A couple of years ago, Republicans got very excited about an obscure federal project. The Department of Energy had a loan program intended to give a boost to companies focused on renewables, and one company in particular ended up getting all kinds of attention: Solyndra.
The right’s efforts to turn this into a “scandal” never really made any sense. The Department of Energy invested in America’s burgeoning clean-energy sector, and while some of the companies that received loans thrived, some didn’t. Solyndra was in the latter category.
In context, its failure wasn’t evidence of much. As Michael Grunwald reported a while back, “That’s capitalism. That’s lending. That’s life. As one Obama aide told me: Some students who get Pell grants are going to end up drunks on the street.” It’s not as if those failures discredit the entire Pell grant program.
But for Republicans and much of the media, the fact that one of the loan recipients failed helped prove an ideological point: the Obama administration made poor choices, and when the government picks “winners and losers,” the results are invariably poor for American investors.
We now know that the Republican arguments had it backwards. Bloomberg News reported yesterday:
The U.S. government expects to earn $5 billion to $6 billion from the renewable-energy loan program that funded flops including Solyndra LLC, supporting President Barack Obama’s decision to back low-carbon technologies.The Department of Energy has disbursed about half of $32.4 billion allocated to spur innovation, and the expected return will be detailed in a report due to be released as soon as tomorrow, according to an official who helped put together the data.The results contradict the widely held view that the U.S. has wasted taxpayer money funding failures including Solyndra, which closed its doors in 2011 after receiving $528 million in government backing.
This is no small revelation. Much of Mitt Romney’s presidential campaign was based on the assumption that the Department of Energy’s loan program was a spectacular failure. Even now, Republicans continue to point to this program as obvious proof of why it’s a mistake for Washington to invest in the clean-energy sector at all.
But Obama’s program didn’t fail at all – the loans not only bolstered the renewable-energy industry, it secured a handsome profit for you, me, and every other American taxpayer.
Michael Morosi, an analyst at Jetstream Capital LLC, which invests in renewable energy, told Bloomberg News, “People make a big deal about Solyndra and everything, but there’s a lot of VC capital that got torched right alongside the DOE capital. A positive return over 20 years in cleantech? That’s not a bad outcome.”
Quite right. In fact, it suggests Republicans had it exactly backwards – the Obama administration was extremely effective in making these investments.
The Bloomberg News piece went on to quote Rep. Marsha Blackburn (R-Tenn.), who said that while the loan program may be well intended, “what we have seen is incredible mismanagement…. When you look at what’s happened with solar, some of the battery companies, you see that most of these companies are bankrupt and are no longer in existence, and the taxpayer is left holding the bag.”
What I don’t understand is why Blackburn says things that are the opposite of reality. Most of these companies aren’t bankrupt – that’s the point. Taxpayers aren’t left holding the bag; they’re left holding an extra $5 billion. It’s not an example of mismanagement; it’s an example of extremely capable and competent management.
Blackburn, by the way, is the vice chair of the House Energy Committee’s oversight panel. The fact that she’s this confused about the basics of a story she’s investigated isn’t a good sign.
As for the Beltway media, which largely played along with Republican complaints, this is a terrific test case. For every news story about Solyndra in 2012, will there be a comparable story in 2014 about the loan program’s return on investment?
For every pundit who said the DOE loan program was a boondoggle, will there now be an acknowledgement that Obama’s policy worked quite well?