The Great Destroyer: Barack Obama's War on the Republic (27 page)

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Authors: David Limbaugh

BOOK: The Great Destroyer: Barack Obama's War on the Republic
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In fact, these companies were not providing permanent jobs, and the jobs they did offer were created only through government infusions of cash. The inability of these companies to compete in the market was all the more remarkable given the free advertising Obama gave them with his incessant promotions and visits. Brendan Doherty, an assistant professor at the U.S. Naval Academy, observed, “You couldn’t get that kind of publicity if you devoted all your advertising budget to it.”
44
Obama himself was unapologetic. “Now there are going to be some failures. Hindsight is always 20/20,” he said in an interview with ABC News and Yahoo! online television. “It went through the normal process and people thought this was a good bet.”
45
We know that neither of those statements was true: it was an expedited process rife with conflicts of interest and favoritism, and many of his closest advisers thought Solyndra was far from “a good bet.” Whether the federal government should be making these kinds of bets in the first place is another question.
Energy Department spokesman Dan Leistikow was equally unrepentant, saying, “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed. But we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.”
46
Being a “well-intentioned” liberal means never having to say you’re sorry.
Unsurprisingly, even as the administration sought to justify the Solyndra investment, some officials blamed the entire mess on the Bush administration, saying the Bush DOE was the first to consider Solyndra’s application. That allegation was true, but it left out one important detail—the Bush DOE
rejected
Solyndra’s bid.
47
Proving that the Solyndra denouement would not affect its energy policy one iota, just days before Solyndra shut down, the Department of Energy finalized a partial loan guaranty for $852 million to yet another solar energy company—Genesis Solar Energy Project, of California—with the promise that it would support eight hundred construction jobs and forty-seven operating jobs. “This project creates jobs, avoids greenhouse gas emissions and helps strengthen our nation’s renewable energy future,” Secretary Chu announced.
48
But the administration’s headlong rush to force-feed these green projects to the nation have led to other unanticipated problems—and from an unlikely source. In order to qualify for the loan, Genesis had to meet certain deadlines, but they’ve run into opposition from Native Americans, who are trying to delay or even scuttle the project because they say the accelerated approval process fails to protect wildlife and cultural resources.
49
“THEY DID PUSH VERY HARD FOR US TO HOLD OUR ANNOUNCEMENT”
There was a good reason the administration was uncooperative with congressional investigators looking into the Solyndra affair. The House Committee on Energy and Commerce opened its investigation on February 17, 2011, requesting documents and a briefing on Solyndra. Four months later, the White House’s Office of Management and Budget was stonewalling, failing to produce “a single page of its communications or analyses” pertaining to the Solyndra loan guaranty. Committee Democrats continually refused to cooperate and protested investigative efforts at every turn. On a strict party line vote, the Committee voted 14 - 8 to subpoena the OMB for these documents.
Upton’s committee concluded that the DOE and OMB did not take adequate steps to protect taxpayer dollars, as emails and other communications showed that their staff repeatedly questioned whether Solyndra had financial resources sufficient to warrant the loan guaranty. These communications confirmed that the administration pressured the OMB staff to expedite and complete its loan review prior to the groundbreaking ceremony at the company’s facilities, which was being orchestrated by the administration. These exchanges “clearly demonstrate that OMB felt pressure to complete its review ahead of the September 4 event.” They also revealed that the White House jumped the gun, treating the loan approval as a foregone conclusion, as they scheduled Vice President Biden’s and Secretary Chu’s appearance before the DOE had even made its final presentation to the OMB for the loan.
51
The
Washington Post
too found that the Obama White House tried to rush federal reviewers for a decision on the Solyndra loan guaranty. Released emails from August 2009 showed that White House officials repeatedly pestered OMB reviewers as to when they would decide on the loan. OMB officials expressed concern they were being pressured to approve the deal without adequate time to assess the risk to taxpayers.
52
There were also reports that the DOE pressured Solyndra investors to quickly increase their investment to justify the government’s loan guaranty.
Tainting the ordeal further, Solyndra company representatives made numerous visits to the White House to meet with administration officials—between March 12, 2009, and April 14, 2011, according to White House visitor logs, Solyndra officials and investors made at least twenty White House visits, including four meetings alone the week before the loan guaranty was awarded.
53
More bad news emerged surrounding a Solyndra restructuring deal that the government had approved in February 2011, as the company ran short of cash. The agreement, it was revealed, was crafted to give Solyndra’s private investors priority ahead of the government—in other words, ahead of the taxpayers—on the first $75 million to be recouped in case of bankruptcy.
According to the committee, this subordination of taxpayer money to private creditors, one of whom was an Obama financial supporter, “appears to be in direct violation of the Energy Policy Act of 2005, which states that ‘the obligation shall be subject to the condition that the obligation is not subordinate to other financing.’” Despite this clear language, DOE counsel issued a legal opinion approving the legality of the government’s loan subordination under the Energy Policy Act.
Two Treasury Department officials told a House Energy and Commerce subcommittee they were unaware of any previous subordination of taxpayers to private investors in a government loan repayment.
54
The restructuring agreement was indeed unprecedented, but it was perfectly consistent with the administration’s practice of ignoring customs, practices, and traditions as well as the law. It was eerily reminiscent of Obama’s lawless subordination of secured creditors in favor of his union allies in the Chrysler restructuring scandal, as detailed in
Crimes Against Liberty
.
In the end, the DOE’s subordination cost the taxpayers dearly. As part of its bankruptcy, the company agreed to auction off thousands of items from its California production facility, all to the benefit of the firm’s private investors, not the taxpayers.
55
More maddening still, we learned the restructuring agreement was approved despite warnings from OMB staff that restructuring could cost taxpayers $168 million more than simply liquidating the company.
56
In a final scandalous revelation, the
Washington Post
reported in November 2011 that the Obama administration had urged Solyndra executives to delay announcing its initial round of layoffs until after the November 2, 2010 midterm elections. “DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” wrote a Solyndra investor advisor on October 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3
rd
—oddly they didn’t give a reason for that date.”
57
As HotAir’s Ed Morrissey wrote, “This means that the DoE knew that Solyndra had begun to fail, and that the case they provided as part of Barack Obama’s job stimulus wouldn’t actually create jobs. In fact, it wasn’t even going to
save
jobs. And yet the DoE not only succeeded in pressuring Solyndra into hiding the fact from the public and their investors, this sequence makes it look as though the Obama administration used the $40 million in loans as a bribe to keep Solyndra from making its layoff announcement in a timely manner.” According to Morrissey, it also appeared that this thread led directly to the White House.
58
“SOLYNDRA WAS JUST THE BEGINNING”
Like Solyndra, at least four other companies that received stimulus money have failed. Two of these were green energy firms: Evergreen Solar and Spectra Watt, both of which said they couldn’t compete with Chinese competitors.
59
Various experts are now predicting hundreds of bankruptcies of U.S. solar companies when the market for solar panels, artificially inflated by government support, cools down. “Solyndra was just the beginning,” says Jessie Pichel, chief of clean energy research at the investment bank Jefferies & Co. “We’re going to see a lot of companies go bankrupt.” Mark Bachman, a renewables analyst at Avian Securities, predicts that only twenty to forty of the few hundred solar panel manufacturers in the world will survive the next few years.
60
Undeterred by all these failures, Obama’s DOE approved two more solar project loan guarantees just days before the federal deadline. The projects totaled more than $1 billion: a $737 million guaranty to Solar Reserve for a solar tower on federal land in Nevada, and $337 million to Arizona’s Mesquite Solar 1. As experts note, these guarantees are virtually destined to fail, having been given to firms that could not make it on their own. Even Treasury Secretary Timothy Geithner’s warning that these guarantees were too risky did not faze Obama, who never met a budget he felt compelled to balance or a risk of taxpayer money he believed he needed to justify.
61
As with Solyndra, political connections appear to have been an important factor in the Solar Reserve loan; one of the company’s business partners, PCG Clean Energy and Technology Fund (East) LLC, has Nancy Pelosi’s brother-in-law, Ronald Pelosi, as an executive. Another of its investment partners, Argonaut Private Equity, employs Steve Mitchell, who was a member of Solyndra’s Board of Directors.
62
Indeed, Obama’s green energy initiative has provided a tremendous outlet for cronyism. In
Throw Them All Out
, the Hoover Institution’s Peter Schweizer revealed that 80 percent of the renewable energy companies backed by Obama’s DOE are operated by or mostly owned by Obama donors. These companies’ political largesse, says Schweizer, “is probably the best investment they ever made in alternative energy. It brought them returns many times over.” Schweizer found that in the so-called “1705 Loan Guarantee Program alone … $16.4 billion of the $20.5 billion in loans granted as of September 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.”
The administration’s clean energy cronyism was also detailed in a 2010 Government Accountability Office report, which found that the Department of Energy “treated applicants inconsistently, favoring some and disadvantaging others.” DOE inspector general Gregory Friedman testified that contracts had been steered to “friends and family.”
63
GAO auditors also reported in 2010 that the DOE had given favorable treatment to certain loan guaranty applicants and had waived some of the required steps for five loan applicants to receive funding, one of which was Solyndra. The government fast-tracked these loan guarantees before receiving final reports that the risks were warranted.
64
The GAO, upon examining the first eighteen government-guaranteed loans that the DOE approved, found that not one of them was properly documented.
65
“There’s a consequence if you don’t follow a rigorous process that’s transparent,” said Franklin Rusco, a GAO analyst. “It makes the agency more susceptible to outside pressures, potentially.” And in fact, Solyndra benefitted a company whose financial backers include George Kaiser, an Oklahoma oil billionaire who functioned as a “bundler” of campaign donations and raised some $50,000 for Obama’s 2008 campaign.
66
In addition, the DOE inspector general called the DOE to task for not saving email communications discussing the selection of loan guaranty recipients. Based on this deplorable series of events, auditors were concerned that defaults of other similarly situated companies might be imminent if the department, in its haste to expedite these types of loans, exercised similar negligence in requiring the normal reviews.
67
Shortly before this book went to press, we learned about more clean energy debacles. First, there is A123 Systems in Massachusetts. Scott Heiss, who bought stock in the company, which manufactures large lithium batteries for automakers, filed a federal lawsuit against the firm alleging it hid problems at its plant that, if disclosed, would lower its stock price. The company, a beneficiary of $300 million of stimulus funding, laid off 125 workers in December 2011 and has announced a recall of malfunctioning battery packs that will cost it more than $55 million. And second, a company ludicrously named “Solar Trust of America” just filed for bankruptcy. As observers noted, its failure could be blamed on the demise of Solar Millennium AG, its German parent company. This was a close call for taxpayers, since the Energy Department approved a mammoth $2.1 billion loan guaranty for the doomed company. Luckily—no thanks to the DOE—the firm’s CEO turned down the offer, saying it was too risky.
68

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