Solyndra has come to embody everything that is wrong with government.
A powerful politician, even one with the best of intentions, announces some ill-thought out plan to spend vast sums of taxpayer money to accomplish some campaign promise or far-flung dream. Understanding this to be free money, businesses line up at the opportunity.
But not everybody has an equal shot. Big donors, potential allies, or old friends are given the first crack. And even then, success doesn’t really matter, after all it’s just taxpayer money were gambling with.
If our losses had been confined to Solyndra it would have been bad enough. Five hundred and thirty five million is nothing to turn your nose up at. But as everyone suspected, it doesn’t end there. Far from it.
CBS News’ Sharyl Attkisson, who has been doing yeoman’s work on the Solyndra and Fast and Furious stories, has begun to peel back the layers on even more trouble within the Obama Administration’s green energy program.
“We identified 11 green energy companies beside Solyndra that together got billions of tax dollars then declared bankruptcy or are suffering other serious financial issues. Most surprising perhaps is how bad off the government knew some of those investments were before committing all that money.”
Among the trouble companies that Attkisson identifies, five that have filed for bankruptcy – Beacon, Evergreen Solar, AES’s Eastern Energy, SpectraWatt and Solyndra. The case of Beacon power that received a $43 million taxpayer-backed loan reveals just how bad many of these investments were from the get go.
Peter Morici, an economist interview for the story, explains that prior to the government’s grant, Standard and Poors rated the company a CCC-plus. “It is a junk bond, but it’s not even a good junk bond,” Morici explains. “It’s well below investment grade. This type of bond has a 70 percent chance of failing in the long term.”
Others are at serious risk of default. Nevada Geothermal, a project that Sen. Harry Reid pressured the Department of Interior to quickly approve, was having trouble paying its bills when it received a $95 million loan. Now it’s on the precipice of bankruptcy. A recent audit by Deloitte and Touche said that the company “has incurred net losses over the past several years, has an accumulated deficit of $44 million and an anticipated inability to retire its long-term liabilities.
Another Department of Energy loan recipient, Sunpower, is also in dire fiscal straits. The company is $820 million in debt – $20 million more than the entire worth of the company and its assets. Despite those numbers, which would scare away any investor worth his salt, Sunpower received a government loan twice the size of Solyndra.
Finally, there is First Solar, a photovoltaic cell manufacturer that has received a whopping $3 billion in taxpayer-backed loans. The rapidly falling prices of solar modules and Europe’s decision to drastically cut back subsidies for renewable energy have revealed an unsustainable business model. Overall, First Solar’s value was $2.64 billion down from a high $25 billion. According to data compiled by Bloomberg and reported by Businessweek, that is the “steepest discount to net assets since its 2006 initial public offering,” meaning it’s one of the worst publicly performing public companies currently traded.
This is where our taxpayer dollars have gone. And this is why the government has no business pretending it is a capable invester.