The Great Destroyer

Obama had claimed to support nuclear power, and with great fanfare had announced his intention to offer $36 billion in loan guarantees for two new nuclear reactors in Georgia. But by impeding the Yucca project, Obama jeopardized the future of the entire U.S. nuclear power industry, which needs a reliable, long-term method of waste disposal along with a more efficient regulatory scheme.¹ Congressional Democrats, always eager to help the administration’s efforts to stifle most traditional domestic energy projects, blocked a Republican bill to provide temporary funding of $100 million for Yucca for 2011. And while the administration convened a commission to make recommendations for nuclear waste disposal, Energy Secretary Steven Chu instructed the commission’s members not even to consider Yucca or any other specific site. Thus, the Yucca project was effectively killed. As the Washington Times editors said, “Sentence first—verdict afterward.”²

A year later, the Government Accountability Office reported that the Obama administration’s rush to shut down Yucca could delay the opening of a nuclear waste facility by more than twenty years and cost billions of additional dollars. According to the report, several Energy Department officials said they’d never seen such a large program come under so much pressure to end that quickly. The administration, in its zealous haste, did not provide a technical or scientific basis to justify the cancellation, nor did it bother to identify possible risks attendant to the closure process.

The GAO report confirmed that Secretary Chu’s decision to shut down the facility was based solely on policy grounds, not safety concerns. Congressman Fred Upton, chairman of the House Energy and Commerce Committee, commented, “It is alarming for this administration to discard 30 years of research and billions of taxpayer dollars spent, not for technical or safety reasons, but rather to satisfy temporary political calculations.”³

While environmental extremists cite the nuclear accident in Fukushima, Japan, in arguing against the use of nuclear power, the accident really underscores the importance of addressing safety issues such as nuclear waste storage, not ignoring them and pretending they will go away.

In November 2011, the Obama administration settled on a proposal to require car manufacturers to nearly double the average fuel economy for passenger cars from 30.2 to 55.4 miles per gallon by 2025. Some analysts said the draconian proposal would effectively require most new vehicles sold in the United States to be battery-powered—and not coincidentally, boosting sales of battery-powered cars is one of Obama’s pet causes. But the rule, a joint brainchild of the Department of Transportation and the Environmental Protection Agency that would go into effect in 2017, was approved anyway, with short shrift given to its likely impact on automakers and the economy.⁴

Some research showed the plan stands to raise vehicle prices by more than $6,000, though the National Highway Traffic Safety Administration and the EPA would only admit to an average increase of $2,000 for each new passenger vehicle sold by 2025, at a total cost of up to $157 billion.⁵ A study released by the nonprofit Center for Automotive Research in Ann Arbor, Michigan, however, estimated the new standards could increase vehicle prices by $10,000. The White House, impervious to economic laws and market forces, claimed the rule would reduce U.S. dependence on foreign oil and would save consumers more than $8,000 per vehicle in fuel costs by 2025.⁶

During its deliberations, the administration shrouded the new standards in its usual secrecy, prompting a rebuke from Congressman Darrell Issa. “Beyond jobs that would be lost as a result of this rule,” said Issa, “there are concerns that these new regulations were crafted in a manner inconsistent with laws and basic standards of transparency that had the effect of hiding special interest agendas.”⁷

Whereas previous administrations customarily factored in greater costs to consumers, job losses, and negative effects on safety and vehicle utility to arrive at a target miles-per-gallon figure, it appeared the administration was issuing dictates with much less concern for those consequences. ⁸ But there will be consequences. Aside from higher prices, the new rule could force automakers to lighten their cars by dumping spare tires and through other means.

As critics noted, the fact that some carmakers have already jettisoned spare tires in the name of fuel economy undermines environmentalists’ claims that, thanks to new technology, carmakers no longer have to downsize vehicles to increase their fuel economy. Smaller, lighter vehicles pose a problem because they suffer more damage during crashes, resulting in thousands of additional traffic deaths per year—which clarifies the shifting priorities of environmental activists.⁹

The Wall Street Journal’s Holman Jenkins wrote a devastating critique of the administration’s zeal for raising CAFE standards, arguing it ignores engineering, the law of diminishing returns, the scarcity of materials needed for ultra-high-mileage vehicles, the likelihood that higher standards will cause Americans to drive their old cars longer, and the standards’ non-existent impact on global carbon dioxide levels. All of this, he wrote, “is a willful rejection of reality.... In the end, only a psychiatrist might explain this urge to pile up new policy excesses, destined someday to blow up in our faces, in an age when history clearly calls us to confront past excesses. But Mr. Obama is not deep. His presidency has been a presidency of shibboleths, of endless boasts that he’s delivering on the bien-pensant slogans that others just mouth.”¹⁰

The Environmental Protection Agency has found a novel way to adopt unpopular policies—it funds environmental groups that sue the agency to force it to do so. This collusive jurisprudence, as one might call it, was revealed in a study by Budd-Falen Law Offices that found a dozen environmental groups have filed more than 3,000 “sweetheart” lawsuits against the EPA and other agencies in the last decade. “Often the suits involve things the EPA wants to do anyway,” said Jeff Holmstead, a Bush-era EPA official. “By inviting a lawsuit and then signing a consent decree, the agency gets legal cover from political heat.” Congressman Ed Whitfield, head of the Energy and Commerce Committee’s energy and power panel, says that more and more environmental policy is being directed with absolutely no input from elected representatives, but by private lawsuits that are settled with monetary payoffs.¹¹

The Clean Water Act was passed in 1972 to protect the “navigable waters of the United States.” But over time, as with so many other areas of our law, it has been expanded to allow regulation of matters far beyond its intended scope. Now, bureaucrats use the law to justify regulation of any pool of water that is capable of accommodating a minuscule toy boat. The term “navigable” has been inflated to include such waters that collect into a “wetland” after a storm. Thus, we have an unaccountable administrative agency that is imposing these rules, which opponents say will substantially harm the economy.¹²

While Obama’s opposition to conventional domestic energy sources seems unbounded, it hardly exceeds his support for frivolous, wasteful green energy projects. In his 2011 State of the Union speech, he tried to characterize his green energy fantasies as a grandiose vision on par with John F. Kennedy’s goal to get us to the moon before the end of the sixties. Obama called it “our generation’s Sputnik moment” and, as is typical of specious liberal rhetoric, argued that our newfound commitment to green energy would be the key to our national security, not to mention saving the planet. “Already,” he boasted, “we’re seeing the promise of renewable energy.”¹³ Before the year ended, Obama’s boasts had fallen flat and his plans had degenerated into monumental waste and scandal, including the notorious Solyndra project.

From the outset of his term, Obama showed an almost singular obsession with green energy development. Oddly, he wasn’t pursuing this technology only because of his environmental extremism; his ideology also informs him that its development is the key to the nation’s future economic prosperity and creating “countless jobs.”

The Washington Post reported in June 2011 that Obama had “devoted more than half of his out-of-town private-business visits to promoting a single industry: clean technology.” He toured twenty-two clean-energy companies in an amazing nineteen trips, where the ostensible purpose was to promote economic recovery and energy independence. He visited a lighting company in Wisconsin, an electric car battery manufacturer in Reno, and a company that produces “energy-efficient lighting” in Durham, North Carolina, repeatedly praising these types of firms in his radio addresses and speeches.¹⁴

There was a stench of crony capitalism in these trips, as many of the companies Obama visited had connections to his 2008 presidential campaign. The White House dismissed these ties as purely coincidental, but there was no escaping that these appearances also served as campaign opportunities. The Washington Post acknowledged that some of his “factory appearances have had a distinctly political feel,” and that they were in states favorable to Obama in 2008.¹⁵

Obama had laid out his full vision for alternative energy in a seminal speech following the Gulf oil spill. Americans for Tax Reform critiqued his remarks, highlighting the many evasions and mistruths underlying his energy agenda. For example, Obama lamented, “Countries like China are investing in clean energy jobs and industries that should be here in America.” What he didn’t mention was that a staggering 80 percent of the first $1 billion of grants to wind energy firms in the 2009 stimulus bill was given to foreign companies to build turbines overseas.¹⁶ The next $2.1 billion of grants was hardly better, with 79 percent going to foreign-based companies.¹⁷

Obama bragged that “old factories” were reopening to produce wind turbines and that small businesses were making solar panels. But, as ATR pointed out, these were all jobs created by the infusion of taxpayer stimulus money stoking artificial supply with no corresponding market demand. As an example, Obama billed the DeSoto Solar Center in Florida as the “largest solar power plant in the United States.” But it had received $150,000 of stimulus money and employed 400 construction workers to build the site, only to end up with just two employees working for the firm—a textbook example of Obama’s concept of sustainability.¹⁸

In his speech, Obama touted jobs his stimulus had created for weatherizing homes. In fact, $5 billion of stimulus money was appropriated and, as of the speech, fewer than 10,000 of the 593,000 designated homes had actually been weatherized. The inspector general concluded that this project had no material impact on jobs, and the Government Accountability Office reported that the Davis-Bacon wage laws translated to the project’s expenditure of $57,000 per home involved.¹⁹

Take Seattle; in 2010, Mayor Mike McGinn learned that his city had received a $20 million federal grant to invest in weatherization. Amidst great acclaim, on the eve of Earth Day—the secular holy day for environmentalists—McGinn traveled to the White House to make the announcement with Vice President Joe Biden. The two proclaimed the project’s ambitious goals: creating 2,000 living-wage jobs in Seattle and retrofitting 2,000 homes in poorer neighborhoods. More than a year later, only three homes had been retrofitted and fourteen jobs had been created, many of which were administrative positions, not jobs for low-income workers. Michael Woo, director of the Seattle environmental group Got Green, observed, “It’s been a very slow and tedious process. It’s almost painful, the number of meetings people have gone to. Those are the people who got jobs. There’s been no real investment for the broader public.”

Moreover, the federal money mostly did not benefit lower-income homeowners, but went to the Washington Athletic Club and a few hospitals. “Who’s benefitting from this program right now—it doesn’t square with what the aspiration was,” said Howard Greenwich of Puget Sound Sage. “I think what it boils down to is who’s got the money.”²⁰

Also in his address, Obama casually conceded, “Now, there are costs associated with this transition [to his cap-and-trade scheme]. And some believe we can’t afford those costs right now. I say we can’t afford not to.” But what were these costs? The ATR ticked off the items: gasoline prices would rise 58 percent, natural gas prices by 55 percent, heating oil prices by 56 percent, and electricity by 90 percent; annual energy costs for a family of four would increase $1,241; aggregate GDP losses would be $9.4 trillion, aggregate cap-and-trade energy taxes would be $5.7 trillion; job losses would be almost 2.5 million; the national debt would increase by $12,803 per person and $51,212 per a family of four; GDP losses for a single year would reach $400 billion by 2025 and would exceed $700 billion by 2012; net job losses would reach nearly 1.9 million by 2012 and perhaps as high as 2.5 million by 2035, and we could lose 1.4 million manufacturing jobs by 2035.²¹

Specifically, Obama said that his Department of Energy was awarding almost $2 billion in “conditional commitments”—meaning loan guarantees—to solar companies Abengoa Solar and Abound Solar Manufacturing, claiming Abengoa would create 1,600 construction jobs in Arizona and Abound would support 2,000 construction jobs and 1,500 permanent jobs in Colorado and Indiana. With these government loan guarantees, the money is loaned by the Treasury bank—not private lenders—pursuant to congressional authorization, so federal money is at risk from the beginning.²² Blogger Ed Morrissey quantified how much the government was putting on the line in exchange for the relatively small number of jobs that might be created, finding we were placing $2 billion at risk to create a total of 5,100 jobs. That yields a potential cost of $392,156 per job—and only 1,500 of those would be permanent jobs, with the rest to end as soon as construction is complete. Morrissey concluded, “That means we will spend over $1.3 million per ‘permanent’ job in building this ‘green economy,’ which looks more like a red-ink economy with even a cursory check of the numbers.”²³ So far, the government has forked out $70 million for Abound, and the company recently announced it would lay off 70 percent of its work force.²⁴

Over two years the DOE ended up awarding Abengoa three separate loan guarantees totaling $2.78 billion for solar and ethanol plants. This is especially troubling, considering the concern didn’t even seem to need U.S. government-backed loan guarantees because in 2010 it qualified for private bank loans worth $161 million in eleven countries.²⁵ A $1.45 billion loan guaranty would “create or save” sixty permanent jobs at its Solana solar plant—amounting to $24.2 million per job; a $1.2 billion loan guaranty to a solar facility in the Mojave desert would produce seventy permanent jobs at $17.1 million a pop; and a $132 million guaranty to Abengoa Bioenergy Biomass of Kansas for a Dodge City ethanol plant would create sixty-five permanent jobs at $2 million each.²⁶

The Titanic of Obama’s green energy program was Solyndra, a California-based solar panel manufacturing company the Obama administration propped up with $535 million in federal loan guarantees, with taxpayers on the hook in the event of a default. The Treasury Department facilitated the loan with the support of the Energy Department, and the terms of the loan were approved by the White House Office of Management and Budget.²⁷

This was unbridled liberalism, with the best of ostensibly good intentions and nary a concern for whether it was a viable enterprise that had the slightest prospect for success—a microcosm of the administration’s grander failure, the $868 billion stimulus bill. In fact, Solyndra received the administration’s first loan guaranty under the stimulus bill.²⁸

Obama showed not the least reticence about his support for the project or any concern that its possible failure would dent the credibility of his clean energy pursuits, obviously having lived a political life mostly sheltered from accountability. Accordingly, he and his energy secretary Steven Chu made celebratory visits to the company’s headquarters in the Silicon Valley. The cautionary warnings of House Republicans and government auditors that this wasn’t a good investment didn’t impress the administration.

Showing zero humility, the administration continually showcased Solyndra as a model project for America’s future. Much fanfare accompanied the groundbreaking ceremony with Secretary Chu in attendance and Vice President Biden’s image proudly on display through a video feed. “The announcement today is part of the unprecedented investment this administration is making in renewable energy and exactly what the Recovery Act is all about,” Biden triumphantly declared. “By investing in the infrastructure and technology of the future, we are not only creating jobs today, but laying the foundation for long-term growth in the 21^st-century economy.”²⁹ During Obama’s visit to Solyndra, he enthusiastically told its employees that his administration’s financial support for the project was creating hundreds of jobs.³⁰ “We can see the positive impacts [of the stimulus] right here at Solyndra,” he boasted.

Not everyone believed the rhetoric, however. Skeptics of the company’s viability included not only Republicans, but apparently the firm’s own employees, with one former worker later declaring, “Everyone knew that the plant wouldn’t work.”³¹ Indeed, in April 2010, even before Obama’s visit, auditor PricewaterhouseCoopers said that Solyndra’s losses and negative cash flow raise “substantial doubt about its ability to continue as a going concern.” As the New York Times reported, “Behind the pomp and pageantry, Solyndra was rotting inside, hemorrhaging cash so quickly that within weeks of Mr. Obama’s visit, the company canceled plans to offer shares to the public.”³²

We later learned that despite the administration’s public braggadocio, it had internally discussed Solyndra’s potential collapse for quite some time. As early as 2009, Brad Jones of Redpoint Ventures sent an email warning Larry Summers, director of the National Economic Council, that Solyndra was a bad bet. Arguing that the Energy Department did not seem “well-equipped to decide which companies should get the money and how much,” Jones said that while his own firm was backing Solyndra, the company had received its loan even though it had no profits and revenue short of $100 million. “While that is good for us, I can’t imagine it’s a good way for the government to use taxpayer money,” Jones observed. Summers candidly replied, “I relate to your view that gov is a crappy vc [venture capitalist] and if u were closer to it you’d feel more strongly. What should we do?”³³

In a Washington Post exposé based on “an analysis of thousands of memos, company records and internal e-mails,” the paper found that Summers was not the only Obama official concerned about Solyndra and about Obama’s larger green energy agenda. The communications uncovered by the Post showed “vigorous debate within the Obama White House about whether the solar-panel manufacturer was a smart bet. They also highlight the angst inside the West Wing about whether the president’s initiative to support clean energy was ill-equipped to live up to its promises, or could, as some hoped, help validate Obama’s use of $80 billion in stimulus to build a clean-energy industry.”³⁴

The Post further discovered that Obama’s “green-technology program was infused with politics at every level.” According to the paper, “political considerations were raised repeatedly by company investors, Energy Department bureaucrats and White House officials.” What’s more, the government’s backing of Solyndra was supported by an extensive lobbying campaign, including “high-level maneuvering by politically connected clean-technology investors.”³⁵

When Solyndra was on the brink of collapse, what commanded the administration’s attention was not so much the fate of the employees— “rarely, if ever was there discussion of the impact that Solyndra’s collapse would have on laid-off workers”—but the “political fallout” and the “optics” of the company’s failure, and its possible effect on Obama’s prospects for re-election. Ryan Alexander, president of the nonpartisan Taxpayers for Common Sense, said, “What’s so troubling is that politics seems to be the dominant factor. They’re not talking about what the taxpayers are losing; they’re not talking about the failure of the technology, whether we bet on the wrong horse. What they are talking about is ‘How are we going to manage this politically?’”³⁶

A typical example is a January 31, 2011 email in which OMB staff members discuss how a Solyndra default, if timed correctly, could be spun to the administration’s benefit. According to the staffer, “If Solyndra defaults down the road, the optics will arguably be worse later than they would be today.... In addition, the timing will likely coincide with the 2012 campaign season heating up, whereas a default today could be put in the context of (and perhaps even get some credit for) fiscal discipline/ good government because the Administration would be limiting further taxpayer exposure letting bad projects go, and could make public steps it is taking to learn lessons and improve/limit future lending.”³⁷

Adding scandal to injury, we later learned the administration had granted ready access to venture capitalists with stakes in administration-backed companies. Many of these individuals were Obama donors, and a number of them were given jobs in the administration overseeing its clean energy program. Compounding this corrupt morass, there were revelations that senior administration officials pressured bureaucrats to fast-track approval of the loan in time to allow the administration to gain maximum political advantage through Biden’s public unveiling of the project during a visit to California.³⁸

Obama made his high-profile visit to Solyndra in May 2010 despite increasing signs of the firm’s impending collapse. We later learned that administration officials and Obama fundraisers, fearing the firm would not survive, had urged him not to visit Solyndra and risk political embarrassment. But arrogant DOE officials gave Obama just enough assurances to allow him to proceed.³⁹

In June 2010, the month following Obama’s visit, the firm’s CEO, Brian Harrison, boasted to the Washington Post about Solyndra’s improving performance, saying that the company “doubled our production from 2009 to 2010, and we’ll double it again from 2010 to 2011.” To the contrary, one solar industry expert, Peter Lynch, revealed that Solyndra had experienced serious difficulties from the beginning and that it had always had an imbalanced financial model. “You make something in a factory and it costs $6, you sell it for $3, but you really, really need to sell it for $1.50 to be competitive,” he said. “It was an insane business model. The numbers just don’t work, and they never did.”⁴⁰

In November 2010 Solyndra announced it would lay off nearly 20 percent of its workers. Less than a year later, the company let go its remaining workers and filed for bankruptcy. Shortly after that, its offices were raided by the FBI and DOE. Top Solyndra executives later pleaded the Fifth Amendment and refused to testify before a congressional hearing.⁴¹

What was so recently heralded as the future of green energy and of a larger, thriving green economy ended in ignominious failure and as the target of a federal criminal investigation. It was a tale of an ideologically driven administration that rigged the system and cut corners to loan enormous amounts of money to a company manufacturing a politically correct product for which there was little public demand.⁴²

The Obama administration took pains to emphasize that the mere collapse of its flagship clean energy project would not diminish its enthusiasm for funding similar concerns. They were not the least bit repentant, acting as though the half-billion-dollar loss was just the ordinary course of business, to be expected in the pursuit of a noble cause, and that they would soldier on, with taxpayer money, experimenting with more such wasteful projects. “The president will continue to support these initiatives and highlight the American ingenuity, the people and the private-sector companies that are helping to generate jobs and foster our nation’s 21^st-century clean-energy economy,” said White House spokesman Clark Stevens. The White House released an unapologetic statement declaring, “While we are disappointed by this particular outcome, we continue to believe the clean energy jobs race is one that America can, must and will win. The Department of Energy’s overall portfolio of investments—which includes dozens of other companies—continues to perform well and is on pace to create thousands of jobs.”⁴³

In fact, these companies were not providing permanent jobs, and the jobs they did offer were created only through government infusions of cash. The inability of these companies to compete in the market was all the more remarkable given the free advertising Obama gave them with his incessant promotions and visits. Brendan Doherty, an assistant professor at the U.S. Naval Academy, observed, “You couldn’t get that kind of publicity if you devoted all your advertising budget to it.”⁴⁴

Obama himself was unapologetic. “Now there are going to be some failures. Hindsight is always 20/20,” he said in an interview with ABC News and Yahoo! online television. “It went through the normal process and people thought this was a good bet.”⁴⁵ We know that neither of those statements was true: it was an expedited process rife with conflicts of interest and favoritism, and many of his closest advisers thought Solyndra was far from “a good bet.” Whether the federal government should be making these kinds of bets in the first place is another question.

Energy Department spokesman Dan Leistikow was equally unrepentant, saying, “We have always recognized that not every one of the innovative companies supported by our loans and loan guarantees would succeed. But we can’t stop investing in game-changing technologies that are key to America’s leadership in the global economy.”⁴⁶ Being a “well-intentioned” liberal means never having to say you’re sorry.

Unsurprisingly, even as the administration sought to justify the Solyndra investment, some officials blamed the entire mess on the Bush administration, saying the Bush DOE was the first to consider Solyndra’s application. That allegation was true, but it left out one important detail—the Bush DOE rejected Solyndra’s bid.⁴⁷

Proving that the Solyndra denouement would not affect its energy policy one iota, just days before Solyndra shut down, the Department of Energy finalized a partial loan guaranty for $852 million to yet another solar energy company—Genesis Solar Energy Project, of California—with the promise that it would support eight hundred construction jobs and forty-seven operating jobs. “This project creates jobs, avoids greenhouse gas emissions and helps strengthen our nation’s renewable energy future,” Secretary Chu announced.⁴⁸

But the administration’s headlong rush to force-feed these green projects to the nation have led to other unanticipated problems—and from an unlikely source. In order to qualify for the loan, Genesis had to meet certain deadlines, but they’ve run into opposition from Native Americans, who are trying to delay or even scuttle the project because they say the accelerated approval process fails to protect wildlife and cultural resources.⁴⁹

Upon Solyndra’s declaration of bankruptcy in August 2011, House Energy and Commerce Committee Chairman Fred Upton issued a joint statement with the chairman of the investigations subcommittee, Cliff Stearns, saying, “We smelled a rat from the onset. For an administration that parades around the banner of transparency, they fought us tooth and nail all summer long in turning over relevant documents related to the credit approval. And today we found out why.”⁵⁰

Upton’s committee concluded that the DOE and OMB did not take adequate steps to protect taxpayer dollars, as emails and other communications showed that their staff repeatedly questioned whether Solyndra had financial resources sufficient to warrant the loan guaranty. These communications confirmed that the administration pressured the OMB staff to expedite and complete its loan review prior to the groundbreaking ceremony at the company’s facilities, which was being orchestrated by the administration. These exchanges “clearly demonstrate that OMB felt pressure to complete its review ahead of the September 4 event.” They also revealed that the White House jumped the gun, treating the loan approval as a foregone conclusion, as they scheduled Vice President Biden’s and Secretary Chu’s appearance before the DOE had even made its final presentation to the OMB for the loan.⁵¹

The Washington Post too found that the Obama White House tried to rush federal reviewers for a decision on the Solyndra loan guaranty. Released emails from August 2009 showed that White House officials repeatedly pestered OMB reviewers as to when they would decide on the loan. OMB officials expressed concern they were being pressured to approve the deal without adequate time to assess the risk to taxpayers.⁵² There were also reports that the DOE pressured Solyndra investors to quickly increase their investment to justify the government’s loan guaranty.

Tainting the ordeal further, Solyndra company representatives made numerous visits to the White House to meet with administration officials—between March 12, 2009, and April 14, 2011, according to White House visitor logs, Solyndra officials and investors made at least twenty White House visits, including four meetings alone the week before the loan guaranty was awarded.⁵³

More bad news emerged surrounding a Solyndra restructuring deal that the government had approved in February 2011, as the company ran short of cash. The agreement, it was revealed, was crafted to give Solyndra’s private investors priority ahead of the government—in other words, ahead of the taxpayers—on the first $75 million to be recouped in case of bankruptcy.

According to the committee, this subordination of taxpayer money to private creditors, one of whom was an Obama financial supporter, “appears to be in direct violation of the Energy Policy Act of 2005, which states that ‘the obligation shall be subject to the condition that the obligation is not subordinate to other financing.’” Despite this clear language, DOE counsel issued a legal opinion approving the legality of the government’s loan subordination under the Energy Policy Act.

Two Treasury Department officials told a House Energy and Commerce subcommittee they were unaware of any previous subordination of taxpayers to private investors in a government loan repayment.⁵⁴ The restructuring agreement was indeed unprecedented, but it was perfectly consistent with the administration’s practice of ignoring customs, practices, and traditions as well as the law. It was eerily reminiscent of Obama’s lawless subordination of secured creditors in favor of his union allies in the Chrysler restructuring scandal, as detailed in Crimes Against Liberty.

In the end, the DOE’s subordination cost the taxpayers dearly. As part of its bankruptcy, the company agreed to auction off thousands of items from its California production facility, all to the benefit of the firm’s private investors, not the taxpayers.⁵⁵ More maddening still, we learned the restructuring agreement was approved despite warnings from OMB staff that restructuring could cost taxpayers $168 million more than simply liquidating the company.⁵⁶

In a final scandalous revelation, the Washington Post reported in November 2011 that the Obama administration had urged Solyndra executives to delay announcing its initial round of layoffs until after the November 2, 2010 midterm elections. “DOE continues to be cooperative and have indicated that they will fund the November draw on our loan (app. $40 million) but have not committed to December yet,” wrote a Solyndra investor advisor on October 30. “They did push very hard for us to hold our announcement of the consolidation to employees and vendors to Nov. 3^rd—oddly they didn’t give a reason for that date.”⁵⁷

As HotAir’s Ed Morrissey wrote, “This means that the DoE knew that Solyndra had begun to fail, and that the case they provided as part of Barack Obama’s job stimulus wouldn’t actually create jobs. In fact, it wasn’t even going to save jobs. And yet the DoE not only succeeded in pressuring Solyndra into hiding the fact from the public and their investors, this sequence makes it look as though the Obama administration used the $40 million in loans as a bribe to keep Solyndra from making its layoff announcement in a timely manner.” According to Morrissey, it also appeared that this thread led directly to the White House.⁵⁸

Like Solyndra, at least four other companies that received stimulus money have failed. Two of these were green energy firms: Evergreen Solar and Spectra Watt, both of which said they couldn’t compete with Chinese competitors.⁵⁹ Various experts are now predicting hundreds of bankruptcies of U.S. solar companies when the market for solar panels, artificially inflated by government support, cools down. “Solyndra was just the beginning,” says Jessie Pichel, chief of clean energy research at the investment bank Jefferies & Co. “We’re going to see a lot of companies go bankrupt.” Mark Bachman, a renewables analyst at Avian Securities, predicts that only twenty to forty of the few hundred solar panel manufacturers in the world will survive the next few years.⁶⁰

Undeterred by all these failures, Obama’s DOE approved two more solar project loan guarantees just days before the federal deadline. The projects totaled more than $1 billion: a $737 million guaranty to Solar Reserve for a solar tower on federal land in Nevada, and $337 million to Arizona’s Mesquite Solar 1. As experts note, these guarantees are virtually destined to fail, having been given to firms that could not make it on their own. Even Treasury Secretary Timothy Geithner’s warning that these guarantees were too risky did not faze Obama, who never met a budget he felt compelled to balance or a risk of taxpayer money he believed he needed to justify.⁶¹

As with Solyndra, political connections appear to have been an important factor in the Solar Reserve loan; one of the company’s business partners, PCG Clean Energy and Technology Fund (East) LLC, has Nancy Pelosi’s brother-in-law, Ronald Pelosi, as an executive. Another of its investment partners, Argonaut Private Equity, employs Steve Mitchell, who was a member of Solyndra’s Board of Directors.⁶²

Indeed, Obama’s green energy initiative has provided a tremendous outlet for cronyism. In Throw Them All Out, the Hoover Institution’s Peter Schweizer revealed that 80 percent of the renewable energy companies backed by Obama’s DOE are operated by or mostly owned by Obama donors. These companies’ political largesse, says Schweizer, “is probably the best investment they ever made in alternative energy. It brought them returns many times over.” Schweizer found that in the so-called “1705 Loan Guarantee Program alone . . . $16.4 billion of the $20.5 billion in loans granted as of September 15 went to companies either run by or primarily owned by Obama financial backers—individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.”

The administration’s clean energy cronyism was also detailed in a 2010 Government Accountability Office report, which found that the Department of Energy “treated applicants inconsistently, favoring some and disadvantaging others.” DOE inspector general Gregory Friedman testified that contracts had been steered to “friends and family.”⁶³ GAO auditors also reported in 2010 that the DOE had given favorable treatment to certain loan guaranty applicants and had waived some of the required steps for five loan applicants to receive funding, one of which was Solyndra. The government fast-tracked these loan guarantees before receiving final reports that the risks were warranted.⁶⁴

The GAO, upon examining the first eighteen government-guaranteed loans that the DOE approved, found that not one of them was properly documented.⁶⁵ “There’s a consequence if you don’t follow a rigorous process that’s transparent,” said Franklin Rusco, a GAO analyst. “It makes the agency more susceptible to outside pressures, potentially.” And in fact, Solyndra benefitted a company whose financial backers include George Kaiser, an Oklahoma oil billionaire who functioned as a “bun-dler” of campaign donations and raised some $50,000 for Obama’s 2008 campaign.⁶⁶

In addition, the DOE inspector general called the DOE to task for not saving email communications discussing the selection of loan guaranty recipients. Based on this deplorable series of events, auditors were concerned that defaults of other similarly situated companies might be imminent if the department, in its haste to expedite these types of loans, exercised similar negligence in requiring the normal reviews.⁶⁷

Shortly before this book went to press, we learned about more clean energy debacles. First, there is A123 Systems in Massachusetts. Scott Heiss, who bought stock in the company, which manufactures large lithium batteries for automakers, filed a federal lawsuit against the firm alleging it hid problems at its plant that, if disclosed, would lower its stock price. The company, a beneficiary of $300 million of stimulus funding, laid off 125 workers in December 2011 and has announced a recall of malfunctioning battery packs that will cost it more than $55 million. And second, a company ludicrously named “Solar Trust of America” just filed for bankruptcy. As observers noted, its failure could be blamed on the demise of Solar Millennium AG, its German parent company. This was a close call for taxpayers, since the Energy Department approved a mammoth $2.1 billion loan guaranty for the doomed company. Luckily—no thanks to the DOE—the firm’s CEO turned down the offer, saying it was too risky.⁶⁸

Clean energy is not living up to its grandiose hype. President Obama at one point promised to create 5 million green jobs in ten years, while California Governor Jerry Brown said he envisioned half a million clean-technology jobs in his state by 2020. But even the New York Times conceded that “the results so far suggest such numbers are a pipe dream.”⁶⁹ The green-tech program that included Solyndra involved a staggering $38.6 billion loan program that Obama claimed would create or save 65,000 jobs. But two years after it began, the program had created only 3,545 new, permanent jobs, according to Energy Department figures.⁷⁰

Eventually, even key Democrats began to publicly criticize Obama’s green schemes. “You know, the green jobs have been about a lot of talk and not a lot has been happening on that,” observed Congresswoman Maxine Waters. “All of this talk about the green jobs never materialized.” Other influential members of the Congressional Black Caucus agreed. Congressman Emanuel Cleaver said, “African-Americans out there were saying, ‘What do we have in common with this new, green technology?’”

A July 2011 Washington Post-ABC poll showed that rank-and-file liberal Democrats were losing faith in the program as well. “The number of liberal Democrats who strongly support Obama’s record on jobs plunged 22 points from 53 percent last year to 31 percent,” according to the Post. But Obama is deaf to the feedback, continuing his showpiece visits to renewable energy firms. One of them was Johnson Controls, Inc., a Michigan firm upon which the government bestowed $300 million to create 150 green jobs, or $2 million per job.⁷¹

When Obama talks about jobs, he invariably emphasizes green jobs.⁷² And yet, the signs are everywhere that green jobs are a bust. The Brookings Institution released a study showing that clean-technology jobs constituted only 2 percent of the nation’s jobs and only slightly more—2.2 percent—in the Silicon Valley. Overall, federal and state efforts to stimulate job creation, according to the New York Times, “have largely failed, government records show.”⁷³

Consider a typical Obama stimulus project: $186 million was allocated to weatherize homes, with the result that California, as of August 2011, had spent only half the money and created some 538 full-time jobs in the preceding quarter. What accounted for the delay in the project’s implementation? Another liberal requirement: the federal Department of Labor had to determine the prevailing wage standards. Even after the postponement, however, “the program never really caught on.” Sheeraz Haji, a market research firm’s chief executive, said, “Companies and public policy officials really overestimated how much consumers care about energy efficiency. People care about their wallet and the comfort of their home, but it’s not a sexy thing.”⁷⁴

Typical of such high-minded liberal projects, clean energy job training programs have also failed miserably. California’s Economic Development Department records show that $59 million of government and private funds assigned to green jobs training and apprenticeship have yielded only 719 jobs, a staggering $82,000 per job. Of course, liberals cannot concede that government is unable to artificially create demand where it doesn’t exist. “The demand’s just not there to take this to scale,” exclaimed the project manager at one of the companies that received cash infusions. Other activists complain that these green jobs would take hold if only Washington would do a better job of stacking the deck against conventional energy.

The Wall Street Journal likewise reported that while the solar industry has long been viewed by some as a remedy to our dependence on fossil fuels, those aspirations are rapidly disappearing as solar panel manufacturers continue to suffer through bankruptcies, cratering stock values, and mountains of debt. Ironically, part of the blame lies in a surfeit of supply, much of it generated by government subsidies facilitated by “well-intentioned” environmentalist liberals who apparently believed the power of their beneficence could overcome market forces.

While Solyndra’s collapse captured the headlines in the last few months of 2011, at least five other solar panel makers filed for bankruptcy or insolvency around the same time. Nine of the ten largest publicly traded solar companies took a hit in 2011, and many others were experiencing difficulties as stock prices fell some 57 percent in the sector.⁷⁵ These reckless experiments are more evidence that even tens of millions of federal and state dollars thrown at pet liberal projects don’t create jobs or stimulate the economy. Liberals may refuse to acknowledge the invisible hand of the market, but they are subject to it nonetheless.

A key energy source to be replaced by green energy, at least in the liberal imagination, is coal. Obama came to office vowing to adopt regulations that would bankrupt companies which build new coal plants,⁷⁶ and as president he has done his best in this regard, pressuring the coal industry from every which way, seemingly determined to drive the industry out of his green energy Neverland.

When the EPA adopted a new policy that tightened water quality standards for valley fills at surface coalmines in West Virginia, Kentucky, Pennsylvania, Ohio, Virginia, and Tennessee, the coal industry filed a lawsuit to challenge the rules. Arguing the move would eliminate tens of thousands of jobs and raise electricity prices, hundreds of coal miners traveled to Capitol Hill to protest the administration, claiming it was trying to wipe out the entire coal industry.

It’s hard not to conclude that at the very least, the EPA was trying to wipe out mountain-top removal mining. After all, EPA Administrator Lisa Jackson admitted the goal was to enforce a standard so strict that few, if any, permits would be issued for valley fills. West Virginia’s senior state senator, Democrat John D. Rockefeller IV, bluntly declared that Jackson “doesn’t understand the sensitivities economically of what unemployment means. Her job is relatively simple: clean everything up, keep it clean, don’t do anything to disturb perfection. Well, you can’t do coal and do that at the same time. God didn’t make coal to be an easy thing to work with.”

The EPA denied these regulations would either weaken the economy or cause unemployment. But U.S. Senator Jim Webb, Virginia Democrat, supported Rockefeller. “We are not going to let the EPA regulate coal out of business,” he proclaimed. Also attending the rally was Senate Minority Leader Mitch McConnell, who said that the Obama administration and the current Congress are the most anti-coal executive and legislative bodies in the nation’s history.⁷⁷

In July 2011, the EPA launched the next round of its assault against coal plants, announcing its Clean Air Transport Rule ostensibly aimed at curbing smog and soot at power plants in 30-plus states. The rule—whose compliance costs were estimated as high as $1 trillion over ten years, and which even the EPA admitted could cost the economy as much as $90 billion annually by 2020—outraged businesses.⁷⁸ John Engler, president of the Business Roundtable, called the proposal “the single most expensive environmental regulation in U.S. history, a job-killing rule it is under no obligation to impose on the struggling economy.”⁷⁹

In September 2011, as Obama moved into re-election mode and the public showed little support for another job-killing, economy-crushing EPA regulation, Obama shelved the proposal—though EPA Administrator Lisa Jackson noted her agency will revisit the issue in 2013, after the election.⁸⁰ “Even President Obama recognizes that his administration’s environmental agenda, with all its new rules and regulations, is a massive job killer and is destroying the economy,” said Myron Ebell of the Competitive Enterprise Institute. “What is shameful about the President’s decision to delay the new ozone rule is that it’s all about improving his chances of being re-elected and has nothing to do with the economic damage that the rule would do. The fact that the President still wants to go ahead after he gets re-elected with a regulation that has been estimated to cost $1 trillion a year shows that he could care less about the U.S. economy and the millions of people who have lost their jobs.”⁸¹

But the smog rule was hardly the EPA’s sole job-destroying scheme. The agency has developed six other rules that together would entail an annual cost to the economy of $35 billion, according to the EPA’s own figures. One of these proposed regulations is the area source rule, which would regulate mercury emission from boilers that provide heat and power for buildings throughout the nation. The Small Business Administration warned that the rule would “impose significant new regulatory costs” on businesses, cities, and other entities, but the EPA was unmoved. As the Heritage Foundation’s Diane Katz observed, “The agency has long been a hyperactive regulator, but the rate at which it is now imposing ever-costlier rules had accelerated dramatically. Congress must act to curb the agency’s unwarranted power grab if it hopes to see any meaningful economic recovery.”⁸²

Another costly new regulation, the cross-state air pollution rule, forces twenty-seven states to cut air pollution that is supposedly pushed across state lines by wind. Luminant, a Texas energy company, said the rule is forcing it to close several of its facilities, costing 500 jobs. “We have hundreds of employees who have spent their entire professional careers at Luminant and its predecessor companies,” said Luminant CEO David Campbell. “At every step of this process, we have tried to minimize these impacts, and it truly saddens me that we are being compelled to take the actions we’ve announced today. We have filed suit to try to avoid these consequences.”⁸³ The administration appeared to have no interest in granting a reprieve from these rigorous deadlines, the importance of American jobs paling in its eyes next to the goal of a pristine environment.

In March 2012, the EPA proposed a new rule that, if implemented, could represent the coup de grace to the coal industry. The regulation would require any new power plant to emit less than 1,000 pounds of carbon dioxide per megawatt hour of electricity produced. Because coal plants average 1,768 pounds of carbon dioxide per megawatt hour, new plants are highly unlikely to meet the revised standard. “This standard effectively bans new coal plants,” observed Joseph Stanko, a lawyer who represents utility companies. “So I don’t see how that is an ‘all of the above’ energy policy.” Michael Brune, executive director of the Sierra Club, exulted that the new rule “captures the end of an era”—yet, displaying the group’s trademark extremism, he argued that even this draconian regulation is “not sufficient.”⁸⁴

There can be no doubt about the intent of this rule, which EPA Administrator Lisa Jackson revealed during an interview in November 2011. When asked about EPA regulations that are forcing the closure of coal-fired power plants, she replied, “First off, EPA doesn’t require shutting down of any plant.... Some businesses are investing in nuclear; some are looking at natural gas. There are states that are leading the way on solar or wind.... What EPA’s role is to do is to level the playing field so that pollution costs are not exported to the population but rather companies have to look at the pollution potential of any fuel or any process or any plant or any utility when they’re making investment decisions.”⁸⁵

Or, stated another way, the administration fully intends, as Obama announced long ago, to bankrupt the coal industry.

Barack Obama said he wanted a transformational presidency, and this grandiosity is on full display in his energy agenda. Using every available method, from EPA regulations to unilaterally cancelling the Yucca Mountain project, Obama is putting relentless pressure on certain disfavored industries, with coal and nuclear power topping the list alongside oil. Because nothing is available to replace the output of these firms, he seeks to advance technological progress on untested green energy projects through the sheer force of government. Blinded by his own ideology, he discounts the mounting costs of his program, pressuring his agencies to rush through billions of dollars in loan guarantees for firms like Solyndra that many observers, even among his own team, view as risky if not outright reckless.

Perhaps the most troubling aspect of the Solyndra affair—more troubling than the cronyism, the self-deluding economic analyses, the high-pressure rush to approve the loan guaranty, and the last-ditch restructuring attempt that cost the taxpayers tens of millions—is the administration’s dogmatic refusal to re-think its approach in light of the company’s collapse. If something that wasteful and that politically embarrassing cannot force some introspection, then in all likelihood nothing can—meaning we can expect to see a lot more Solyndras in the near future.

SHUTTING DOWN NUCLEAR ENERGY IN THE NAME OF EXPANDING IT

CAFE STANDARDS: “A WILLFUL REJECTION OF REALITY”

FEEDING THE MOUTH THAT BITES YOU

WATER POLLUTION REGULATIONS

$57,000 PER HOME AND “NO MATERIAL IMPACT ON JOBS”

FROM $1.3 MILLION TO $24.2 MILLION PER “PERMANENT” JOB

SOLYNDRA: “INFUSED WITH POLITICS AT EVERY LEVEL”

“IT WAS AN INSANE BUSINESS MODEL”

LIBERALISM MEANS NEVER HAVING TO SAY YOU’RE SORRY

“THEY DID PUSH VERY HARD FOR US TO HOLD OUR ANNOUNCEMENT”

“SOLYNDRA WAS JUST THE BEGINNING”

GREEN JOBS—THE RECORD

REGULATING COAL OUT OF BUSINESS

“AN UNWARRANTED POWER GRAB”