Stop Tanking America, Part 2: Reckless Stimulus Spending on "Green" Energy Projects
In early September 2009, with the nation still shaken by the financial crisis and the unemployment rate rapidly climbing towards a disastrously-high 10 percent, President Barack Obama was eager to share some good news. And he found the perfect opportunity. Backed by $535 million in Energy Department loan guarantees, a new solar panel manufacturing plant was breaking ground in Silicon Valley – the first new factory there in years. He sent his Energy Secretary, Steven Chu, to attend the ceremony. Eight months later, the President himself toured the new facility and proclaimed that in America “the true engine of economic growth will always be companies like Solyndra.” Here was real evidence that his stimulus package was paying off and creating the jobs he promised to the American people.
But we all know how this story ended. Just two years later, Solyndra closed its doors, laid off 1,100 employees, and filed for bankruptcy. Two days after that, FBI agents and officials from the Energy Department’s Office of the Inspector General raided the company’s headquarters. The House Energy and Commerce Committee demanded to know why the Energy Department and the White House ignored several red flags about the company’s finances. Subpoenas were issued. Documents revealed that Solyndra’s CEO and other executives had bundled over $100,000 in donations to the Obama campaign and made more than 20 visits to the White House while the company’s loan guarantee was being reviewed. Investigations are still ongoing. And the $535 million of loan guarantees provided by U.S. taxpayers? Down the drain.
Yet Solyndra wasn’t the only failure. In October 2011, a Massachusetts-based “next gen” energy company called Beacon Power filed for bankruptcy after receiving $43 million in government support. In January of this year, Ener1, an electric-car battery maker, filed for bankruptcy as well after one of its subsidiaries received a $118 million stimulus grant.
Several other so-called “green” energy companies are in tough shape despite generous assistance from the President’s stimulus package. Nevada Geothermal Power received a $79 million loan guarantee from the same program that funded Solyndra, but last November the company’s auditor expressed “significant doubt about the company’s ability to continue as a going concern.” Abound Solar, another solar-panel maker which has drawn $70 million of its $400 million government loan guarantee, recently announced it would halt production and lay off 280 of its employees.
These companies and several more may be next in line for bankruptcy. But no one should be surprised that they are struggling so mightily when the only way they could secure financing in the first place is by dipping into the deep pockets of old Uncle Sam.
Unfortunately for taxpayers, bureaucrats and lawmakers all suffer from what economist Friedrich Hayek called “the fatal conceit”: the arrogant belief that somehow these government planners know how to direct our complex, modern, and dynamic economy better than consumers and investors acting out their own best interests in the free market.
Yet the tools planners employ – loan guarantees, grants, tax credits, and other special government handouts – all have one thing in common: they’re a big waste of taxpayer dollars. There’s no better evidence than this wave of bankruptcies and looming failures over the last several months.
Perhaps these “green” technologies truly are the wave of the future. Perhaps one day we will be able to power our nation with windmills and solar panels, and we can drive clean natural gas-powered vehicles – all at lower cost than the cheap, abundant energy sources we rely on today. Energy solutions that are better for the environment and cost effective are a dream come true for all of us. But it’s consumers acting in the free market that should pave the way towards that future, not officials in Washington. Until the government stops using taxpayer dollars to pick winners and losers, until this political cronyism and corporate welfare is put to rest all together, our tax dollars will continue to be wasted and our nation’s economy will continue to suffer.
If you haven’t already, sign the petition telling President Obama to “Stop Tanking America!”
Click here to read Stop Tanking America, Part 1 on the Keystone Pipeline.
Be sure to check back tomorrow for part 3 in the series.