It's yet another inauspicious announcement the Obama Administration didn't want you to hear. Late on Friday, the White House announced that it ordered an independent review of loans made by the Department of Energy to energy companies after months of weathering criticism for its $528 million loan to the now-bankrupt Solyndra solar panel company.
The White House's independent investigation, though, isn't the only one in town. The FBI raided Solyndra after it declared bankruptcy, and Congress is diving in with an investigation of its own. Energy Secretary Steven Chu, who has been a strong advocate of this federal loan program, is set to testify before a congressional committee in mid-November on his involvement in the scandal. And Heritage's Lachlan Markay reports that the House Energy and Commerce Committee announced Friday that it will vote to subpoena a host of White House documents related to Solyndra, including messages from the President's Blackberry. The White House, though, would not comment on whether it will comply with the subpoena.
Even the mainstream media is picking up on the story. On yesterday's Meet the Press, host David Gregory asked White House senior adviser David Plouffe whether, in times of dire economic straits, the government should be playing venture capitalist and trying to prop up green energy industries. Plouffe's answer? In a nutshell, other governments are doing it, so we should, too: "Listen, you see what's happening in other countries, you know, huge investments in this clean energy sector. We have to do everything we can."
But as the motherly advice goes, just because all your friends are jumping off a bridge, that doesn't mean you should do it, too. Unfortunately, this seems to be the logic the Obama Administration is operating under, despite the weight of common sense that should otherwise be holding it back: If the centrally-controlled economy of China does it, so shall America.
The latest proposal on the table is the Clean Energy Deployment Administration--a veritable "green bank" that would provide loan guarantees to energy and automotive projects that Washington deems worthy. And what it amounts to is a costly subsidy financed by the taxpayers that invites the government to stick its finger into the private energy marketplace. If the company defaults, the taxpayer is on the hook--just like in the case of Solyndra. The total cost of the program? Ten billion dollars, with projected costs hitting an additional $1.1 billion over the next five years.
So what about the Administration's argument that other countries are investing heavily in these industries, so the United States must keep up? In a new paper, Heritage's Nicolas Loris analyzes the green bank program and points out a harsh reality: When subsidies are removed from these green energy industries, they collapse because they were developed in a bubble and can't survive on their own. Loris explains that European countries--which pursued the path the Obama Administration would like to go down--learned that lesson the hard way and are making an exit:
When faced with a need for drastic budget cuts and job creation, Spain, the United Kingdom, Germany, France, and the Czech Republic decided to reduce subsidies for green energy programs, such as wind and solar energy. As a result, some industries have collapsed and others are either collapsing or face difficult roads ahead.
Although each European country has taken a different approach to subsidize green technologies, the results have been the same: Artificially propping up industries by reallocating labor and capital toward uncompetitive projects, forcing higher energy prices on ratepayers, and failing projects are costly to the economy and the taxpayer.
Europe has seen that picking winners and losers in green energy doesn't work and brings with it a steep cost. The Obama Administration has seen it first hand with Solyndra, the hundreds of millions of taxpayer dollars it wasted, and the 1,100 former employees now out of work. But for some reason, even that first-hand experience can't convince them to stop playing with taxpayer dollars as if it's their "Monopoly" money to burn.
Congress should refuse to expand loan guarantee programs and quit putting taxpayers on the hook for an untold number of projects that could fail. The American people simply can't afford to have Washington put them in the venture capital business.