Earlier this week the nation celebrated what would have been Ronald Reagan’s 101st birthday. It reminded me of one of my favorite quotes of his, “The government’s view of the economy could be summed up in a few short phrases: If it moves, tax it. If it keeps moving, regulate it. And if it stops moving, subsidize it.”
Those all still hold true. Sadly, Democrats in Washington have tacked on another tenet to the government’s invasion into the economic realm: subsidize it until it starts moving.
Solyndra is perhaps the most egregious example, but it is far from the only one. Indeed, recent headlines have been filled with companies who are struggling despite having received millions in loan guarantees from the Obama Administration.
“Electric Car Maker and U.S. Loan Recipient Fisker Cuts Jobs”
That was today’s headline from CNN discussing Fisker Automotive, who announced they would soon be laying off workers at their Delaware plant. Sadly, this isn’t the first time Fisker has been in the news for the wrong reason. Not too long ago we wrote about Fisker’s decision to locate production of its first generation of electric cars in Finland despite receiving U.S. taxpayer-backed loans totaling $528 million.
Now it appears Fisker has already burned through the cash and is hoping to “renegotiate its loan agreement with the Department of Energy.” Originally the first cars were supposed to be released in late of 2009, but that date was pushed back to spring of 2011 due to problems with the battery.
Now the company is saying that production won’t begin until 2013 because of unspecified delays. Of course, even if a car does make it off the production line an into the car lot, it’s not necessarily a success. Fisker’s least expensive car, the Nina, is expected to cost $45,000. That’s about $13,000 more than a Chevy Volt, which dramatically underperformed expectations by only managing to sell 603 cars in all of 2011.
“Ener1, Parent of Obama-Backed Green Company, Files for Bankruptcy”
That was the recent headline from ABC News, announcing that the lithium-ion battery manufacturer Ener1 was going the way of Solyndra. The company had received more than $118 million in government funding and promised to use the money to double capacity and create 1,700 jobs.
The problem was that Ener1’s business model relied on a nonexistent market for electric cars. With companies like Fisker facing continual delays and cars like the Volt failing to catch on with the public, a chain reaction is created that impacts other taxpayer-backed companies. Those problems are why the company’s share price tumbled from more than $8 per share to penny stock status, causing the company to suffer the ignominy of being delisted by NASDAQ.
“Beacon Power Bankrupt; Had U.S. Backing Like Solyndra”
The headline, this time from Reuters, details the bankruptcy of Beacon Power Corporation just one year after receiving a $43 million loan guarantee from the federal government. The company built “smart grid” technology that was designed to capture solar and wind power – whose production is irregular – and supply it when needed.
The problem was that the federal government was the only one willing to invest. As a result it saw its shares, which once traded for $47, fall to just under 11 cents. Now there are serious questions about whether taxpayers will see any of the money back.
And those are just the latest stories. With green energy looking increasingly non-viable in current market conditions, expect to see lots of other Obama-backed companies go belly up in the near future.
Sadly, none of this news was enough to deter the President from asking for more subsidies for green energy companies in his latest State of the Union! It seems as if Obama refuses to learn from his mistakes. But we are left to pay the consequences.