As the Solyndra scandal continues to boil over, the energy secretary has been frequently cited as the main player who was trying to “fast-track” the $535 million loan for the now-failed solar panel manufacturer.  E-mails show serious tension between the DOE and the Office of Management and Budget at the time of the loan and in subsequent months as fears began to rise over the financial viability of the firm.

Considering he’s been at the center of the storm that is Solyndra, it’s likely he has had time to consider his responses to a reporter’s inquiry on the subject.  That’s what makes his “20/20 hindsight” statement so curious.  It’s an obvious dodge.

The latest memos released just yesterday by House Democrats on the Energy Committee show that warnings were given to the White House and the DOE at the time of the loans and in the following months.  This is not a question of “20/20 hindsight.”  The responsible parties in Sec. Chu’s department knew at the time that Solyndra was in risk of collapsing and yet continued to put American tax dollars at risk.

It has also been revealed that Sec. Chu, himself attended a meeting with President Obama and the president’s chief financial advisers, Lawrence Summers and Treasury Secretary Timothy Geithner.  At that meeting, Summers and Geithner warned that 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.

According to the LA Times:

Energy Secretary Steven Chu, also at the meeting, had a different view. Under pressure from Congress to speed up the loans, he wanted less scrutiny from the Treasury Department and the Office of Management and Budget, or OMB.

Secretary Chu, Mr. Summers and Sec. Geithner did not have “wonderful 20/20 hindsight,” they warned you and President Obama of the dangers in risking tax-payer money on unproven technology and poorly vetted companies back in October, 2010.  What do you say to them?  And to the American tax payers?

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.”

“If it’s too late to change/postpone the meeting, the president should be careful about unrealistic/optimistic forecasts that could haunt him in the next 18 months if Solyndra hits the wall, files for bankruptcy, etc.”

Hit the wall they did. Solyndra is bankrupt and over 1,000 people are unemployed. And yet President Obama had praised the fledgling company as an “engine of economic growth” and a model of his administration’s $80 billion stimulus-funded investment in clean energy technologies and companies.

As the House Energy Committee continues investigating the details behind the Solyndra hand-out, each day brings a new revelation of White House connections and foreknowledge of the impending failure.

Today’s release of memos came from Democrats on the House Energy and Commerce Committee. That suggests a loss of congressional support for the president, even as the emails themselves reveal a deep rift between warring factions of the Obama Administration.

The Office of Management and Budget (OMB) began voicing concerns about the company’s financial standing in early 2010, and complained that the DOE was either ignoring the problems or was unconcerned over the potential loss of $535 million in taxpayer funding:

“DOE … has one loan guarantee to monitor and they seem completely oblivious to this issue,” one OMB analyst said to another in an April 2, 2010, email.

“What’s terrifying is that after looking at some of the ones that came next, this one [Solyndra] started to look better,” another OMB e-mail exchange said of Solyndra. “Bad days are coming.”

The “bad days” appear to be here for the Obama Administration as House investigations focus on the influence of George Kaiser, an Obama donor and Solyndra investor who visited the White House multiple times in the days leading up to the loan approval for the now-bankrupt California company.

Investigations have also uncovered:

• Solyndra violated the terms of the original loan, but still received more money from DOE
• DOE re-structured the Solyndra loan to allow investors to get paid back before tax-payers (allegedly violating federal law)
• A Solyndra investor said the goal of the DOE loans was to lend credibility to the firm so it could “cash out” by going public
• Obama’s top economic advisers warned him that Solyndra and “green technology” in general was a risky investment and the White House should not tie federal stimulus money to individual companies, but to a broad market instead.

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.

Summers and Geithner also warned about the overall risks involved in relying so heavily on pumping federal stimulus money into unproven programs and technologies which would not have any lasting positive effect on the moribund economy and the stagnant job picture in America.

The divisions foreshadowed a question that has emerged since Solyndra’s bankruptcy: Was the program’s vetting process thorough enough? The disagreements also spotlighted an issue that has confronted Obama since he took office: What is the appropriate role of the government in stimulating the private marketplace?

Skeptics, noting that taxpayers could now be on the hook for $527 million the federal government loaned Solyndra, said the administration would have been better off making greater use of market incentives, not individual company loan guarantees.

“It was completely predictable that there would be a colossal failure among the bets,” said one person familiar with the internal debate.

The meeting took place in the White House last October.

Now that we know what the President knew, and when he knew it, it’s instructive to look at how his administration reacted to the information provided by the President’s top economic geniuses.  The White House ignored their advice and doubled-down on the risky and fruitless endeavor of “investing” in unproven companies like Solyndra.

Here are the key actions by the White House since hearing the advice from Summers and Geithner about the risks of the President’s policy:

• Within months of the fateful meeting, the DOE restructured the Solyndra loan allowing the tax-payers to take the back seat to private investors if any money were to be paid back.  This move appears to be unlawful according to Rep. Cliff Stearns of the House Energy Committee.
• In the President’s State of the Union in January 2011, Mr. Obama lectured lawmakers on the importance of “Winning the Future” and implored them to send our country further into debt by “investing” in more “green technologies” like Solyndra.
• Just today the Dept. of Energy announced a $737 million loan guarantee for a Nevada solar project in direct contradiction to the Treasury Secretary’s advice.

Yes, now we know what the president knew and when he knew it.  Unfortunately, it appears the president didn’t learn anything from it.

In an interview with Fox News on April 19, 2011, a little over three months ago, when U.S. Treasury Secretary Timothy Geithner was asked if the U.S. was at risk of losing its AAA rating, he replied:

“No risk of that, no risk…you see the leadership of the United States of America, the President…the Republican leadership…the Democrats…recognizing now that this is the right thing to do for the economy.”

For some time now, the United States debt has been creeping up to the 100 percent of Gross Domestic Product (GDP) mark.  That’s a disaster just waiting in the wind. It’s reminiscent of 2001 when the Bush Administration warned of potential problems and warned that financial giants, Fannie Mae and Freddie Mac, could “cause strong repercussions in financial markets.”  In 2003, the White House upgraded the concerns to a “systemic risk” that could spread beyond the housing sector.  But U.S. Representative Barney Frank (D) told the House Financial Services Committee that the housing market was fine, stating, “Fannie Mae and Freddie Mack are not in a crisis.”

In 2008, the housing market crashed, sending the economy in a downward spiral, from which we have not recovered.  You would think that our “leaders” would have learned their lessons from the past, especially from such a debacle just a few short years ago.  But with the passing of the recent budget hijacking, debt ceiling busting deal that our lawmakers recently compromised on, ignoring the warnings of the TEA Party, it is apparent that the lessons of history were short-lived.  Shortly after the deal was done, the unthinkable happened.  The US debt hit the 100 percent mark of GDP, the market tanked, and the US credit rating was downgraded from its AAA rating, with the real possibility of being downgraded again.

It was an historic day for America, all on President Obama’s watch.  From MSN:

“US debt shot up $238 billion to reach 100 percent of gross domestic product after the government’s debt ceiling was lifted, Treasury figures showed Wednesday. Treasury borrowing jumped Tuesday, the data showed, immediately after President Barack Obama signed into law an increase in the debt ceiling as the country’s spending commitments reached a breaking point and it threatened to default on its debt. The new borrowing took total public debt to $14.58 trillion, over end-2010 GDP of $14.53 trillion, and putting it in a league with highly indebted countries like Italy and Belgium…Ratings agencies have warned the country to reduce its debt-to-GDP ratio quickly or facing losing its coveted AAA debt rating.”

How could they not see this coming?

Look, let’s put it in kitchen table terms, the way most Americans these days understand it. When your income matches your debts, there is no room for error.  None.  Let’s say my family makes $60,000 a year.  That’s $5,000 per month.  And when I add up all my debts and expenses (mortgage/rent, car payment, insurance, utilities, food, gas, etc.) and I find out that, it too, equals $5,000.00 per month, I’m worried.  Heck, scratch that, I’m PETRIFIED!

You see, in the real world, things come up. There is always a “crisis” just around the corner.  A trip to the doctor, a flat tire, a heat wave that spikes my electric bill, etc.  And, dare I say, if gas goes up then you can pretty much say that I’m screwed.  Because, unlike the government, I don’t have a “blank check” that I can go cash that comes out of the wallets of “other people,” and I don’t have a printing press in my backyard.  Credit?  Please, I have already used all that, and a bank will just laugh at me walking through their door.  Hypothetically speaking, that is.

The reality is, when your outflow exceeds your income, then the outcome will be your downfall!

Well nobody is laughing now, and Standard and Poor (S&P) is now holding the proverbial crystal ball, but they know how to use it.

In a report released by S&P, the worldwide leader in financial market intelligence gives a bleak overview:

“The downgrade reflects our opinion that the fiscal consolidation plan that Congress and the Administration recently agreed to falls short of what, in our view, would be necessary to stabilize the government’s medium-term debt dynamics.

More broadly, the downgrade reflects our view that the effectiveness, stability, and predictability of American policymaking and political institutions have weakened at a time of ongoing fiscal and economic challenges to a degree more than we envisioned when we assigned a negative outlook to the rating on April 18, 2011.”

Tapping further into the Crystal Ball, S&P gives a warning shot that we should all pay attention to:

“The outlook on the long-term rating is negative. As our downside alternate fiscal scenario illustrates, a higher public debt trajectory than we currently assume could lead us to lower the long-term rating again [emphasis added]. On the other hand, as our upside scenario highlights, if the recommendations of the Congressional Joint Select Committee on Deficit Reduction–independently or coupled with other initiatives, such as the lapsing of the 2001 and 2003 tax cuts for high earners–lead to fiscal consolidation measures beyond the minimum mandated, and we believe they are likely to slow the deterioration of the government’s debt dynamics, the long-term rating could stabilize at ‘AA+’.”

The problem with Washington is simple.  It’s not their money.  There is no emotion attached or sense of urgency for a reduction in spending.  It’s just a green sheet of paper to them, but a lifeline to us.  It’s easy for all the politicians and bureaucrats to compromise and make deals with “other people’s” money.

Then, perhaps, maybe “other people” should be in charge!

This man-made inferno is now centered around and fixated upon the August 2 so-called “drop dead” date for reaching a deal to raise the nation’s borrowing limit.

If we do not by then do so, we are told, America will go into default.

Which is little more than repetitive absurdity.

Treasury Secretary Tim Geithner has already given us numerous such “drop dead” dates.  March 31?  April 15?  May 16?  May 31?  July 8?  July 22?  These were all “drop dead” dates with which Geithner previously tried to concern us.

Now we’re even being told it’s as likely to be August 10 as any of the others.

In short, on this federal government power grab disguised as a fiscal “crisis,” Lil’ Timmy Geithner is many times over the Boy Who Cried Wolf.

These ever-rolling “drop dead” dates prove (at least) one additional thing: conservative Republican leverage for a deal to their liking indubitably increases every day after the date passes – else Geithner would not be so keen on repeatedly moving it.

As with these myriad others, August 2 is only a drop dead date mostly in the minds of Leftists and the Media (please pardon the redundancy) – who wish to manufacture a crisis so that they can then not let it go to waste.

We can no longer borrow money after August 2 – we will still be collecting tons of coin via taxes and fees.  To the tune of approximately $200 billion per month – not at all an untidy sum.

But that $2.4 trillion in federal money to be collected this year is dwarfed by the $3.82 trillion we are planning to spend.

(The latter number we’ve reached with a monstrous 29% increase in profligacy in just the last four years.)

And this is one of the many Alice in Wonderland moments in this debt ceiling debate.

We’re borrowing about 40% of the money we’re spending – but that is somehow not the crisis.  The “crisis,” we are told, is our not granting ourselves permission to continue doing so.

Thusly do we go through the Looking Glass and down the rabbit hole.

But the other side of that coin is that we still have access to 60% of the money we spend.  Which means we are in absolutely no danger of defaulting on our debt.

We can also easily cover the Social Security, Medicare, Medicaid, military and veterans’ payments President Barack Obama and others have of late (yet again) shaken like a shibboleth.

So while we will not be able to cover all of the 80 million checks Treasury Secretary Tim Geithner says the feds cut each month, we can easily pick and choose our way around any potential land mines – both real, and fabricated for political purposes.

(And here’s another Lewis Carroll moment – 80 million checks a month?  I will bet all the money in my pockets versus all the money in your pockets that the Founding Fathers did not design the Constitution and its government with the intention of it cutting 80 million checks in a century – let alone every thirty days.)

And here’s another dirty little secret the Left and the Media (again, apologies) vociferously insist on not sharing with us.  We the People are overwhelmingly opposed to a debt ceiling raise of any kind, under any conditions – by about 2-1.

What we currently have in Washington is a Republican Party agreeing to raise the debt ceiling – the biggest of all compromises – in exchange for fundamental, structural budgeting reform.

Reform of which We the People are in favor – by about 2-1.

And a Democrat Party playing politics – disingenuously demagoguing these genuine, genuinely favored efforts, while offering no substantive plans of their own.

The Leftist-Media nexus is attempting to force-feed us demonstrably false stories – that we must raise the ceiling so as to avoid defaulting on our debt and stiffing seniors, the poor – all the “most vulnerable Americans,” and that the latest, overwhelmingly popular Republican proposal to repair the long-term damage is the “worst piece of legislation” ever.

We the People aren’t buying.

—–

All of this is in ways very similar to how we arrived at the Federal Communications Commission (FCC)’s illegal December Internet power grab – so that they could then impose the absurd Network Neutrality.

Like with the debt ceiling power grab, the Leftist-Media nexus has been long force feeding us scary – and mythical – Net Neutrality stories.  About evil corporations that would block us from the Web content we wanted.

Like with the coming – and going – of the many debt ceiling raises, we kept waiting for the alleged Internet terribleness to transpire – and it never did.

Like with the debt ceiling power grab, Net Neutrality was woefully unpopular with We the People.  In fact more so.  95 Democrats signed a pro-Net Neutrality pledge in advance of the 2010 election – and all 95 lost.

And in substantive ways, the Net Neutrality power grab is in fact even worse.

On the debt ceiling, you have representatives from both political Parties going along with the terrible joke – pretending that we must raise the roof by this latest “drop dead” date to avoid alleged default.

On Net Neutrality, you had 302 members of the then overwhelmingly Democrat Congress telling the FCC not to do what they ended up doing.

(Not to mention the Democrat-led D.C. Circuit Court – which ruled unanimously that the FCC doesn’t have the authority to do anything to the Internet.)

On the debt ceiling raise, you have several large Democrat-paragon unions fighting on the side of increasing Huge Government.

On Net Neutrality, you had and have several large Democrat-paragon unions vocally opposed.

Not to mention myriad others that are usually almost always in Democrat lockstep – including seventeen minority groups, several racial grievance groups and an anti-free market environmentalist group.

See?  Net Neutrality is – even worse.

—–

Both the debt ceiling increase and the FCC Net Neutrality usurpation are insufferable federal power grabs.

That are incredibly unpopular with We the People.

We who have to repeatedly cede our freedoms and our coin in acquiescence to our alleged “representatives.”

Who routinely, rigidly flout or will – rather than represent it.  And dictate – rather than listen – to us.

The lessons of 2010 were clearly never learned.  They must be retaught in 2012.

Some say the world will end in fire and some say in ice.

But in Washington, a lot of people say it will end if we don’t continually raise the debt ceiling.

The statutory debt limit, or debt ceiling, represents the maximum amount of debt the federal government can carry at any given time. The limit was created in 1917 so that Congress wouldn’t have to vote every time the government wanted to increase the amount of debt (which was becoming a more and more frequent occasion). Since then, the Treasury Department has had the authority to issue new debt up to whatever the limit is to fund government needs. Last year, the limit was raised to $14.3 trillion, an amount that is about to reached.

As it approaches, Federal Reserve Chairman Ben Bernanke has said failing to raise the limit would likely mean the U.S. would default on its debt, creating “real chaos” in place of the fake chaos that’s out there now. Treasury Secretary Timothy Geithner has said that failing to raise the limit would be “deeply irresponsible” and and Austan Goolsbee, President Obama’s chief economic adviser, has said that not raising the limit would create “the first default in history caused purely by insanity.”

Eh, maybe.

As Reason columnist and Mercatus Center economist Veronique de Rugy, has pointed out, we’ve maxed out the nation’s credit card in the past without such dire results. In the mid-1980s, the mid-1990s, and in 2002, for instance, the debt limit wasn’t raised for months at a time and the government got along just swell. The government has a big bag of tools it can use, ranging from playing around with the amount of spending that is liable to the limit to prioritizing interest and debt payments over other outlays. Interest on the debt for this year is projected to be about $225 billion and government revenue is expected to be around $2.2 trillion, so the government can easily pay the vig and avoid defaulting.

What it shouldn’t do is simply keep piling on the debt. The limit has been raised no fewer than 10 times in the past decade. When Republicans ran the White House and the Congress, they voted overwhelmingly to charge it and Democrats, including Sen. Obama, hollered bloody murder. In 2006,he called the need to yet again increase the debt limit “a sign of leadership failure.” Now that Dems run the show, the GOP has suddenly rediscovered its inner cheapskate.

So it goes.

The boldest plan to rein in spending and debt comes from newcomer Sen. Mike Lee (R-Utah), a Tea Party favorite who dispatched Republican incumbent Bob Bennett in the primaries before coasting to victory in the general election last fall. Lee has vowed to block passage of a debt-limit increase unless Congress signs on to his balanced-budget amendment which would cap annual federal spending at 18 percent of Gross Domestic Product (GDP). The amendment would require a super-majority of two-thirds in the Senate and House of Representatives. Lee’s bill is competing with another Republican proposal from Sens. Hatch (Utah) and Cornyn (Texas) to cap spending at 20 percent of GDP. The Hatch-Cornyn bill has weaker rules on its higher cap as well.

In 2010, spending came to about 24 percent of GDP and it’s expected to come in around 25 percent of GDP in 2011. Since 1950, total federal revenues have averaged 17.8 percent and have reached higher than 20 percent exactly once. Spending over the same time has averaged just under 20 percent.

Whether Lee’s proposal carries the day – and there’s a strong case that its passage would do more to calm financial markets than simply bumping up the federal credit line – neither the Democratic nor the Republican leadership has yet to advance a serious proposal to cut spending and reduce outstanding debt. Indeed, both the president’s budget proposal for 2012 and the generally non-existent Republican response are not only deeply irresponsible but clear signs of insanity.

That ain’t right. But it does help explain why a government that has increased spending over 62 percent in real dollars can no longer get by on a $14 trillion debt ceiling.

Video written and produced by Austin Bragg; article text written by Nick Gillespie.

Go to Reason.tv for downloadable versions and subscribe to Reason.tv’s YouTube channel to receive automatic notification when new material goes live.

Remember all of those bold statements that the so called “Troubled Assets Relief Program” (TARP), the Bailout of Wall Street Bill, was a one time deal and our federal government should and will never do it again.  Secretary of the Treasury Tim Geithner testified in January of this year before the House Committee on Oversight and Government Reform:

Many Americans look at what happened with AIG, and the rest of the financial rescue, and simply ask:  Why was it necessary?  Why was it fair for the government to take taxpayer money and put it into an institution that had mismanaged itself to the edge of collapse?  The answer is that it was not fair, and it was not something our government should ever have to do.  But those Americans, those families and business owners who played by the rules and played no role in giving rise to this recession, should understand that if the government had failed to act, that failure would have unleashed substantially greater damage upon them.

If TARP “was not fair” and not “something our government should ever have to do,” then why is Congress trying to impose the TARP model on small business?  Congress will consider legislation this week to establish TARP, Jr. for small businesses to be administered and run by none other than Secretary of the Treasury Tim Geithner. The House is considering H.R. 5297, the Small Business Lending Fund Act that provides “temporary authority to the Secretary of the Treasury to make capital investments to eligible institutions in order to increase the availability of credit for small businesses.”

The legislation creates a federally run new bureaucracy called the “Small Business Lending Fund. ”  To qualify a financial institution has to have less than $10 billion in assets and the new creation would have up to $30 billion in new investment authority.  This allegedly temporary program is set up “without further appropriation of fiscal year limitation,” i.e. not temporary, to purchase “preferred stock and other financial instruments” from small business as a means to infuse money into local banks with the condition that they lend to failing small business.  Local banks will be lending in exchange for equity small business, therefore these banks will be using federal monies to buy equity in companies.  This is an idea born from socialism and one that will harm the free market for small business, because failure will be rewarded by federal subsidies while success will be punished.

The bill also creates a “Small Business Credit Initiative” with $2 billion of your tax dollars to be given to states that have created programs to provide funds to banks to bailout small businesses in trouble.  This would provide an incentive for states to adopt the crony capitalism programs of the federal government exemplified by the federal takeover of General Motors and the activities of Fannie Mae and Freddie Mac.  Setting up a system with private profits, yet socialized losses, will diminish capitalism and the American free market system.  This legislation, TARP, Jr., extends the failed and free market offensive TARP model to small business.  Considering that the original TARP program was “not fair, and it was not something our government should ever have to do,” Congress might want to heed the advice of Secretary Geithner of January 2010 and pause before creeping a few more steps toward American socialism.