Joe Stephens is on Democracy Now today talking about this story of Obama, Rahm Emanual, Joe Biden and others botching solar energy's key role in America's future. Read Michael Klare's piece here on
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Solyndra loan: White House pressed on review of solar company now under investigation
By Joe Stephens and Carol D. Leonnig,http://www.washingtonpost.com/politics/white-house-pushed-500-million-loan-to-solar-company-now-under-investigation/2011/09/13/gIQAr3WbQK_story.html
EXCLUSIVE | The Obama White House tried to rush federal reviewers for a decision on a nearly half-billion-dollar loan to the solar-panel manufacturer Solyndra so Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory, newly obtained e-mails show.
The Silicon Valley company, a centerpiece in President Obama’s initiative to develop clean energy technologies, had been tentatively approved for the loan by the Energy Department but was awaiting a final financial review by the Office of Management and Budget.
The August 2009 e-mails, released exclusively to The Washington Post, show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal. In response, OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.
Solyndra collapsed two weeks ago, leaving taxpayers liable for the $535 million loan.
One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.”
“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week),” one official wrote. That Aug. 31, 2009, message, written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”
White House officials said Tuesday that no one in the administration tried to influence the OMB decision on the loan. They stressed that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.
“There was interest in when a decision would be made because of its impact on whether an event involving the vice president could be scheduled for a particular date or not, but the loan guarantee decision was merit-based and made by career staffers at DOE,” White House spokesman Eric Schultz said.
Solyndra spokesman David Miller said he was unaware of any direct involvement of the White House in securing or accelerating the loan.
The e-mail exchanges could intensify questions about whether the administration was playing favorites and made costly errors while choosing the first recipient of a loan guarantee under its stimulus program. Solyndra’s biggest investors were funds operated on behalf of the family foundation of Tulsa billionaire and Obama fundraiser George Kaiser. Although he has been a frequent White House visitor, Kaiser has said he did not use political influence to win approval of the loan.
The White House has previously said that it had no involvement in the Solyndra loan application and that all decisions were made by career officials based on the merits of the company.
It is not clear from the e-mails whether the White House
influenced a final decision to approve the loan guarantee.
The Sept. 4, 2009, groundbreaking event went ahead as scheduled, with Energy Secretary Steven Chu in attendance and Biden speaking to the gathering by satellite feed.
Republican investigators for the House Energy and Commerce Committee, which is holding a hearing about Solyndra on Wednesday, concluded that the White House set a closing date for the OMB approval even before the OMB review had begun.
The White House pressure may have had a “tangible impact” on the OMB’s risk assessment of the loan, the congressional investigators concluded.
In one e-mail, an OMB staff member questioned whether the review team was using the best model for determining the financial risk to taxpayers in evaluating the Solyndra deal.
“Given the time pressure we are under to sign-off on Solyndra, we don’t have time to change the model,” the staffer wrote.
Solyndra was a favorite of the administration until two weeks ago, when the company abruptly shuttered its factory and filed for bankruptcy court protection, leaving 1,100 people out of work and taxpayers on the hook for the loans. Last week, FBI agents searched the company’s Silicon Valley headquarters in a raid that Miller said appeared linked to the loan guarantee.
In one e-mail, an assistant to Rahm Emanuel, then White House chief of staff, wrote on Aug. 31, 2009, to OMB about the upcoming Biden announcement on Solyndra and asked whether “there is anything we can help speed along on OMB side.”
An OMB staff member responded: “I would prefer that this announcement be postponed. . . . This is the first loan guarantee and we should have full review with all hands on deck to make sure we get it right.”
There are still plenty of nagging questions about the collapse of Solyndra, the California-based solar-panel maker that went bankrupt last month after getting $535 million worth of loan guarantees from the Obama administration. Such as: Did the Energy Department fail to do due diligence? And did the White House intervene inappropriately in pressing for the loan guarantees?
But as Solyndra becomes the newest political chew toy, there’s been no shortage of hyperbole about the affair — especially over what it means for energy policy more broadly. On Tuesday, for example, Rep. Cliff Stearns (R-FL), who chairs the oversight subcommittee of the House Energy and Commerce Committee, said that Solyndra’s downfall proves “that green energy isn’t going to be the solution.” That’s quite a leap. So here’s a look at five overheated arguments about Solyndra’s bust:
1) This scandal is no big deal. To the contrary, evidence is mounting that there was something irregular about the way the Solyndra deal got greenlighted. My colleagues Joe Stephens and Carol D. Leonnig have obtained e-mails showing that the White House pressed the Office of Management and Budget to hurry up in reviewing the deal (note, however, that this only came after the Energy Department had approved the loan), even as OMB officials voiced concern about being rushed.
Does that prove the White House engaged in cronyism, shoveling cash toward a political ally? Not necessarily. Democrats have pointed out that Solyndra’s loan process was initiated by the Bush administration and that many key investors were Republicans. Still, there could have been other reasons the deal was hastened. As a former Clinton energy aide stressed to me, it was arguably a mistake to sell the loan guarantees as job-creating stimulus (the program was expanded as part of the 2009 stimulus bill). “It means you try to force huge amounts of money quickly through processes that aren’t quite ready yet,” the aide said. “It’d be better to have a calmer, steadier source of funding.”
2) Solyndra proves that energy-loan guarantees are a flop. Not exactly. The Energy Department’s loan-guarantee program, enacted in 2005 with bipartisan support, has backed nearly $38 billion in loans for 40 projects around the country. Solyndra represents just 1.3 percent of that portfolio — and, as yet, it’s the only loan that has soured. Other solar beneficiaries, such as SunPower and First Solar, are still going strong. Meanwhile, just a small fraction of loan guarantees go toward solar. The program’s biggest bet to date is an $8.33 billion loan guarantee for a nuclear plant down in Georgia. Improper political influence in the process is disturbing, but, at least so far, Solyndra appears an exception, not a rule. (That said, the GAO and others have pointed out potential pitfalls and the need for stricter oversight in the loan program.)
3) The government should leave energy R&D to the private sector. Actually, there’s reason to think the private market is drastically under-investing in new energy technology. As a new report from the American Energy Innovation Council lays out, the utility sector spends just 0.1 percent of its revenues on R&D — the average for U.S. industries is 3.5 percent. The electricity sector is heavily regulated and capital-intensive — power plants last for decades and turn over slowly — and hence tends to focus less on innovation. What’s more, many objectives that may be in the public interest, such as reducing carbon emissions, aren’t fully valued in the marketplace right now.
As such, the AEIC report concludes, “Energy innovation should be a higher national priority.” Right now, the federal government spends a middling amount on energy research (about $3 billion in 2009), compared with the sums lavished on the National Institutes of Health ($36.5 billion) or defense research ($77 billion). And the AEIC report recommends public support for all aspects of the innovation process, from basic research to pilot projects to helping companies commercialize their products. (Solyndra was in that last phase.)
4) Solar is a doomed industry. This view has been gaining popularity, but it’s not borne out by the numbers. Prices for solar photovoltaic modules continue to tumble, even as fossil-fuel prices rise. A June report by Ernst & Young suggests that large-scale solar could become cost-competitive within a decade, even without government support. Of course, grid operators still have to grapple with the fact that the sun doesn’t always shine, but storage technologies continue to improve — in July, a solar plant in Seville, Spain, achieved continuous 24-hour operation using molten salt storage. All told, some 24,000 MW worth of projects are in the pipeline in the United States, led by California. Those projects may not all get completed, but that’s a lot of growth underway.
5) It’s all China’s fault. This one is complicated. China does provide hefty subsidies to its solar industry. As Climate Progress’s Stephen Lacey details, the Chinese Development Bank offers cheap long-term loans to domestic manufacturers that dwarf anything Solyndra ever got. That allows Chinese solar companies to offer cutthroat prices and drive competitors out. And yet, as Westinghouse Solar CEO Barry Cinnamon explains, it wasn’t China that caused Solyndra to go belly-up — the company had invented a solar panel that didn’t use silicon, unlike its competitors, and foundered after silicon prices plummeted.
What’s more, the fact that China hurls money at solar isn’t necessarily a bad thing, since cheaper solar prices can benefit the United States too. The Energy Department seems to have recognized that going toe-to-toe with China on direct subsidies may be futile and is instead trying to focus on complementary efforts to bolster innovation, through programs like its Sunshot Initiative. Also, for all China’s subsidy frenzy, the United States still exported $1.9 billion of solar products last year and actually has a trade surplus in solar with China.
Five myths about the Solyndra collapse