In Republican-leaning circles in Washington, the question of the moment has been “Does this Solyndra thing have legs?” — in other words, will the news media keep running stories on the subsidized, politically connected solar power company that just went bankrupt?
When Republicans ask this question, they mean, “Will this significantly detract from President Obama’s re-election chances?”
The brief answer is: Probably not, because too many Republicans are asking the wrong questions and drawing the wrong conclusions.
Solyndra’s rise and fall are an important microcosm of Obamanomics. It’s an instance of the influence peddling, incompetence and waste that are inevitable whenever government becomes deeply entangled in industry.
But many Republicans are drawing narrower conclusions, making Solyndra about one loan, or trying to imply — with insufficient evidence — that it was a corrupt backroom deal. One reason they’re not looking at the issue more broadly is that it would draw attention to the corporate subsidies Republicans love.
The most telling moment of last week’s House subcommittee hearing on Solyndra was a back-and-forth between Democrat Ed Markey and Republican Phil Gingrey.
Markey pointed out that solar companies aren’t the only energy companies getting federal loan guarantees. Power giant Southern Co. won a $3.4 billion loan guarantee from the Obama Energy Department last summer.
Gingrey, of Georgia, didn’t like Markey “comparing Solyndra, this bankrupt company, totally unproven technology, to the Southern Company.” Gingrey pointed out that “Southern Company owns Mississippi Power, Alabama Power, Georgia Power, among others, and employs literally thousands of people.”
The implication was clear: Federal subsidies to big, established companies are fine. It’s the handouts to these upstarts that are objectionable.
So Gingrey is embracing the heart of Obamanomics — the proposition that government ought to be an active partner in shaping the economy and helping business — while objecting to the administration’s behavior in one case.
If Republicans were willing to broaden their attack beyond criticizing this one loan deal, they could indict the whole practice of government-business collusion. The GOP could show how Solyndra is the inevitable consequence of Obama’s type of big-government policies.
Everywhere you look, you see Obama turning government into a venture capitalist or business partner. His administration says it wants to expand Fannie Mae and Freddie Mac, those government-sponsored enterprises that fueled the housing bubble by eating private banks’ mortgage risk.
Last year, Obama’s Export-Import Bank — a government agency that subsidizes U.S. exporters (primarily Boeing) — broke its record for the most subsidy dollars provided in a single year. Ex-Im is something of a model for the DOE finance program from which Solyndra benefitted.
Part of Obama’s Stimulus II is a similar “infrastructure bank.” Administration officials and their allies have floated the idea of a “Green Bank,” a permanent subsidy agency to let a thousand Solyndras bloom.
Tim Geithner, Obama’s treasury secretary, created a novel bank bailout program in 2009 called the Public-Private Investment Partnership, again providing taxpayer backstops to allow private banks to profit with less risk.
The problem is not that Obama’s administration is bad at picking investments. Nor is Obama, among politicians, corrupt or unusually given to cronyism. The problem is that Obama’s stated agenda, which involves giving government a central role in the private sector, inevitably creates waste, gives benefits to the well-connected, and opens the door for cronyism and corruption.
Obama promised to be the scourge of the lobbyists and the antidote to special-interest dominance in Washington, but he also promised an activist government role in the economy. The two are nearly mutually exclusive.
Some Republicans, to their credit, are driving this idea home. Newt Gingrich in last week’s debate pointed out the incompatibility of Obama’s call to close tax loopholes and his steady push for “green energy” tax subsidies. House Speaker John Boehner criticized Obama’s Big Government policies for creating “a government that favors crony capitalism and businesses deemed ‘too big to fail’ over the small banks and small businesses that make our economy go.”
In the House hearing on Solyndra, though, Republicans alternated between the typical congressman-bullying-a-witness schtick, and trying to paint Obama’s DOE as unusually inept. The more accurate and politically relevant point is that government agencies simply aren’t well-equipped to be economic players, and that political decisions will always drive government investments, whether the president is named Bush, Obama, Perry or Romney.
Perry created his own government-run venture capital funds in Texas. Romney, too, used his state’s Emerging Technology Fund to lure in big businesses. Republicans almost unanimously support Obama’s expansion of the Export-Import Bank.
Republicans could fairly use the Solyndra flap to highlight Obama’s corporatism — if only they weren’t guilty of the same sort of thing.
Timothy P. Carney, The Examiner’s senior political columnist, can be contacted at [email protected]. His column appears Monday and Thursday, and his stories and blog posts appear on ExaminerPolitics.com.
