ill-equipped to live up to its promises, or could, as some hoped, help validate Obama’s use of $80 billion in stimulus to build a clean-energy industry.”
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The
Post
further discovered that Obama’s “green-technology program was infused with politics at every level.” According to the paper, “political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.” What’s more, the government’s backing of Solyndra was supported by an extensive lobbying campaign, including “high-level maneuvering by politically connected clean-technology investors.”
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Post
further discovered that Obama’s “green-technology program was infused with politics at every level.” According to the paper, “political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.” What’s more, the government’s backing of Solyndra was supported by an extensive lobbying campaign, including “high-level maneuvering by politically connected clean-technology investors.”
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When Solyndra was on the brink of collapse, what commanded the administration’s attention was not so much the fate of the employees— “rarely, if ever was there discussion of the impact that Solyndra’s collapse would have on laid-off workers”—but the “political fallout” and the “optics” of the company’s failure, and its possible effect on Obama’s prospects for reelection. Ryan Alexander, president of the nonpartisan Taxpayers for Common Sense, said, “What’s so troubling is that politics seems to be the dominant factor. They’re not talking about what the taxpayers are losing; they’re not talking about the failure of the technology, whether we bet on the wrong horse. What they are talking about is ‘How are we going to manage this politically?’”
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A typical example is a January 31, 2011 email in which OMB staff members discuss how a Solyndra default, if timed correctly, could be spun to the administration’s benefit. According to the staffer, “If Solyndra defaults down the road, the optics will arguably be worse later than they would be today…. In addition, the timing will likely coincide with the 2012 campaign season heating up, whereas a default today could be put in the context of (and perhaps even get some credit for) fiscal discipline/ good government because the Administration would be limiting further taxpayer exposure letting bad projects go, and could make public steps it is taking to learn lessons and improve/limit future lending.”
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Adding scandal to injury, we later learned the administration had granted ready access to venture capitalists with stakes in administration-backed companies. Many of these individuals were Obama donors, and a number of them were given jobs in the administration overseeing its clean energy program. Compounding this corrupt morass, there were revelations that senior administration officials pressured bureaucrats to fast-track approval of the loan in time to allow the administration to gain maximum political advantage through Biden’s public unveiling of the project during a visit to California.
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“IT WAS AN INSANE BUSINESS MODEL”38
Obama made his high-profile visit to Solyndra in May 2010 despite increasing signs of the firm’s impending collapse. We later learned that administration officials and Obama fundraisers, fearing the firm would not survive, had urged him not to visit Solyndra and risk political embarrassment. But arrogant DOE officials gave Obama just enough assurances to allow him to proceed.
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In June 2010, the month following Obama’s visit, the firm’s CEO, Brian Harrison, boasted to the
Washington Post
about Solyndra’s improving performance, saying that the company “doubled our production from 2009 to 2010, and we’ll double it again from 2010 to 2011.” To the contrary, one solar industry expert, Peter Lynch, revealed that Solyndra had experienced serious difficulties from the beginning and that it had always had an imbalanced financial model. “You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive,” he said. “It was an insane business model. The numbers just don’t work, and they never did.”
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Washington Post
about Solyndra’s improving performance, saying that the company “doubled our production from 2009 to 2010, and we’ll double it again from 2010 to 2011.” To the contrary, one solar industry expert, Peter Lynch, revealed that Solyndra had experienced serious difficulties from the beginning and that it had always had an imbalanced financial model. “You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive,” he said. “It was an insane business model. The numbers just don’t work, and they never did.”
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In November 2010 Solyndra announced it would lay off nearly 20 percent of its workers. Less than a year later, the company let go its remaining workers and filed for bankruptcy. Shortly after that, its offices were raided by the FBI and DOE. Top Solyndra executives later pleaded the Fifth Amendment and refused to testify before a congressional hearing.
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What was so recently heralded as the future of green energy and of a larger, thriving green economy ended in ignominious failure and as the target of a federal criminal investigation. It was a tale of an ideologically driven administration that rigged the system and cut corners to loan enormous amounts of money to a company manufacturing a politically correct product for which there was little public demand.
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LIBERALISM MEANS NEVER HAVING TO SAY YOU’RE SORRY42
The Obama administration took pains to emphasize that the mere collapse of its flagship clean energy project would not diminish its enthusiasm for funding similar concerns. They were not the least bit repentant, acting as though the half-billion-dollar loss was just the ordinary course of business, to be expected in the pursuit of a noble cause, and that they would soldier on, with taxpayer money, experimenting with more such wasteful projects. “The president will continue to support these initiatives and highlight the American ingenuity, the people and the private-sector companies that are helping to generate jobs and foster our nation’s 21
st
-century clean-energy economy,” said White House spokesman Clark Stevens. The White House released an unapologetic statement declaring, “While we are disappointed by this particular outcome, we continue to believe the clean energy jobs race is one that America can, must and will win. The Department of Energy’s overall portfolio of investments—which includes dozens of other companies—continues to perform well and is on pace to create thousands of jobs.”
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st
-century clean-energy economy,” said White House spokesman Clark Stevens. The White House released an unapologetic statement declaring, “While we are disappointed by this particular outcome, we continue to believe the clean energy jobs race is one that America can, must and will win. The Department of Energy’s overall portfolio of investments—which includes dozens of other companies—continues to perform well and is on pace to create thousands of jobs.”
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