Here’s the popular conservative mythology about Solyndra:
President Obama guarantees an enormous federal loan to a company that’s pushing a technology which works about as well as a tissue paper gasoline can. To make matters worse, a major investor in this company is a “bundler” for the Obama re-election campaign, so this is obviously a pay-to-play, envelopes-full-of-cash sort of deal, right?
Plus if you consider that the project involves “renewable energy,” which somehow strikes a lot of Republicans as being vaguely leftist rather than simply being practical, this whole thing hits all the pleasure centers of people who would very much like it if Obama would stop being the president. It features political favoritism, enormous amounts of money, and government bailouts. In terms of a scandal, it’s pure gold.
Except it isn’t. Solyndra-like events happen constantly in DC. The government offers money to private companies all the time, either as a guaranteed loan, subsidies, or as straight-out funding for research and development. If something goes wrong or doesn’t pan out, the government either has to eat the cost of the loan or gets nothing in return for its research and development expenditures. Either way, money goes bye-bye.
Business as usual
The government guarantees loans quite often, particularly if they think that whoever or whatever needs the money is important. For instance, since there simply aren’t that many conveyor belts and assembly lines left in America for people to stand in front of, it became national policy to make it easier for students to pay for a college education. They did this by way of providing banks with subsidies to lend out as student loans.
The downside of that policy was that if the student defaulted on the loan, it was guaranteed by the government anyway. All the banks had to do was keep collecting the subsidies and divvy them out (with a hefty operations fee, of course) with no risk to their bottom lines whatsoever.
So when your space case second cousin dropped out midway through his sophomore year to sell scrap metal figurines at Burning Man and defaulted on his loan, me, you and everybody else who pays taxes were on the hook for that. President Obama eliminated the middleman in 2010, and was promptly crucified for “meddling in the free market.”
A lot is being made of George Kaiser’s involvement in Solyndra, and the thinking is that the loan got guaranteed because Mr. Kaiser delivers big buckets of money to the Obama campaign. That might have something to do with it, but it isn’t exactly a secret that the Obama administration considers green energy and energy independence a priority; Solyndra had some green technology to offer.
As I mentioned, the government tends to guarantee loans on things that it thinks are important. Despite what you might think, green, renewable energy is important. T. Boone Pickens seems to think so, and if you think he’s a bed-wetting liberal you should contact John Kerry for his thoughts on the matter.
Is this “pay to play,” or is it “Hey, good idea?” I mean, did the Koch brothers win the contract to replenish the Strategic Petroleum Reserve in 2002 because they dump money onto conservative causes, or because they happened to have 8 million barrels of crude oil lying around? Did Halliburton get the biggest no-bid logistics contract in history because they were the only American corporation capable of supplying the troops during the Iraq War, or was it because Dick Cheney used to run the show over there?
Either way, the SPR got topped off and the troops got fed, albeit at a rate of about $45 bucks for a case of soda, with an extra charge if Private Jenkins wanted it served to him in a glass.
The only difference with Solyndra in terms of finished product was that they went bankrupt before they could start putting out solar panels—but they didn’t go bankrupt because the technology didn’t work. It was the market price of the materials they used to make those solar panels that did Solyndra in. It’s the same ebb-and-flow of the market that causes the Chamber of Commerce to genuflect and the rest of us to fall asleep in Econ 101.
Solyndra and 'Star Wars'
So did we just toss $535 million in the garbage? Well, here’s a parallel for you to consider: The Missile Defense Agency is a branch of the DOD that does exactly what its name implies. It’s their job to come up with ways to figure out how to keep ballistic missiles from striking the United States. When they say “ballistic missiles,” they mean “nukes,” although they never actually say that on the website.
We’ve been working on this sort of thing for quite some time now. Under Reagan it was called the Strategic Defense Initiative (otherwise known as “Star Wars”). The project was almost killed by President Clinton in 1993, but it survived and got a new name out of the deal (the Ballistic Missile Defense Organization). In 2002, President George W. Bush gave it yet another name change (this time to the Missile Defense Agency), as well as a cubic boatload of new funding.
Four of the major defense contractors working on the MDA are, of course, THE four major defense contractors in the country. Over the past decade, Boeing has received $19.45 billion, Lockheed got $5.75 billion, Raytheon got $4.94 billion, and Northrop Grumman got $3.69 billion. This doesn’t count the billions and billions that these folks have been given, not loaned, since the whole Strategic Defense Initiative got started back in 1983.
While we’re on the subject of accusing people of “pay to play politics” and “crony capitalism,” do you want to take a guess as to which members of the House Defense Appropriations Subcommittee got campaign donations from Boeing? Here’s a hint: It’s all of them. Chairman Bill Young (R-FL) got a little under $20,000. Ranking Member Norm Dicks (D-WA) got $25,000 from Boeing and $11,000 from Lockheed Martin.
Are all these representatives “on the take,” or would they very much like it if we wouldn’t get blown up? I guess the answer depends on whichever side of the political fence you happen to dwell.
After thirty years of research and billions and billions and billions of dollars, does our missile defense system work? Well, sort of.
According to the MDA, they have been successful in 54 out of 68 “hit-to-kill” intercepts since they started serious testing in 2001. That’s not a bad percentage, I guess, but close only counts in horseshoes and hand grenades, not thermonuclear ICBM’s with multiple-kiloton warheads. Provided that whoever fires a nuke at us only does so one at a time, we have a little less than 80% chance of not getting incinerated. Woo-hoo?
An open wallet and a big smile
It should be noted that nobody on Capitol Hill is demanding that Boeing, Lockheed, Raytheon and Northrup Grumman return all the money that we gave them for all the times that their missile defense products failed to work. The United States Government at least “loaned” Solyndra money in the hopes that they would get it back. The defense contractors just got an open wallet and a big smile.
The $535 million dollar loan to Solyndra seems like small potatoes compared to the amount of money that Boeing got for missile defense, the Koch brothers got to give us our back-up gas, and Halliburton got to make sure that our guys who were getting shot at and blown up at least had something decent to eat. We didn’t “invest” in missile defense as much as we just decided to dream the whole project up from scratch, while Solyndra had a product that was very close to being ready to go. Those cylindrical panels of theirs actually worked. The whims of the market did them in rather than failed technology.
If I were a guy with over $500 million to invest and I was given the choice between a technology that worked and one that would take 30 years to get not-quite-right, I know where I’d put my money. In fact, I have every confidence that within ten years solar power will be a working and crucial part of our energy infrastructure. But if in ten years I turn on the news and hear that a full-fledged nuclear attack is on the way, you will find me sitting on a lawn chair with a bottle of 18-year-old Scotch in the middle of the National Mall, complete with a sign advising all passersby to kiss their posteriors goodbye.