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Romney’s conflicting remarks on Solyndra-like investments

at 06:00 AM ET, 06/08/2012
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“Well, that [Konarka investment] was a loan that was approved by the prior administration. The governor made it clear that his philosophy was that government should not be in the business of venture investing.”

— Romney campaign adviser Eric Fehrnstrom on ABC’s “This Week,” talking about a Massachusetts investment in the failed solar-panel company Konarka Technologies, June 3, 2012

Mitt Romney campaign adviser Eric Fehrnstrom squared off Sunday with President Obama’s deputy campaign manager, Stephanie Cutter, on ABC’s “This Week,” with the two operatives defending their candidates’ records on clean-energy investments.

Earlier in the week, Romney held a news conference at Solyndra, describing the collapse of that federally backed solar-panel maker as proof that the Obama administration was misguided in trying to create jobs with targeted government investments — something the president’s critics have described as crony capitalism. But Massachusetts made similar investments when the presumptive GOP presidential nominee was governor of that state, and a small number of those companies have gone bust.

Does Romney have his own Solyndra situation? Let’s review the Bay State’s clean-energy programs to determine how much responsibility the former governor deserves for an investment in the now-defunct solar-panel start-up Konarka Technologies. We’ll also take a look at how much he supported government financing for green-technology development in general.

The Facts

Romney held a news conference at the Konarka headquarters less than three weeks after becoming governor of Massachusetts, announcing that the state would shift $24 million from its long-established Renewable Energy Trust to a new Green Energy Fund. The plan allowed the state to partner with private investors to provide loans, venture capital and management assistance to start-ups, with an independent group making the investment decisions.

Green Energy Fund Chief Executive William Osborn told us that “the idea was that a private investment company might be better suited to manage and choose the companies.”

All told, Romney announced $9 million in funding to five companies, according a January 2003 Boston Globe article. Those investments included a $1.5 million loan to Konarka that the renewable-energy trust closed on shortly before Romney took office.

The administrator for the renewable-energy trust said at the time that Romney’s announcement represented a “redoubling of efforts” with the state’s clean-energy program, and that the trust “was evolving and developing, and now it’s on steroids,” according to a January 2003 article in the Boston Herald.

It’s worth noting that Romney’s Republican predecessor, Gov. Jane Swift, recommended a different direction for the trust before she left office. With the state facing a $3 billion deficit, she proposed draining the fund to avoid cuts in human services and school aid, according to the Boston Globe article.

Romney ignored that advice and kept the program in place. Here’s what he said about the planned investments during his 2003 news conference at Konarka:

“The [renewable-energy] trust fund has been growing for years, and I believe now is the time to refocus its assets in such a manner that it can become a major economic springboard for the Commonwealth by focusing on job creation in the renewable energy sector.”

Springboard ... for job creation? That’s similar to what Obama said at Solyndra before the solar-panel company collapsed, leaving more than 1,000 people out of work and taxpayers holding the bag for $535 million in Energy Department loans.

Fast-forward about nine and a half years to May 31. Romney holds a news conference in front of the shuttered Solyndra headquarters to lambaste the Obama administration’s investments in clean energy companies. Ironically, Konarka announced a day later that it would file for bankruptcy and lay off all its workers.

A Konarka spokeswoman told us that “all the monies [from the state loan] were paid back on schedule.” But contrary to what Konarka claims and what Politico ended up reporting, the solar panel company never paid back the 2003 loan. Instead, the firm converted that debt into equity, which means taxpayers will recover whatever the bankruptcy process allows — which usually means very little for equity investors in a bankrupt company.

Granted, the renewable-energy trust had approved Konarka’s loan before Romney took office, and the Green Energy Fund was already in the works by then as well. But the new governor could have put the brakes on all that. He boasted about it instead.

“We met with folks in the governor’s office and let them know what was coming,” said Rob Pratt, director of the renewable-energy trust before and during Romney’s term. “They wanted to put some spin on it.”

“We had done all the work, and they took the credit for it,” Pratt continued. “But I thought that’s how governors play the game, and that was fine with us.”

This reiterates the point that Romney didn’t create the Green Energy Fund and that the Konarka loan went through before his time. But the Republican presidential candidate doesn’t get to have it both ways — applauding and embracing clean-energy investments when it suits him and then disavowing those positions once they become a political liability.

It’s worth noting that Romney vetoed $12.5 million in state funding — half the total amount — for a similar but unrelated emerging-technology fund during his first year in office. The Democrat-led legislature overturned that action.

According to an April 2003 Boston Globe article, Romney had this to say about the emerging-technology fund: “I don’t believe the state has a real role to become a venture capitalist. Somehow the idea of state employees deciding which business to invest in is not a model I would subscribe to.”

That’s an obvious change from the comments Romney had made three months earlier at Konarka. It also shows a lack of policy consistency, since the Republican governor did nothing to end his state’s clean-energy investment programs. (We should note that he signed off on a plan to shift $17 million from the trust fund in an effort to cover budget deficits, but that’s a far cry from ending the $160 million program.)

Osborn said Romney never expressed any qualms with the Green Energy Fund. “If he had not liked it, he certainly could have lowered the boom,” he said. “We never heard boo from him in terms of government shouldn’t do this.”

Pratt shared similar recollections in regard to the renewable-energy trust, saying, “Romney definitely wasn’t antagonistic toward clean energy and the investment role we were playing.”

The Pinocchio Test

In terms of clean-energy investments, Romney sent mixed messages as governor of Massachusetts. He touted the state’s clean-energy investment programs and even delivered remarks that would give listeners the impression he was responsible for a decision to “refocus its assets in such a manner that it can become a major economic springboard.” But he also slashed funding for a separate program that provided money for emerging-technology development.

The Konarka loan was intended to create jobs at a time when Massachusetts desperately needed them. Now it’s a liability, and Romney wants to disavow any involvement with it. He didn’t create the investment, but he did boast about it early in his tenure.

The Romney campaign earns three Pinocchios for suggesting that the presumptive GOP presidential nominee made it “clear that his philosophy was that government should not be in the business of venture investing.” Romney was far from clear or consistent on this issue.

Three Pinocchios

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    About the Blogger

    Glenn Kessler has covered foreign policy, economic policy, the White House, Congress, politics, airline safety and Wall Street.

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