To find a metaphor for the failed Obama presidency, look no further than Solyndra. Before it went bankrupt, the solar panel manufacturer was more than the recipient of a $535 million loan guarantee from the federal government. It was the model for the White House effort to put the American economy on a “new foundation.”
Solyndra was environmentally friendly, technologically advanced, and politically correct. It was an exporter, not an importer. Politicians and government were instrumental in the company’s growth. The money disbursed to Solyndra, it was said, would “multiply” throughout the economy, creating jobs and increasing consumer spending. “Keep up the good work!” wrote an administration official to a Solyndra executive last May. “We’re cheering for you.”
That was before the bankruptcy filing. Before the 1,100 lost jobs and the empty 650,000-square-foot production facility in Fremont, California. Before the FBI raid of Solyndra headquarters. Before the House Energy Committee released emails suggesting the Solyndra loan was rushed and improperly vetted. These days the White House is tight-lipped. The only cheering comes from Republicans sensing a possible Obama scandal.
Emphasis on “possible.” So far, the leaked Solyndra emails raise more questions than they answer. We’ve yet to see hard evidence that the White House improperly pressured the bureaucracy to approve a risky deal for a supporter. Republicans should also remember that the Solyndra loan was issued under a lobbyist-friendly 2005 law passed by a GOP-controlled Congress and signed by President Bush. The real Solyndra scandal isn’t that White House staff were overeager for a photo-op. It’s that America increasingly resembles a bankrupt clean energy company.
In today’s economy, risks are socialized while profit is privatized. The government uses deficit spending to shape investment decisions and support markets that otherwise wouldn’t exist. Political connections determine the recipients of government largesse. Rentiers conceal their self-interest behind the organic hemp cloak of environmentalism and global “competitiveness.” The illusion can be maintained for a time, but in the end the bill comes due. There’s no money left. And everything disappears.
If Solyndra had taken off, its private investors would have become extraordinarily rich. But it failed—and the American taxpayer has to foot the bill. And many other bills, too: The Solyndra loan was part of a $38.6 billion program to aid green energy that the Washington Post says has created exactly 3,545 jobs. (That’s $10,888,575 in loans per job, for those of you without a calculator.)
Government meddling isn’t limited to alternative energy. The U.S. Treasury stands behind Fannie Mae and Freddie Mac, General Motors, and AIG, not to mention all the other companies that profit from loopholes, sweetheart loans, and subsidies. The cliché has it that government is picking winners and losers. But that’s wrong: It picks only losers. Winning companies don’t need public support.
Fiscal and monetary policy serve the well connected. Wall Street titans benefited not only from TARP but also from the Federal Reserve’s money creation. Labor dictated the terms of the auto bailout. The health insurers were more than happy when the Democratic Congress handed them millions of new paying customers. The CEOs of GE and American Express got to sit next to the first lady at the president’s last address to Congress. Are we really surprised to learn that the Solyndra loan was approved a week after George Kaiser, the firm’s single largest shareholder and an Obama donor, met with White House officials?
The fastest way to earn government support is to say your efforts protect the environment and help America “win the future” over China and India. Solyndra was a twofer. “It’s here that companies like Solyndra are leading the way toward a brighter and more prosperous future,” President Obama said when he visited company headquarters on May 26, 2010. “Around the world, from China to Germany, our competitors are waging a historic effort to lead in developing new energy technologies.” Without intervention, he went on, “We risk falling behind.”
The event at which Obama said those words was well orchestrated. Throughout the Solyndra affair, the White House talent at “optics” was apparent. Berlin, Denver, Grant Park, Fremont—Obama knows how to put on a show. But he and his administration were so concerned with the images on the evening news that they ignored the invisible consequences of fiscal and monetary stimulus. “It almost always happens that when the immediate consequence is favorable, the later consequences are disastrous,” wrote the nineteenth-century economist Frédéric Bastiat.
Such was the case with Solyndra, and with Obama. Do they have to take the rest of us down with them?