The problem with crony capitalism is that it is impossible, even for honest pols, to prove they didn’t act out of self-interest. The Wall Street Journal reports: “White House officials dismissed concerns about Solyndra LLC ahead of President Barack Obama’s May 2010 visit to the failed solar-panel maker, despite acknowledging that the company and other clean-energy ventures could go ‘belly-up’ by the 2012 election, according to emails released by Democratic lawmakers.” Democrats claim this proves no favoritism was shown. Republicans will look at this and conclude that only favoritism accounts for the rush to complete a deal whose viability was in serious doubt. ABC News reports:
President Obama told George Stephanopoulos Monday that he didn’t regret his administration’s investment of $535 million in failed clean energy company Solyndra.
“People felt it was a good bet,” the president said.
But new e-mails revealed today indicate there were plenty of folks within the administration who had serious questions about Solyndra, with the president’s chief economic adviser at the time, Larry Summers, suggesting that the government was “crappy” at picking sound investments.
So the administration is left to argue that the decision-makers were dunces, not crooks.
This is true on both sides of the aisle. In Texas, Gov. Rick Perry is coming under fire today yet again for his own favoritism toward donors. In the latest case, the favored company turned out to be one of the villains in the mortgage crisis. The Associated Press reports:
An Associated Press review of federal mortgage data, court filings and public statements found that Perry downplayed early warnings of an impending mortgage crisis as alarmist. That’s even as Perry’s own attorney general would later investigate whether Countrywide Financial Corp. encouraged homeowners to borrow more than they could afford.
As Perry offered $20 million in grants to Countrywide and $15 million to Washington Mutual Inc. — each blamed for having a major role in one of the country’s most serious recessions — he took in tens of thousands of their dollars for his gubernatorial campaign.
His campaign spokesman said the governor did it to get 3,800 jobs. (The report said 11,000 jobs had been promised.) Or was his judgment clouded by the campaign donations from these entities? Again, voters have to decide if the “11-point vetting” process was a facade or merely ineffective. Perry’s campaign spokesman has not responded to my inquiry as to the discrepancy between the jobs promised and delivered, whether those jobs were wiped out in the financial meltdown and whether in retrospect the vetting process should have been better.
There are always good reasons offered (e.g., cutting-edge technology, jobs for Texas) for self-dealing. But the motives of those who participate are suspect when those asking for the handout are also campaign donors. Moreover, whether the deal involves Solyndra or offering grants to lure banks to a state (that might have gotten the business anyway, given its pro-business climate), these situations show that politicians, without the discipline of the marketplace (i.e., they are spending other people’s money) aren’t very good at this sort of thing. In the end, it makes both the government officials and the business recipients look shady, or incompetent, or both.