“Every day that you build this expanded facility, you’re demonstrating that the promise of clean energy isn’t just an article of faith.” President Barack Obama told this to employees of Solyndra at the company’s solar panel plant in Fremont last May, “It’s happening right now. The future is here.”
Well, the future was here. On Thursday, Solyndra announced it was filing for bankruptcy, despite the president’s bold prediction 15 months earlier that the company would create 4,000 new jobs — 3,000 in construction and 1,000 in manufacturing. In September 2009, Solyndra had received the very first federal loan guarantee — $535 million — from a Department of Energy program partially funded by Obama’s stimulus package. But questions quickly surfaced. A Pricewaterhouse Coopers audit of the firm, months after the award was announced, found it to be a black hole for cash. Solyndra’s cumulative $558 million in “recurring losses from operations,” PwC wrote, and “negative cash flows since inception … raise substantial doubt about its ability to continue as a going concern.” Later, the Government Accountability Office found that the loan guarantee program failed to establish a rigorous and transparent oversight process.
“It makes the agency more susceptible to outside pressures, potentially,” GAO analyst Franklin Rusco said. And Solyndra brought plenty of pressure. The firm spent $140,000 on lobbyists in just the first quarter of 2010 when it applied for yet another half-billion-dollar federal loan guarantee. But now the company is now going under.
At the time Solyndra received its grant, Vice President Joe Biden declared that the Solyndra investment is “exactly what the Recovery Act is all about.” Events have proven Biden right.
Now that Solyndra is a demonstrated failure like the stimulus package as a whole, the administration still wants to continue the waste.
“The project that we supported succeeded,” Energy Department spokesman Damien LaVera said Wednesday.
So a bankrupt firm lays off all of its workers after blowing through half a billion in private venture capital, then consuming half a billion in taxpayer-subsidized loans, and this is a “success?” What would failure look like?
We’re supposed to have vibrant capital markets that make investment decisions using market principles. Instead we have the administration acting as a venture capital fund, picking projects not on a profit-and-loss basis, but on political priorities instead. A similar leap of ideological faith caused a fellow Democrat, Gov. Deval Patrick of Massachusetts, to waste $58 million of taxpayer funds on grants to another solar company that filed for bankruptcy two weeks ago.
If Obama and his friends want to invest their own money in a clean-energy company based on their faith that the technology’s moment is now, we wish them well. But we’d appreciate if they would stop gambling public money away on politically correct, pie-in-the-sky ventures.