The details surrounding the $535 million government loan to Solyndra – the now-bankrupt solar energy company that had been the green apple of the president’s eye – are still emerging. It remains to be seen whether or not the Obama administration broke any laws when it pushed the loan out the door despite obvious problems with the company’s finances.
At the very least, the administration is guilty of wasting taxpayer money. In that regard, it’s no different than all the other administrations that have tried to tinker with energy markets. When the dust settles, Solyndra will take its place alongside other infamous federal energy boondoggles, including the Synthetic Fuels Corporation, the Clinch River Breeder Reactor, and the Superconducting Super Collider. (All of these and more are discussed in a Cato essay on federal energy subsidies.)
Congressional Republicans are salivating over the prospects of a scandal involving a key initiative of the administration. But Republicans should be careful when casting stones given their past and present support for energy subsidies. (Note to investigative reporters: Republican [and Democratic] governors like to hand out subsidies to businesses, which often backfire on taxpayers. I’d know.)
As the political circus over the Solyndra loan unfolds, let’s not lose sight of the fact that the more important question is whether taxpayers should be forced to subsidize energy companies to begin with. The Cato essay argues that they shouldn’t:
The private sector is entirely capable of performing research into coal, nuclear, solar, and alternative energy sources for itself. Businesses will fund new technologies when there is a reasonable chance of commercial success, as they do in every other private industry. Federal subsidies may even be actively damaging to our energy future by steering markets in the wrong direction, away from the best long-term energy solutions…
Policymakers often make grandiose promises, such as proposing to make America ‘energy independent’ or to convert the nation to a ‘green economy.’ Those visions don’t make any sense, but even if they did history shows that the Department of Energy would be incapable of putting them into place with any degree of competence. Federal energy schemes are often poorly managed and generate huge cost overruns, or they aim at objectives that make little economic sense[.]