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Right Turn
Posted at 05:00 PM ET, 11/18/2011

Solyndra: The case against government meddling

Energy Secretary Steven Chu’s testimony yesterday wasn’t just bad news for him and the Obama administration. It is also an inconvenient reminder for Republican voters that some of the Tea Party-friendly candidates have rotten records when it comes to crony capitalism.

True, Chu’s testimony is most problematic for him and the president. He insisted the Solyndra endeavor was fully scrutinized. He had no idea others were playing politics. This exchange neatly summed up Chu’s cluelessness:

“I don’t see any chain of emails looking out for the taxpayer money,” Rep. Steve Scalise, R-La., said in a tense exchange with Chu. “I see a whole lot of emails in the administration that are concerned about the politics. That’s what stinks the most about this.”
Chu denied that he asked Solyndra to delay the layoff announcement, prompting committee Chairman Cliff Stearns, R-Fla., to ask if Chu plans to look into who sent the email.
“You don’t know who in your department was involved with this and you have no idea in finding out?” Stearns asked.
Chu said the Energy Department’s general counsel “will look into who is doing these things.”

Chu is a walking advertisement for the perils of giving government bureaucrats duties for which they are not remotely competent to perform. When he says he acted with the taxpayers’ interests in mind, you get the idea that he might be serious. Apparently this crew thinks that the way to compete globally is to mimic failed command-and-control economies.

As Kimberley Strassel aptly put it:

Mr. Chu came to Congress to get grilled on the circumstances that led to $535 million in taxpayer money getting thrown down (to use a high-concept business term) a rat hole. Republicans were particularly interested in plumbing whether undue political influence played a role in the later terms of this loan to Solyndra, whose investors include an Obama donor.
But perhaps the greater merit of the testimony was to provide Americans the clearest view yet of the Obama philosophy of government in action. To watch Mr. Chu was to glimpse a day in the life of a political appointee destined for so much more than dusty energy policy. Boring! In Obamaland, department secretaries run the economy, baby! They swim in a pile of balance sheets — creating, funding and managing America’s future, one company at a time. As [Gordon Gekko] might say, Mr. Chu “makes the rules, pal!”

But Chu is also a reminder that a number of the Republican candidates aren’t much better. Newt Gingrich is a lifelong member of the energy subsidy society (that’s not a formal group). His writings and speeches are littered with all sorts of ideas for getting the government to back cool new ideas. I remember a few years back listening to Gingrich extol the virtues of energy-producing algae. Yeah, that’s the ticket. And let’s spend money on wind farms too. Gingrich, of course, posits himself as smarter than Chu, but is Gingrich-directed energy investment that much better than Chu-directed energy investment?

And likewise, Texas Gov. Rick Perry boasts that he personally signed off on tech fund grants. The Post’s Fact Checker, Glenn Kessler, found:

The governor’s office administers the technology fund and approves each award, which appears to present a conflict of interest. The lieutenant governor and House speaker must also sign off, but not until the governor has green-lighted the companies.
The [Dallas Morning] News article notes that the 20-plus states with similar funds avoid using such a system in order to prevent corruption.
Perry told The News that it shouldn’t matter whether the award recipients supported his campaigns, as long as their projects were worthy of funding. It turns out that some of them were not.
The governor also denied knowing whether his donors had ties to the companies receiving money, even though applicants had to submit full financial disclosures with names of investors.
Perry’s remarks suggest that the legislature’s reauthorization of these grant programs proves adequate oversight. But reauthorizing old programs and feeding them more money is not the same as auditing them.

The bottom line is that, in all these cases, pols contend they are better positioned to gamble money (not theirs, but the taxpayers) than is the private equity market. In all these cases, conflicts of interest are almost unavoidable.

Moreover, as Rep. Paul Ryan (R-Wis.) explained in his report on income inequality, these arrangements perpetuate a certain pernicious form of income inequality: the unfair preference for the politically connected. Solyndra is a good reminder for Democrats and Republicans alike that government shouldn’t be in the business of picking winning and losing energy companies.

By  |  05:00 PM ET, 11/18/2011

Categories:  Economy, Conservative movement

 
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