High, persistent unemployment and a sluggish economy underscore what all but the most-dedicated supporters of Barack Obama know to be true: The president’s 2009 stimulus program was a massively expensive bust.

Understanding why the stimulus failed is an important step in understanding how the government can—and cannot—goose economic recovery. To get a better sense of how and where the stimulus went wrong, Reason.tv focused on Silver Spring, Maryland, a suburb of Washington, D.C., that’s home to a large number of government contractors and other recipients of money earmarked for the sorts of “shovel ready” projects that were going to bring the economy back to life.

President Obama’s top economic advisor Larry Summers laid out ground rules for how stimulus dollars should be spent: The funds must be ”targeted” at resources idled by the recession, the interventions must be ”temporary,” and they needed to “timely,” or injected quickly into the economy.

None of that turned out to be true. “Even if you were to believe that government spending can trigger economic growth,” says Veronique de Rugy, Reason columnist and senior research fellow at the Mercatus Center, “the money is never spent in a way that’s consistent with the conditions laid out by the Keynesians for it to be efficient.”

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From The New York Times:

greenjobs_gw_03

A $500 million green jobs program at the Department of Labor has so far provided only 15 percent of current participants with jobs, leading the agency’s inspector general to recommend that the bulk of the money be returned to the Treasury.

The program, which was funded through the American Recovery and Reinvestment Act, aims to find employment for almost 80,000 people by providing grants for labor exchange and job training projects. With those grants expiring over the next 15 months, IG officials concluded that the program would fail to come close to that target.

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Just months after receiving the first “Green Jobs” stimulus money from the Obama Administration, the Department of Energy was poised to funnel another $469 million to Solyndra, the failed solar energy start-up at the center of a growing scandal within the Obama Administration.

E-mails released today show that White House staffers in the Dept. of Office and Management had grave concerns over the proposed “Phase II” funding which would have brought the total amount of tax payer money delivered to Solyndra to just under $1 billion.

The Energy Department was actively pushing to provide the second loan guarantee to the troubled solar-panel manufacturer in April and May 2010, when Solyndra’s auditors warned the company was in danger of closing due to its rapidly mounting debts and expenses, according to complete e-mails just released by a House committee investigating the original loan.

Most damning to the Obama Administration is the responses shown in the e-mails by career staffers at OMB.  Clearly not buying the value in throwing good money after bad at a company that was supposed to be part of President Obama’s “Winning the Future” plan for America, unnamed staffers resorted to gallows humor when contemplating the second proposed loan.

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As the mainstream media continue to obsess about a painted rock in Texas, the Solyndra story continues to grow.

“A number of us are concerned that the president is visiting Solyndra…  Many of us believe the company’s cost structure will make it difficult for them to survive long term. . . . I just want to help protect the president from anything that could result in negative or unfair press.”

Those words appeared in an email from Solyndra investor and Obama fundraiser Steve Westly to Obama senior adviser Valerie Jarrett in May 2010.  The correspondence is yet another indication that the White House had immediate warning signs that the $535 million loan guarantee of stimulus money pushed through by the Obama Department of Energy (DOE) was at great risk.

President Obama visited Solyndra despite the warnings, and the resulting video footage of the photo-op has become the perfect b-roll to accompany stories describing the failed “green jobs” initiative that the president held up as a shining example of how his administration was “Winning the Future.”

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Until now the Solyndra scandal only reached the White House in the guise of e-mails from staffers fretting about the political implications of the disastrous bankruptcy and how it would reflect on the President’s “Winning the Future” rhetoric.

Until now, the Solyndra scandal was a circumstantial log of White house visits by a big Obama donor who also was the failed solar company’s chief investor (those visits occurring right before a half-billion dollar loan guarantee was awarded by Obama’s Dept. of Energy).

Until now, the White House’s direct involvement in the Solyndra scandal appeared to be over-zealous operatives looking to speed-up the loan so Vice President Biden could have a nice photo-op at the doomed solar firm.

Now, we know much more.

According to an investigation by the Los Angeles Times, President Obama was warned nearly a year ago that Energy Secretary Stephen Chu’s department was not rigorous enough in vetting loan recipients and they ran the risk of funneling federal money to companies that shouldn’t receive it, or didn’t need it.  And the warnings came from the President’s top economic advisers Lawrence Summers and Timothy Geithner.

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On today’s edition of Coffee and Markets, Brad Jackson and Elizabeth Blackney are joined by Philip Klein from the Washington Examiner to discuss the latest on the Solyndra scandal and how it perfectly illustrates the crony capitalism and back room deal culture of the Obama administration. Then, we’ll discuss Obama’s plan to reduce the deficit through phantom cuts and trillions in tax hikes.

We’re brought to you as always by BigGovernment and Stephen Clouse and Associates. If you’d like to email us, you can do so at coffee[at]newledger.com. We hope you enjoy the show.

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OMB had warned Solyndra “NOT ready for prime time”
Obama Rejects Obamaism
Day No. 972: President Obama unveils a deficit reduction plan
Obama reaches out to liberals with budget plan
Philip Klein at the Washington Examiner

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The left is trying to find a way to avoid talking about the Solyndra scandal. For example, Kevin Drum at Mother Jones advises his readers to spin Solyndra as just another free market failure: “There was no scandal in the loan process, and there’s nothing unusual about having a certain fraction of speculative programs like this fail. It’s all part of the way the free market works.”

Drum’s excuse is laughable. But it’s also bad for the cause he wants to advance. If you still believe, as most on the left do, that we need government spending to create jobs, your only fallback thus far in the face of the failed stimulus has been the Paul Krugman line: that we ought to have spent more. That argument itself has failed because of our increasingly urgent debt problem.

Solyndra could provide the left with an alternative: the argument that Obama was right to spend, but he spent corruptly, and therefore unwisely. That’s a line that would let Keynesians separate the theory of the stimulus from its execution. It also would allow the left to attack corporate special interests–something it is quite eager to do, rightly or wrongly, when a Republican is in power.

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The White House’s Solyndra game plan and that of its talking head and media enablers is now apparent and requires correction.

First, the notion that Solyndra failed because China subsidized their own solar companies is absurd: these companies only exist where their host governments are propping them up. Period.

Next, it is clear from administration emails that the White House’s message was not, as Dem talking heads and other apologists are now offering, ’since you are approving this, we will schedule the visit’; it is instead, ’since we are scheduling the visit, this will be approved.’

Although this is apparent throughout, one message particularly captures it:

“We have ended up with a situation of having to do rushed approvals on a couple of occasions (and we are worried about Solyndra at the end of the week).  We would prefer to have sufficient time to do our due diligence reviews and have the approval set the date for the announcement rather than the other way around.”  August 31, 2009, email between OMB and Terrell McSweeny of the Office of the Vice President, regarding “DOE Announcement.

This running governmental contracting scam makes the $600 toilet seat of the 1980s — which was bad, because, uh, it was the military — look pathetic. Obama’s green temporary jobs, by its own varying estimates, range in cost to the taxpayer from $355,555 (overall) to $479,000 (Solyndra) to $4.8 million if you remove the really temporary installation gigs. But that’s, um, ‘green’, so it’s not like the $600 toilet seat, at all.

Worse, after having shown the due diligence of the average Bernie Madoff investor desperate to leap on to a trendy ride their associates assured them was hot, the Obama administration is now rushing to emulate Madoff himself. The only twist on the analogy is that they are using you, the scheme’s old entrants — who in this version of Mr. Ponzi’s construct, never actually get paid off, but only his non-contributing buddies do — as its new, involuntary entrants .

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OBAMA REGIME TAKES BILLIONS FROM TAXPAYERS – BLOWS IT ON FAILED GREEN PROJECTS–

The Obama Administration spent nearly half of the $38.6 billion ($17.2 billion) set aside for his green energy programs and was only able to create 3,545 permanent green jobs.
This comes out to a staggering $4,853,000 per job.

Obama continued to push green energy initiatives in his 2011 State of the Union Address.

The Obama Administration has blown billions of taxpayer dollars on green energy and has only succeeded in producing a few thousand jobs.

The Washington Post reported:

A $38.6 billion loan guarantee program that the Obama administration promised would create or save 65,000 jobs has created just a few thousand jobs two years after it began, government records show.

The program — designed to jump-start the nation’s clean technology industry by giving energy companies access to low-cost, government-backed loans — has directly created 3,545 new, permanent jobs after giving out almost half the allocated amount, according to Energy Department tallies.

President Obama has made “green jobs” a showcase of his recovery plan, vowing to foster new jobs, new technologies and more competitive American industries. But the loan guarantee program came under scrutiny Wednesday from Republicans and Democrats at a House oversight committee hearing about the collapse of Solyndra, a solar-panel maker whose closure could leave taxpayers on the hook for as much as $527 million.

The GOP lawmakers accused the administration of rushing approval of a guarantee of the firm’s project and failing to adequately vet it. “My goodness. We should be reviewing every one of these loan guarantee” projects, said Rep. Marsha Blackburn (R-Tenn.).

Obama’s efforts to create green jobs are lagging behind expectations at a time of persistently high unemployment. Many economists say that because alternative- energy projects are so expensive and slow to ramp up, they are not the most efficient way to stimulate the economy.

“There are good reasons to create green jobs, but they have more to do with green than with jobs,” Princeton University economics professor and former Federal Reserve vice chairman Alan Blinder has said.

And you really wonder why the US economy was downgraded? With leadership like this?

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And Watergate wasn’t the defining episode of the Nixon administration. But that’s how desperate Team Obama have become. And with today’s House hearing cancelled after the Solyndra gang phoned in a no-show, methinks this is not the end or even the beginning of the end of what Solyndra will tell us about Obama’s term.

Countering WaPo’s front page story showing deep and intense White House involvement in rushing through $535 million in taxpayer dollars to the brainchild of major Obama contributor George Kaiser, failed solar panel boondoggle Solyndra, today’s E&E Daily has a story (subscription required) “Democrats launch counteroffensive on Solyndra”.

The hand-waiving effort — Schwarzenegger was a fan! A Solyndra exec is a registered Republican! The program Obama abused was originally created by Congress during George W. Bush’s presidency! (untrue, “Sec. 1705″ was a 2009 project in the…stimulus bill…of Henry Waxman (D-CA)) — concludes with the following cry for help, or at least for a good fisking:

Other Democratic leaders were quick to pan the RNC’s attempt to make Solyndra the face of the stimulus effort.

“Solyndra is unfortunate. Did it not work? It didn’t work apparently. But that’s not the face of the Recovery Act,” said House Minority Whip Steny Hoyer (D-Md.) in an interview.

I’m sorry…whose effort to make Solyndra the face of ’stimulus’?

Which other project received — on top of the internal push to rush a half-billion dollars to this “NOT ready for prime time” (per an OMB email) project — personal attention and public promotion by the Energy Secretary, Vice President, and President? But, no, it wasn’t the face of ’stimulus.’

But, what of that whole presidential address, whose details make this claim something less than near-fetched:

“So that’s why we’ve placed a big emphasis on clean energy.  It’s the right thing to do for our environment, it’s the right thing to do for our national security, but it’s also the right thing to do for our economy.

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From Bloomberg:

Solyndra LLC’s workers making solar-power panels in a California factory subsidized by U.S. taxpayers showed “the promise of clean energy isn’t just an article of faith,” President Barack Obama said on a visit to the company in May 2010.

Two months before Obama’s visit, accounting firm PricewaterhouseCoopers LLP warned that Solyndra, the recipient of $535 million in federal loan guarantees, had financial troubles deep enough to “raise substantial doubt about its ability to continue as a going concern.”

The Obama administration stood by Solyndra through the auditor’s warning, the abandonment of a planned initial public offering and a last-ditch refinancing where taxpayers took a back seat to new investors. That unwavering commitment has come under increasing scrutiny since the company’s travails culminated in its filing for bankruptcy protection on Sept. 6 and a raid on its headquarters by the Federal Bureau of Investigation two days later.

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From NBC Bay Area News:

FBI agents armed with search warrants descended this morning on bankrupt solar company Solynrda this morning.

The investigation comes after a request by the Department of Energy’s inspector general, FBI spokesman Peter Lee told NBC Bay Area News.

Agents arrived at 7a.m. and are examining the factory. Solynrda has a skeleton crew of 100 workers on the scene, closing the factory down. A CNBC photographer on the scene says the FBI has promised a press conference. An agency spokesperson at its San Francisco headquarters says he’s unaware of any such plans.

Solyndra filed for bankruptcy last week, shocking both workers and the Obama administration, which had given the startup hundreds of millions of dollars in low interest loans.

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A lead story in Wednesday’s trade press publication E&E Daily was “Energy, fighting EPA at the core of GOP jobs agenda”. This is true, but also reveals what may be the greatest gap between Obamanomics and an approach to governance that most Republicans claim to support:

• Obama treats the energy sector like a centrally planned jobs program, putting the boot on the neck of the stuff that works while ‘creating’ politically desired but economically unsustainable positions making politically desired but economically undesirable products. Republicans argue that if wind- and solar-powered electricity, pioneered in the 1890s, work then they will work but in the meantime creating jobs in the energy sector means getting your boot off the neck of the stuff that works.
• Obama and his team have long argued that their costly regulations will actually create jobs. Of course, every program, regulation and even hurricane “creates jobs”, just not on net. The administration either doesn’t get ‘net’, or thinks you will be persuaded by ‘the seen’ and imagine there is no unseen.

EPA administrator Lisa Jackson embarked upon a campaign to advance these absurd arguments in February, arguing that, e.g., if she adopts a rule requiring you to do something costly or even prematurely destroy capital, why, you’ll have to hire someone to do it!

The WSJ accurately characterized this philosophy: “In other words, the government should harm an industry and force it to ruin working assets so maybe other people can clean up the mess.”

Obama administration “green jobs” emissary Jackson also said these will require many more new environmental regulators. Yes, she said that, risible dogma that was repeated by administration apologists as recently as this week on NPR’s Diane Rehm Show. So they aren’t giving up on it.

Except… On the Friday before this past long holiday weekend, President Obama somewhat buried a rational decision if a decision, like Thursday’s speech announcing Son of Stimulus, rooted entirely in his own political needs.

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Sarah Palin weighed in with a very important point in the policy debate about the role of government. Her Saturday speech, among other things, took a swipe at the country’s dilemma of booming crony capitalism:

[T]he permanent political class …[use] taxpayer dollars… to bail out their friends on Wall Street and their corporate cronies, and to reward campaign contributors, and to buy votes via earmarks. There is so much waste. And there is a name for this: It’s called corporate crony capitalism. This is not the capitalism of free men and free markets, of innovation and hard work and ethics, of sacrifice and of risk. No, this is the capitalism of connections and government bailouts and handouts, of waste and influence peddling and corporate welfare. This is the crony capitalism that destroyed Europe’s economies. It’s the collusion of big government and big business and big finance to the detriment of all the rest – to the little guys.

Amen. Immediately, the media and other Democrats, as well as some Republicans, pointed out that this label sticks to Texas Governor Rick Perry just as it does to President Obama and that, assuming Perry is the Republican nominee, it will have limited resonance in the 2012 debate.

There is an element of truth to this, though that seems to be as much an effort to dodge discussion (or Obama’s record) as it is to accurately represent matters.

First, about the phrase, ‘crony capitalism.’ After addressing it recently on television someone emailed me and asked if I would please deploy the term ‘cronyism’ since, after all, this is just corrupt abuse of taxpayer money and not at all capitalism. I get that. But you ride the waves that come in, and rhetorically, this practice is “crony capitalism” and will remain so barring a full airing of the practice’s true extent and insidiousness.

That Perry, like it seems most politicians, has some things to answer for on this front seems hardly enough to neuter Obama’s awful exposure to the charge (see, e.g., his many waivers from ObamaCare going 50% to union members who only represent about 7% of the workforce, as well as “Obama’s Enron“, the $535 million green jobs boondoggle Solyndra).

It is axiomatic that crony capitalism and similar corruption is rampant, in many forms, among businesses that would not exist but-for largesse transferred to them, by politicians, from taxpayers. Such industries, and the practice of propping them up in the name of one or another fads or theories, invite this.

The increasingly popular “green jobs” schemes — the White House claims more than $80 billion of the $800-plus billion ’stimulus’ went to these, whatever their  definition encompasses — are therefore rife with moral hazard. After all, they exist for reasons other than their economic s or their merit; their pitch is “unless you give me this preference, mandate or bag of money why, I’ll disappear”.

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In this May 26, 2010 file photo, President Barack Obama, with Solyndra Chief Executive Officer Chris Gronet, looks at a solar panel, during a tour of Solyndra, Inc., a solar panel manufacturing facility, in Fremont, Calif. Solyndra received a $535 million loan from the U.S. government has announced layoffs of 1,100 workers and plans to file for bankruptcy. (WaPo)

Top Obama bundler George Kaiser made multiple visits to the White House in the months before the company was granted a $535 million loan from the government.
iWatch News reported, via Free Republic:

The i Watch News investigation confirmed that at least 18 other bundlers have ties to businesses poised to profit from the president’s political agenda, through stimulus money, government contracts, or other spending to promote clean energy technology or green development.

Oklahoma billionaire investor George Kaiser is one. A longtime Democratic donor, he is a big financial backer of a company that in March of 2009 won a $535 million loan guarantee [19] from DOE for a solar plant in Silicon Valley. He had multiple visits to the White House in the months before he was awarded the contract. Kaiser has not responded to interview requests from iWatch News.

This doesn’t look very good considering it was widely known that Solyndra was in deep economic trouble in 2010 and had negative cash flows since its inception.

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As the nation tunes in to hear President Barack Obama’s “Jobs Speech” this Thursday, it would be instructive to learn how the last bundle of Keynesian billions were spent on those fabled “Green Jobs” that were supposed to save our economy in 2009.

Meet Solyndra, the latest Darwinian example of how not to run a capitalist economy.  The President’s magic bullet to save America’s job disaster and help “Win the Future” was to be a whole host of “Green” businesses designed to take advantage of the enormous market demand for solar energy, electric cars and high speed rail.  Of course, since that demand did not actually exist, Obama spent an additional bundle of billions to provide incentives for businesses and individuals to purchase the white elephant products he spent to build.

Solyndra was one of the crown jewels in the President’s plan.  He even made a high-profile appearance at the San Francisco factory complete with hard hat tour, and speech to adoring workers who were paid to sit and look thankful for their Green Jobs.  Those workers, 1,000 of them, are all part of the Obama Unemployed now as Solyndra shut its doors and declared bankruptcy.

The green workers got pink slips and no sign of a severance package.

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Solyndra, a San Francisco based solar panel company that received a $535 million loan guarantee from the federal government has declared bankruptcy. Last year President Obama touted the company as “leading the way” in the green jobs future he envisions.

Just a few months ago, ABC News revealed that one of the major financial backers for Solyndra is also a major donor to the Obama campaign.

The donor, Steve Westley, has subsequently been named to the President’s Energy Advisory Board. Solyndra was supposed to have produced 4,000 jobs with the loan guarantee. Now all of the company’s employees have been laid-off. Mr. Westley is still on the advisory board.

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This WaPo article — “Obama tries to change subject back to green jobs” — is an instant classic of a new, Obama-era genre: cheerleading for expensive schemes which exist solely due to political whimsy and consideration, and are therefore little more than make-work.

The item begins, “After spending weeks talking about topics he probably would have preferred to avoid — debt limits, deficits, a plunging stock market — President Obama will hit the road Thursday to talk about jobs. Specifically, about how his administration is trying to create more of them.”

The green ones. Which schemes failed where the president used to tell us to look but no longer does because the failures were exposed. As his spokesman admits “the White House doesn’t create jobs”.

And his critics say he’s out of ideas! But, hmm. Yes. I suppose that ‘green jobs’ thing went over well last time he led with it. Still, if ending up as a punch-line is victory, what does defeat look like?

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From Accuracy in Media’s Michael Watson:

In a tweet sent by White House media official Jesse Lee in direct response to AIM’s coverage of the Politico report on the elusive “green jobs” the President has promised, the press office sent “a few folks who disagree.”

The first item was an image of President Obama at a photo-op with workers at a solar energy plant. The second item is more interesting. Lee tweeted an article written for CNBC by “freelance journalist” Rob Reuteman which claimed that “everyone seems to agree there will be many more [green jobs] in the coming decades.” Reuteman claims that “market forces” in addition to regulatory mandates are creating such jobs.

Reuteman notes that “twenty-nine states have ordered their utilities to produce up to 30 percent of power through renewable energy in the next couple decades.” This is a mandate, not a market force.

Reuteman reports that the stimulus program “earmarked more than $70 billion in direct spending, tax breaks, and loan guarantees…most of it for ‘green energy.’” This too is not a market force but state intervention.

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Take a look at this video.

Doesn’t this sound like a nice guy? Isn’t this the kind of guy you’d love to have as your president? He sounds so…caring…even frustrated that he can’t make things better for us as soon as he’d like. He even sounds like he really believes that jobs should be created in the private sector. He just wants to help that along a little with things like…”partnering”…what a nice word…it sounds so…cooperative… and lets us know that the government is here to help us during this difficult time.

The president says, in his weekly address, that he wants to help create jobs by giving community college manufacturing students an extra little advantage of having a special seal of approval credential. This way, businesses who are hiring will know that the graduates with the credential are approved for their new jobs. Problem is, Mr. President, nobody is hiring…there are no jobs. And the reason for that is your policies have made a bad recession worse. Your policies have created so much uncertainty, so much ambivalence, and so much fear in small businesses and companies that no one wants to commit to hiring more employees. I believe you are referring to this phenomenon as “bumps in the road.”

Does the president really want to help Americans find jobs? To be sure, the president would say, “Of course.” What he might not say, but think, is, “I want to help people find the right kind of jobs, like green jobs that help me to achieve my green energy agenda, because that is what is really important to me.” And that is what the president actually does.

Ah, the difference between what the president says, and what he does!

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