From Loan Guarantees to "Venture Socialism"

Weigel
Reporting on Politics and Policy.
Sept. 29 2011 4:52 PM

From Loan Guarantees to "Venture Socialism"

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FREMONT, CA - MAY 26: U.S. President Barack Obama heads inside to deliver a speech after meeting with construction workers building a new Solyndra solar panel factory May 26, 2010 in Fremont, California. President Obama toured Solyndra Inc., a growing solar power equipment facility that is adding jobs as they expand their operation. (Photo by Paul Chinn-Pool/Getty Images)

Photo by Paul Chinn-Pool/Getty Images

The collapse of Solyndra, the doomed solar cell company that wasted a $535 million loan guarantee from the Department of Energy, has invigorated a new strain of follow-the-money reporting. One of the newest examples is this daisy chain from Joel Gehrke, which starts with the new guarantee going to the Crescent Dunes Solar Energy Project in Nevada.

David Weigel David Weigel

David Weigel is a reporter for Bloomberg Politics

[Steve] Mitchell served on the Solyndra LLC Board of Directors and reportedly still serves on the board. Mitchell serves as a "board participant" for Solar Reserve, the parent company to Tonopah Solar (the Tonopah Solar email address even routes to a Solar Reserve account) and his Solar Reserve biography says that he "currently sits on the Boards of Directors of... Solyndra" and several other companies. Despite the Solyndra failure, the Department of Energy continues to provide loan guarantees to solar companies, giving Tonopah Solar a $737 million loan guarantee for a project in Nevada.
Mitchell owes his position at Solyndra and Solar Reserve, apparently, to the fact that his primary employer, Argonaut Private Equity, invested in both companies. Mitchell holds the title of Managing Director for Argonaut Private Equity. After Solyndra declared bankruptcy, two Democratic members of the U.S. House asked that House Subcommittee call Mitchell to testify about Solyndra. Though he has not appeared before Congress, he has "been asked to provide documents to Congress" pertaining to Solyndra.
The Mitchell connection to Solar Reserve brings George Kaiser into the spotlight with respect to this latest loan guarantee. Kaiser owns Argonaut and thus invested in both Solyndra and Solar Reserve (more heavily in the former than the latter). He also bundled over $50,000 into President Obama's campaign.
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Everything comes back around to Obama donors. By "everything," I mean both the money -- draw the line long enough, and you can connect lots of Democrats to these loans -- and the narratives. Rush Limbaugh's been doing yeoman work crafting them, calling the stimulus and the loans "Obama slush funds." Jim DeMint has come up with the framework that will probably define the Republican response to these stories: "Venture Socialism." With Solyndra as the model, DeMint categorizes the $38.6 billion of green funds in the stimulus, $25 billion in energy efficiency grants for auto companies, Fannie and Freddie, the GM bailout, and HAMP as "venture socialism," with the government "playing investor on the taxpayers’ dime."

Here's how Democrats and some liberal commentators have responded to the frame: "Yeah, well, you guys did it, too." The first wave of pushback on Solyndra stories was about the Republicans who had asked for green cash for projects in their own districts. Darrell Issa spokesman Fred Hill had a smart response to this:

The issue isn’t that members of Congress from both parties have signed letters supporting some green projects, it’s that roughly $90 billion set aside for efforts handpicked by the administration haven’t had a meaningful impact on lowering unemployment and that some companies -- like Solyndra -- appear to have received special treatment

That's separate from DeMint's complaint. The original Republican gripe was that stimulus money, sold as emergency job-creation cash, was being invested in projects that would take years to pay off. The evolving gripe -- DeMint's gripe -- is that any government effort to build up markets is "socialism." And DeMint isn't wrong! One of the (legal) reasons Solyndra collapsed (as opposed to the illegal reasons the FBI suspects) is that China is eating our lunch on green energy development. A big reason for that: China, where democracy isn't really a hurdle to spending, plows money into green tech, and counts on slave labor to build it. Happily, America's only ever going to compete on one of those counts. But the lesson DeMint is taking is that it shouldn't -- not as long as the loan programs are structured this way.

It's early in this scandal. Will loan guarantees be a political problem for a few months, as Republicans find a Democratic donor within six degrees of every program?* Or will they become the next earmarks -- once the way that Washington sendt money back to congressional districts, now politically toxic?

*It doesn't excuse grift, but is anyone surprised that the people who bet big on green technology skew toward the Democrats? The people who want more coal, natural gas and oil exploration and tax credits skew toward the Republicans.

David Weigel is a reporter for Bloomberg Politics

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