The Magazine

The Solyndra Stonewall

Oct 31, 2011, Vol. 17, No. 07 • By STEPHEN F. HAYES
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About 24 hours after he recited the oath of office, Barack Obama addressed senior executive branch officials and cabinet secretaries at the Eisenhower Executive Office Building. The new president promised that his administration would bring a new openness to Washington, with strict ethics requirements and a presumption in favor of public disclosure of, well, almost everything. “For a long time now, there’s been too much secrecy in this city,” he declared. “The old rules said that if there was a defensible argument for not disclosing something to the American people, then it should not be disclosed. That era is now over. Starting today, .  .  . this administration stands on the side not of those who seek to withhold information but those who seek to make it known.”

Photo of Obama touring Solyndra facilities

Think about that promise as you consider the Obama administration’s response to the congressional investigation of a $535 million loan guarantee to the bankrupt solar panel manufacturer Solyndra.

After the Department of Energy complied with an initial Solyndra document request from the House Energy and Commerce Committee in February 2011, the Obama administration became largely uncooperative. When there has been a defensible argument for not disclosing something, the administration has used it. Officials have withheld thousands of pages of documents. They have ignored requests for information as a matter of routine. In late June, the deputy director of the Office of Management and Budget did not show up at a congressional hearing for which he was the only witness. In late July, OMB failed to meet a deadline to provide documents that had been subpoenaed by the Energy and Commerce Committee. In October, after the head of the Department of Energy’s loan program resigned, the administration finally provided some of the requested documents​—​but did so late on a Friday of a three-day weekend and only after briefing select reporters in advance to spin the damaging materials.

These are the “old rules.” As questions surrounding the Solyndra loan grow more serious, the Obama administration is digging in. It’s not hard to see why.

Late last week, for instance, the administration muzzled a key figure in the developing controversy. The Department of Energy denied a request from the House Energy and Commerce Committee for a transcribed interview, under oath, with Susan Richardson, chief counsel to the Department of Energy program that granted the risky loan to Solyndra. Richardson is the author of two memos from earlier this year about the restructuring of that loan​—​changes which ensured that private investors, including several prominent Obama supporters, would be paid back before taxpayers in the event of a default.

The two memos are nearly identical except for their dates and, perhaps significantly, the addressees. The first, labeled “draft” and dated January 19, 2011, is a “Memorandum for the Secretary”​—​Energy Secretary Steven Chu​—​to be delivered “through Scott Blake Harris,” the department’s general counsel. A second version, dated February 15, 2011, is addressed directly to Harris, with no mention of Chu.

Why the difference? Perhaps Richardson, or someone in her employ, didn’t want to burden a busy Secretary Chu with more paperwork. Or maybe Richardson thought it was up to Harris to decide if the issue was important enough to be brought to Chu’s attention.

Those are the charitable explanations. Here’s another possibility: Richardson may have sought to protect Chu from the political fallout if an increasingly flimsy Solyndra collapsed. No one, after all, had been a bigger advocate for the Solyndra loan than Steven Chu. From the beginning, Chu sought to expedite the loan guarantee, even if that required changing the rules meant to protect taxpayers. In February 2009, for example, Chu complained to the Wall Street Journal that paperwork requirements were burdensome. “It might be too much,” he said.

A month later, Chu had apparently made some progress. The Solyndra loan application had been denied by the Bush administration in mid-January 2009. But the new rules yielded different results. “We’ve accelerated and streamlined the process and the loans are coming out,” he said. “We’re trying to streamline it so that the period of time will be reduced from a scale of four years to several months.”

Two years later, as Richardson was preparing her memo justifying the loan restructuring, the political implications of a Solyndra collapse were on the minds of top Obama administration figures. Officials at the Office of Management and Budget thought Solyndra so important, in fact, that they recommended having a top OMB representative raise the issue directly with Chu.

An email between OMB officials dated January 31, 2011, notes that an upcoming meeting about the loan program “might present an opportunity to flag to DOE [Department of Energy] at the highest level the stakes involved, for the Secretary to do as he sees fit (and be fully informed and accountable for the decision).”

The email further suggests that the OMB director “privately” point out the risks of restructuring and the potential political implications to Chu:

While the company may avoid default with a restructuring, there is also a good chance it will not. If Solyndra defaults down the road, the optics will arguably be worse than they would be today. .  .  . [Q]uestions will be asked as to why the administration made a bad investment not just once (which could hopefully be explained as part of the challenge of supporting innovative technologies), but twice (which could easily be portrayed as bad judgment, or worse). In addition, the timing will likely coincide with the 2012 campaign season heating up, whereas a default today could be put in the context of (and perhaps even get some credit for) fiscal discipline/good government because the administration would be limiting further taxpayer exposure .  .  . ).

Prescient words. The important question, however, is this: Did Richardson leave Chu off the February 15 memo to protect him? And if so, did someone tell her to do so?

We don’t know. Testifying under oath, however, would allow Richardson to answer those questions and others that might help shed light on the whole sorry mess. That the Obama administration is blocking her​—​and refusing to cooperate fully with congressional investigators​—​makes clear the president and his lieutenants are less interested in sharing the facts of the case than in hiding them. As President Obama put it in January 2009: “The way to make government responsible is to hold it accountable. And the way to make government accountable is make it transparent so that the American people can know exactly what decisions are being made, how they’re being made, and whether their interests are being well served.” He was right.

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