The lesson of Solyndra fiasco
September 25, 2011 - 1:04 am
President Obama last year visited a California solar panel plant, saying the company proved “the promise of green energy isn’t just an article of faith.” Sixteen months later, Solyndra is bankrupt and under FBI investigation while the White House and the U.S. Department of Energy face congressional scrutiny for wasting half a billion dollars of taxpayers’ money to prop up the losing enterprise.
Just two months before the president took his highly publicized tour of the plant, the accounting firm PricewaterhouseCoopers issued a stark warning that Solyndra wasn’t making money — and never had. Nevertheless, an Energy Department program aimed at promoting clean energy projects guaranteed a $535 million loan to Solyndra.
By last February, the company had closed one of its two plants and was about to shut down for good. Yet within a few weeks, and after frantic company phone calls and meetings with White House aides, the Energy Department incredibly approved a loan restructuring that allowed private concerns to pump an additional $75 million into the company with the contract stipulation that, if the business failed, investors would be paid back before taxpayers.
This is an outrage.
A look at the bigger picture reveals the entire domestic solar industry, not just this company, has hit a downturn, raising doubts about the Obama administration strategy of spending on alternative energy while resisting Republican and Democrat calls to instead bolster the oil and natural gas industries.
The Solyndra scandal is a terrible stain on the Obama administration’s stimulus package, passed in 2009 by the Democrat-controlled Congress. Solyndra is just one of 42 projects in the Energy Department’s $30 billion portfolio of clean energy loan guarantees.
This begs a question: Are any of these other projects in trouble?
It is ironic that while touting his latest jobs legislation, the president attacks what he calls oil and gas “subsidies” received through tax credits and deductions. He continues to harm the domestic oil and gas industries with such baseless criticism. Doing away with tax provisions for exploration and drilling will not hurt big companies. It would damage the smaller oil and gas independents that produce 95 percent of the nation’s wells. These tax provisions — not “subsidies” — allow independents to invest their profits in reserves and production, as well as create jobs. Lots of jobs.
It is also ironic that fossil fuels are creating virtually all of our new jobs, yet alternative fuels are getting all the subsidies. There are more than 18,000 unfilled jobs related to the oil and gas exploration business in North Dakota. The labor market is so tight in North Dakota that McDonald’s is offering $2,000 bonuses for new hires there.
We are still a fossil fuel nation. And yes, we need solar, biofuels, wind and every other source we can develop. But the Solyndra debacle proves we don’t need the federal government trying to pick the winners and losers in the energy field.
A USA Today editorial gives a proper lecture to the president: “If there’s one thing the marketplace virtually does better than government, it’s picking individual successes in an uncertain and highly competitive business. In fact, government involvement can unfairly tilt the playing field toward one company and away from competitors. What the government can do is create an environment that makes it possible for the best companies to emerge and thrive.”
The president should follow this advice. He also ought to listen to the rising chorus within his own party (as well as the GOP) asking that he support regulatory relief to business and a better and more productive tax environment, and start defending American companies from unfair foreign competition. After all, one reason for Solyndra’s demise was a huge drop in solar panel prices thanks to China’s state-subsidized manufacturers dumping junk panels on the market.
Business consultant J.C. Watts (JCWatts01@jcwatts.com) is former chairman of the Republican Conference of the U.S. House, where he served as an Oklahoma representative from 1995 to 2002. He writes twice monthly for the Review-Journal.