Where there's smoke there's fire?Follow

Joph's downplay aside, there are a number of aspects of that deal that smell pretty bad of corruption and political payback. Owners/investors of said company were big donors to the Obama administration and then received a very large amount of subsidy from public money in return (a pretty classic "I'll pay for you to get elected, you make the taxpayers pay me back" kind of deal). By itself, this doesn't prove anything of course. Folks invested in solar panels are going to tend to support politicians who are going to be pro-solar panels. The question comes in when there's a degree of contact above the norm and it's starting to look like their may have been.

That's where the "where there's smoke, there's fire" bit comes from. There's certain some smoke coming from this one. The biggie is the recent revelation that for some really strange reason, the contract written up by the DoE actually ensured that the private investors (ie: Dem supporters) would get their money back first in case of bankruptcy and not the government (really, the public). In the context of existing charges that the Dems are using public money to pay off their buddies, this looks really really bad.


Honestly, I'm not sure there was any deliberate corruption involved (and it would be hard to prove anyway), but it's a great example as to why it's a bad idea to use public money to invest in the productizing of new technology. Research grants are one thing, but once you're working on actually marketing a product, subsidies are (almost always) a bad idea. It allows products to go to market that can't compete without those subsidies *and* it increases the odds of the investment being bad in the first place.

And yes, I'm aware that businesses fail all the time. But that's not the point. If a bunch of private investors put their money into something and it fails, then it's their money that they lost. Their choice all the way through. When the government does this, it's investing with our money, but has no profit motive to balance its decisions. It's going to make poor decisions a lot more often than someone using their own money will. And again, it's gambling with our money. It doesn't really have the right to do that.

Who else invested in the company really isn't that relevant though. The bigger question is why the DOE put money into it. There's a paper trail being investigated right now. There's some issue because the recommendation of the DOE was to *not* put money into solyndra. Yet it did anyway. Add in the personal attention by Obama, the number of people involved who were donors to Obama (and other Dems), and there's a legitimate question as to whether political entanglements drove the decision to fund Solyndra rather than good market sense.

In the middle of all of this is the question as to who told the DOE to change its mind and put not just some money, but a whole hell of a lot of money into this company. If this ends out being some kind of direct pressure put on the DOE by the White House or other prominent political figures, then you've got a pretty big scandal on your hands.

There's definitely enough smoke in this to justify looking to see if there's a fire.



It does kinda come back to my earlier statement though. If it's such a great idea, and it was able to get private investment, then why did the government have to get involved at all?

Gbaji would sound a lot more sincere if he ever questioned why oil companies making more profit than God so desperately need their taxpayer subsidies. Surely, they can get private investment for their "exploration", right?

I can say why a start-up in a new field would need help more so than a 150 year old company that makes global record profits year after year.

They don't. That's the point you seem unable to grasp. The subsidies handed out to Solyndra represented a significant portion of their entire operating capital and allowed them to continue operating. The subsidies to oil companies are not there to allow them to stay in business, nor to make their product marketable in the first place.

Which is the first clue that these are two completely different things.



Yup. Which might make one suspect that the purpose of those subsidies, rather than to allow the company to make more money than it would otherwise, is designed as an incentive to get the oil companies to do something they would not ordinarily do. We can argue back and forth about what things the government wants oil companies to do differently that's worth the cost of the subsidies, but it's a good bet that "help them make more money" isn't one of them.




Ok. So which start ups do we decide to invest taxpayer dollars into? It's that process of choosing which companies got those dollars that is at question here Joph. That's where the whole thing starts to smell fishy. Are you arguing that we shouldn't bother investigating this? If there's nothing there, then there's nothing there.

Question: Do oil companies give back more, less or the same in taxes that they're given in subsidies?

Genuinely curious.

Of course they do. Vastly more. Obviously, sources will vary, but the numbers I've heard most commonly are something like $4 billion in total oil company subsidies in the US, and somewhere around $200-$300 Billion on taxes paid. I believe those numbers are all taxes at all levels, and not just federal taxes.

This should underscore just how irrelevant those subsidies are in terms of their total business and why it's absurd to equate those subsidies to a .5B subsidy for a single relatively small company, with yearly revenues measuring significantly less than that subsidy amount.

Their own bank accounts.

I'm just not finding it relevant. I am, however, vastly amused by your full-throated defense of throwing billions and billions of dollars at companies who, by your admission, don't really need them at all (but are GOP lapdogs) while lamenting 1/80th that amount going towards a start-up venture that doesn't match your political agenda.

Right. One donates millions and millions of dollars to the GOP and the other doesn't. Money gone is money gone and, frankly, it doesn't even matter if it's direct payments or tax breaks; both result in a lower total on the balance sheet. The question is whether investment in an industry that can use the boost to realize its potential is worth (or even 1.25% as much) as subsidies towards industries that break global records in profit making.

Even the lame "Well, this is about the government wanting them to do something differently" argument is a wash because all subsidies, loans, etc are for that purpose. The purpose of giving Solyndra a $550mil grant was because we wanted Solyndra to build a plant in the US and develop technology we thought the nation would benefit from rather than them choosing some other location or developing something else. Is this really different from "Well, those tax incentives were because we wanted the oil company to drill in this spot instead of that spot"? No, it's not. Not at all, really. Money is given to influence corporate actions whether it's building a plant in a specific location, buying equipment, hiring people, manipulating inventories or whatever.

And so much more convenient for your lockstep defense of all things Republican to insist that -- no! -- This is REALLY different! And not at all only because it's about an industry with Democratic support.

We're supposed to be all a-fluster about this, remember? If you can't come up with something better than "Umm... uhh... no, it's absurd! Totally different!" then I hope you understand why no one is taking you seriously.

Mostly? The same thing we do with farming subsidies. If we're really looking at just subsidies (ie: where the government pays the oil company) and not lumping in tax deductions as well, most oil subsidies are about getting the oil companies to not drill so much oil in the US. The government basically pays oil companies to "explore" for oil, but in ways and in locations unlikely to result in eventual oil production.

It's not a 100% all or nothing scenario of course, but subsidies to oil companies are largely negotiated payments for regulations which make it harder for them to make money on domestic oil. It's more or less exactly like the government requiring that a farmer produce less wheat and then compensating him with a subsidy for the potential profit he's not making.

/shrug

You're the one who brought up oil subsidies as though they were somehow relevant to this. I just don't see how you can equate subsidies to a set of industries that are profitable without any government intervention, to a subsidy for a company which constituted about 1/3rd of the entire investment into that company during its entire duration. We can sit here and go back and forth about why various subsidies and tax breaks and whatever are applied to the oil, gas, and coal industries, but none of them appear so obviously to exist in order to prop up those businesses and make them look successful when they are not.


The loan to Solyndra definitely *does* look like money dumped into a company in order to keep it running for another year and not a whole lot else.

An alleged hypocrisy which rests on your own false equivalence.

Get back to me when those oil company subsidies consist of anywhere close to 1/3rd of the entire operating capital of those companies over their lifetime. Then I'll treat them with the same weight. Until then, I'll stick with singling out Solyndra as an example of a horrible waste of taxpayer money at best, and outright political corruption and payback at worst.

Really? That's your best argument? Funny how you tally a "cost" for an industry that has a net positive effect on our economy, a net positive effect on our job market, and a net positive effect on our government revenues. You kinda forget to account for that in your whole cost assessment, don't you?

Solyndra has "cost" us more than the entire oil industry Joph. Because we spent that money and got absolutely nothing back. No sustainable jobs. Negative economic gain. Negative effect on federal revenues. Given that this specific company was one which Obama personally hyped as a shining example of how his green energy subsidies were going to create jobs, push the tech envelope, and help save the US economy, I do think it's legitimate to hold its failure up in at least equal measure.


Don't you agree?

Edited, Sep 27th 2011 7:41pm by gbaji