September 17, 2011
Don't Bet on GreenBy Linda Halderman, MD
No legislator would seriously suggest that a roulette wheel be employed to dig California out of its financial mess. Yet elected officials routinely gamble with taxpayer money.
Lawmakers don't bet on red or black. They bet on green.
"Companies like Solyndra are leading the way toward a brighter and more prosperous future," reported President Obama in Fremont, California (May 2010).
In January of 2010, Solyndra appeared to be a promising company. It boasted annual revenues of over $100 million, employed almost 800 people, and had an "aggressive growth plan" for its solar panel-producing empire. Solyndra claimed that its loan-dependent plan would create 4,000 new jobs, including 3,000 in construction and 1,000 permanent jobs. The company promised a brighter tomorrow, powered by clean energy.
Policymakers in Washington bought in. They happily handed over $535 million in taxpayer money to the company, chasing visions of a neon-lit future (solar-powered, of course) filled with prosperity and "green" jobs. The president himself took an almost personal pride in Solyndra's success, touting the opening of a new factory in Fremont as a major achievement.
Policymakers in Washington and Sacramento then hedged this bet with generous subsidies for approved "green" businesses. Legislators used promises of jobs and "clean energy" as trump cards to shame anyone with the audacity to suggest the fiscal risk of these subsidies.
By January of 2011, President Obama's Office of Management and Budget (OMB) suggested that Solyndra's operations were so fiscally shaky that the U.S. Department of Energy might wish to cut its losses and limit further taxpayer exposure.
"If Solyndra defaults down the road, the optics will be arguably worse later than they would be today," wrote OMB officials, because the timing "would likely coincide with the 2012 campaign season heating up."
On August 31, 2011, Solyndra filed for bankruptcy, was subsequently raided by the FBI, and is now under investigation by at least three entities, including the U.S. Treasury Department and the House Energy and Commerce Committee.
Even before filing for bankruptcy, Solyndra was not fulfilling Washington's promises. The corporation had been given $535 million in taxpayer-funded federal loan guarantees to build an additional facility in Fremont, California. But only two weeks after opening the new facility, Solyndra shut the doors of the previously built facility. A hundred and seventy workers were laid off.
After Solyndra declared bankruptcy, what happened to the rest of the green jobs financed at taxpayer risk and bolstered by additional "clean energy" subsidies at both the state and federal level? Gone. More than 1,000 jobs went down with Solyndra's sinking ship, many of them in California.
D.C. lawmakers and President Obama placed a bet of over half a billion dollars. The taxpayers lost.
A bill was presented in the California legislature a few months ago to subsidize "clean tech" companies with the promise of lowering unemployment by growing California's "green" economy. I opposed the bill, citing Solyndra in my opposition.
These subsidies have even been pitched as investments in the future. The Solyndra debacle illustrates that such subsidies are not investments. D.C. and Sacramento policymakers did not bother to analyze business proposals, earnings statements, or market research before making decisions to support "green energy" with taxpayer money.
They simply smiled, found a friendly loan shark, and spun the roulette wheel.
Californians need jobs. But massive subsidies from the state and federal governments do not guarantee jobs. They guarantee only to drain already limited government resources at significant taxpayer risk.
Instead of favoring color-coded industries to coddle, California lawmakers should focus on legitimate policies to make California's business climate better for every job-creating business. We can cut bureaucratic red tape, eliminate burdensome and redundant regulations, and lower crippling payroll and small business taxes to make California jobs truly sustainable.
We now know that Solyndra was a $535-million bad bet. The money gambled and lost at the federal level is now being traced by forensic accountants using government resources.
The lesson for policymakers? Don't bet on green.
Assemblymember Linda Halderman, M.D. (R-Fresno) represents the 29th Assembly District in the California Legislature, which includes the communities of Fresno, Madera, Clovis, and Orange Cove.
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