Pro: Steven Chu deserves a booby prize for his naivete
Energy Secretary Steven Chu should resign as a result of the disastrous decision to guarantee $537 million in loans to failed solar panel manufacturer Solyndra.
The federal government’s rush to guarantee the loans despite numerous warning signs threatens to cost taxpayers more than $500 million. Career government employees repeatedly warned that this “investment” was flawed from the beginning. Not only was Solyndra betting on an unproven “thin film” technology, but it was trying to compete with a cost structure that was uneconomical even under optimistic assumptions.
Regardless of your position on the merits of government investments in green energy, you should insist on Chu’s resignation.
As a skeptic, I’m horrified but not surprised at a massive loss of public money in a badly managed firm. But if you think green energy investments are a good idea in general, you should be furious over Solyndra.
Not only did the company hand out $37,000 to $60,000 bonuses to its managers as it spiraled into bankruptcy this summer. Solyndra built a brand-new facility in one of the highest cost locations in America rather than recycling an existing building in a cheaper location, ordered expensive robots that whistled Disney tunes rather than focusing its spending on production, and paid investors dividends even as the company ran short of cash.
As Rep. Brian Bilbray, R-Calif., noted, putting taxpayer money in such a firm was “felony dumb.” Worse, there is little doubt that the decision to guarantee the loans was politicized. The email trail uncovered by congressional investigators demonstrates considerable political pressure from the White House to approve the guarantees, leading some to speculate it was due to the Solyndra connections of Obama donor George Kaiser and his George Kaiser Family Foundation.
Kaiser was a key fundraiser for Obama’s presidential campaign, hosting a 2007 fundraiser at his home that raised more than $250,000. Kaiser’s foundation (which had nearly $4 billion in assets in 2009) was a key investor in Solyndra.
Don’t be fooled by the foundation’s role: America’s super rich often use family foundations to cut their tax bills. And as the nonpartisan Sunlight Foundation described it, Kaiser “built his fortune in part through shrewdly playing the Internal Revenue Code.”
Again, Solyndra appears to be just the tip of the iceberg as we learn of more green energy firms with political connections that have received federal loan guarantees and other subsidies.
I’m angry, but if you are a green energy proponent you should be even angrier. We skeptics had low expectations for these programs from the beginning. But if you believe solar technology is vital and that the government should make decisions about which technologies to support, then Solyndra is a disaster because it threatens to discredit the entire enterprise. Whistling robots and political payoffs aren’t the image solar proponents should want to present.
I oppose any energy subsidies precisely because the history of such programs is that they turn into favors for special interests. For those who believe in them, Dr. Chu’s failure to protect a flagship program from political influence is a reason to demand that he resign.
Obama’s appointment of a Nobel-prize winning physicist was touted as a long-overdue shift to science-based policy-making, taking politics out of energy policy. Dr. Chu, Obama assured us, would use his considerable scientific skills to set energy policy on a rational basis.
By allowing the green energy programs to turn into yet another opportunity for the politically well-connected to pick taxpayers’ pockets, Dr. Chu broke the promise that he would depoliticize energy policy. He should do the honorable thing and resign.
Andrew Morriss is a professor of business at the University of Alabama. Readers may write him at UA Law, 101 Paul W. Bryant Drive East, Tuscaloosa, Ala. 35487; email: amorrisslaw.ua.edu.