The Takeaway from Solyndra

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 everyday 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 out way 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 — worst still — some politician looking for another infusion of campaign cash?

We could take a major step forward 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 Buffet would not. Now, that’s a Buffet rule I would gladly support!

 

 

 

 

 

2 thoughts on “The Takeaway from Solyndra

  1. The government, like banks, will never be 100% perfect on loans. My business has been the recipient of two loans. The first was an SBA loan 13 years ago. It was fully paid off, and resulted in the business going from 2 to 10 employees. The second is happening now for another expansion. At a time where credit seems to be so unavailable for small businesses at the current low interest rates, reasonable loans at lower interest are a good alternative from government resources. Where the government needs to target loans is small businesses, and help banks make those loans.

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  2. Hi Jane.
    It doesn’t take a rocket scientist to figure out what is so in-our-face and obvious. If an entity, outside of our “public servants” in DC, pulled a “Sylandra” …..I-slap-your-back-you-slap-mine, with money other than their own, no disclosure of information to the lender, without authorization of the lender….(ie.,the taxpayer); criminal charges would be in the works, initiated by an arm of yours truly; some appendage of “government”! I thought….those in leadership positions, of which salary is paid by the taxpayer, should be held to a higher standard? Gosh, I would settle for any standard at all! It is quite clear those in DC truly have convinced themselves they are chosen (probably by Mother Earth)to be in the elite group of “vision of the anointed”! (Title of book by Thomas Sowell)
    The government is out of control. Every thing they touch becomes complicated, non-productive and broke. The more money (taxpayer money) they throw at whatever it is, incredible as it sounds, the more unefficient and unproductive it becomes. Every entity funded by our federal government, ie., post office, trains, public education, LOANS….dismal failure.
    And we now are going to let them manage and control…..HEALTH CARE!? That may be well and fine with the young and healthy individuals out there as they have no concept of what it is like to be sick, vulnerable and totally at the mercy of a health care provider.
    It is not pretty. If we don’t take a stand against obamacare, we will pay a huge price, not only in dollars but also in lives, mostly the young, the old and anything complicated.

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