Beware of a company that claims it can make widgets for $10 each, sell them for $8 a piece, and then “make up the losses on volume.” No banker or venture capitalist would invest in such a foolhardy scheme. But substitute solar panels for widgets and that is exactly what Washington’s professional politicians and career bureaucrats did with $535 million in loan guarantees for Solyndra, the now-bankrupt Fremont company that was the centerpiece of President Barack Obama’s “clean-energy future.” The funding came from the $859 billion Obama economic stimulus program.
Ultimately, Solyndra may prove to be the only Energy Department loan guarantee that explodes into a major scandal. However, there are at least 16 more such loan guarantees worth in excess of $10 billion — all approved by the same cast of characters at the White House and the Energy Department responsible for the current mess. And plenty of other federal departments and agencies have also provided billions of dollars worth of loan guarantees, so nobody should be surprised if Solyndra is only the first of similar outrages under the economic stimulus regime.
What is clear from emails made public last week by the House Energy and Commerce Committee’s subcommittee on oversight and investigations chaired by Rep. Cliff Stearns, R-Fla., is that key Solyndra loan decisions were guided primarily by political considerations. President George W. Bush was in the White House when the proposal to back the company initially appeared in Washington. But two weeks before Bush left office, an Energy Department review panel unanimously recommended against making the loan. Even after the Obama administration opted to champion the proposal, career employees at the Office of Management and Budget cautioned against doing so before a final decision was made. One even predicted Solyndra would run out of money and head for bankruptcy court by this month. And a Government Accounting Office report said the Energy Department had circumvented its own rules in order to make loan guarantees to at least five firms, including Solyndra.
The problem is that government is inherently political, so it is all but impossible, even for the most dedicated and impartial career employees, to make investment decisions using tax dollars strictly on the basis of economic considerations. That is why politicians should never be allowed to pick winners and losers in the market. The result almost always will be, as Energy and Commerce Committee Chairman Rep. Fred Upton, R-Mi., said of the Solyndra mess last week, “not right. This is not good. It makes you sick to your stomach. This is taxpayer money.”