Feds Should Stop Betting Tax Funds on Solyndras

Solyndra is one of many green energy companies struggling despite massive government loans.

By + More

Gregg Laskoski is a senior petroleum analyst for GasBuddy.com.

Much attention has been given to the depths to which the U.S. economy has sunk in recent years and the pile of money needed to climb out of the abyss. According to CNN, the government's efforts to remedy the situation has cost American taxpayers $1.2 trillion, so far.

You would think that with all this money being thrown around someone would have been keeping score of what's going where and when each investment's return should come in. But as we would learn, money was not distributed to businesses based on merit, or job creation for that matter. Somehow $528 million of taxpayer money was handed to a 'green energy' company called Solyndra in the form of a guaranteed loan from the U.S. Department of Energy. You probably heard how that company was hand-picked and that it went bankrupt last year.

[See a collection of political cartoons on energy policy.]

Let's forgive and forget. Oh wait; I can't do that. CBS News just reported that the government's "investment strategy" implementing the same wisdom that selected Solyndra has been extended to 12 green energy companies that are having considerable financial trouble after being approved for more than $6.5 billion in federal loans. In addition to Solyndra, four others have filed for bankruptcy too.

To make matters worse, some of these companies had poor ratings… worse than junk bonds. And the government knew that too but gave them the money anyway.

One company called Sun Power landed a $1.2 billion loan guarantee last fall, but CBS reported that on its last financial statement the company owed more than it was worth. Another loser was First Solar, which left taxpayers on the hook to back $3 billion in company loans.

In this era of transparency, Energy Secretary Steven Chu opted against explaining this mess when reporter Sharyl Attkisson offered the opportunity.

[Read Peter Roff: Solyndra Is Symptomatic of a Larger Obama Energy Problem]

Economist Peter Morici said, "Tasking (Chu) a Nobel Prize mathematician to make investments for the U.S. government is like asking the manager of the New York Yankees to be the general in charge of America's troops in Afghanistan. It's that absurd." Some believe the federal government is simply trying to jumpstart the economy. They say that big rewards require big risks.

Should the federal government be gambling this way? I learned the answer to that question about 35 years ago as a student working a summer job at a pharmacy (long since closed) in Bronxville, N.Y.

The drugstore was one of three in town that had a soda fountain. I made burgers, sandwiches, ice cream sundaes, etc., and delivered medication to people who dropped off their prescriptions and wanted home delivery. I also placed bets for the pharmacists and a bookie named Gus.

[Follow the U.S. News Energy Intelligence blog on Twitter]

Each day around noon I'd have to drive south to the nearest Off-Track Betting office (at 233rd St. and White Plains Road in the Bronx. That's closed now too.). I had to get the bets in before post time at Aqueduct Raceway and Belmont Park.  

Gus knew the horses but he knew his clientele better. One day one of the pharmacists left cash for a wager on the counter but had written something imperceptible and left the store. We knew which race but couldn't read which horse he picked. (This was before cell phones… there was no way to reach him.) Knowing the pharmacist's mercurial temperament I asked Gus if he had an idea which horse the pharmacist was considering or if he should pick it himself.

Gus declined. "Can't do that," he said. "It ain't my money."

  • See an opinion slide show of 10 wasteful stimulus projects.
  • See a collection of political cartoons on the budget and deficit.
  • Read Thomas Pyle on how the government failed in energy policy in 2011.