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The takeaway from the Solyandra scandal
Posted By Jane Chastain On 09/21/2011 @ 9:00 pm In Commentary | Comments Disabled
If we learn anything from the Solyndra debacle, it’s that the government should not be in the business of making loans, period!
The House Oversight and Government Reform Committee is now investigating the allegations of improper dealings between the White House and the failed energy company. Taxpayers would be better served if Congress simply would vote to end all government-backed loan programs.
Fat chance! These government-backed projects represent a mother lode of campaign contributions for both political parties.
Judges are expected to recuse themselves from trying cases in which they have a vested interest. However, our elected representatives have no qualms about sitting on committees and voting on bills that favor their major donors. It is done every day Congress is in session. It is business as usual.
Admittedly, the Solyndra case smells worse than most. The Bush administration shelved the loan request because the company was too shaky. A couple of months later, despite many red flags from budget analysts, Obama’s energy secretary, Steven Chu, announced the government would give Solyndra $535 million from the stimulus. To make matters worse, last February, when the company was about to go belly up, the Obama administration illegally refinanced the loan putting private investors ahead of the taxpayers.
Can we really be surprised to discover that Solyndra executives were big contributors to Obama’s presidential campaign or that one of Solyndra’s major investors was Oklahoma billionaire George Kaiser, a bundler of campaign cash?
Shocking? Not really.
When the investigation runs its course, we will find that that Congress could find no “real proof” of a causal connection between Mr. Obama and this bad loan. Real proof would have to be in the form of the president’s fingerprints on a gun that was held to the head of the secretary of energy. Even if we were to find Obama’s DNA on a blue dress worn by a Solyndra executive, the president will dodge this bullet as so many presidents, congressmen and senators have done before him.
“You give me tons of campaign cash and I will give you government money for your pet project no matter how big or how shaky.” That’s how Washington works. We the taxpayers are the poor saps left holding the bag for these bad “investments.”
Every day of the week, the government makes these “investments” on our behalf in the form of below market loans or outright grants.
What’s in it for us?
If the project is successful, the company wins. If the project is a failure, we lose. It’s a classic case of “Heads I win; tails you lose.” Sure, if the project succeeds, we may get our original investment back, but the interest we receive in return for the use of this money is not enough to cover the interest paid (the government is broke, remember) on the money we advanced.
If you are still wondering why we are making these grants and below-market loans, please reread the above paragraphs. It’s so politicians can reward their major donors and grease the skids for more campaign cash!
To be sure, there have been many innovations that were developed as a result of the research that went into national defense and putting a man on the moon, which were legitimate functions of government. However, this does not mean that government should be in the business of picking winners and losers in the private sector.
If a bank will not loan the money for a project at a reasonable interest rate, it is because the financial analysts at the bank do not think it can succeed. If you cannot get private investors for a project, it is because investors think the risks outweigh any potential reward.
The argument from our politicians is that, without these government funds, many worthwhile projects would never get off the ground. Ah, there’s the rub!
Who gets to decide what is worthwhile and what is not? Do we leave it up to some bureaucrat who has never held a real job, or – worse still – some politician looking for another infusion of campaign cash?
We could take a major step toward reducing our deficit spending by ending all government loans and grants.
It is unreasonable to ask taxpayers to take risks that investors like Warren Buffett would not. Now, that’s a Buffett rule I would gladly support!
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