Sunday, September 18, 2011

Preventing Another Solyndra

Solyndra is the now bankrupt solar company, which was the Obama administration’s poster company for green energy. What’s troubling is that Solyndra not only squandered 535 million dollars in taxpayer stimulus, but it was also learned that White House economic advisors urged Obama that Solyndra was a very risky company, analogous to a private investor buying a penny stock. Not only did the White House ignore its economic advisors and move forward with the Solyndra loan, they offered the loan at a 1% interest rate – this is unheard of especially for a company that only had a B+ rating. To make matters worse, when the administration learned that Solyndra would go belly up they rewrote the loan to guarantee the first 75 million dollars recovered in bankruptcy would go to their investors, not the taxpayers. And what was equally troubling was learning about the 50,000 dollar campaign contribution Obama received from Solyndra’s CEO in 2008. Solyndra is one of many troubling stories when the government gets involved in the private sector – the end result is a lot of fraud, waste, and corruption.

Liberals argue that Obama’s intervention into the auto industry saved a total collapse of that market. First, Bush started this program, which incidentally was a very bad decision. Secondly, the nearly 100 billion dollars in loans to both GM and Chrysler did not stop the inevitable – bankruptcy. Yes, it was ultimately bankruptcy that led to the restructuring of the failed business models that helped GM and Chrysler to rebound. The 100 billion dollars in loans merely delayed the inevitable. Hence, it was not government interference that saved the auto industry; it was a private sector tool - bankruptcy.

The same argument can be made about the Wall Street bailouts. Sure, the Toxic Asset Relief Program (TARP) may have saved a few banks, but many would have survived without government loans. And those companies that did fail would have faced any one of number of private sector options including declaring bankruptcy or being acquired by a more solvent competitor. The bottom line is that the financial market would have recovered without government interference. What was criminal were the government failures that led directly to the financial collapse and received no scrutiny or reform – Fannie Mae, Freddie Mac, the SEC, and the Federal Reserve.

But the real question is how can we prevent another Solyndra fiasco? Sure we can dwell on blame and fault, but at some point we must correct the mistakes that were made. The bottom line is that the government has no business meddling in the private sector. The end result of government interference leads to lawyers, lobbyists, and campaign finance based on quid pro quo transactions. And all of this ultimately leads to fraud, corruption, and waste.

Liberals are a big fan of Separation of Church and State. I am too (even though it is NOT part of our Constitution). The reason I support this is simple, if the government or even the private sector give or receive favors from one religion than other religions would rightfully expect the same cooperation. The same can be said of government interference into private industry or organizations. Why do some companies and organizations receive stimulus funding, bailouts, government contracts, and favorable regulations while others do not? It is politics – the corporations and organizations that are represented by expensive lawyers or lobbyists and or give the biggest campaign contributions reap the benefits of favorable legislation. If we want to reform Washington politics than federal government policy towards companies and organizations must be one of laissez faire.

I too am a fan of laissez faire towards global policy unless it is a matter of national security and there is an eminent threat against the people of the United States. Global policy towards nations and global organizations, such as the U.N., can also lead to waste, corruption, and fraud. Some say I am a hypocrite because they believe I favor Jews over Arabs in the Middle East and this violates my belief of laissez faire and separation of church and state. This is not true; I favor Israel (democracy) over Palestine (dictatorship), but believe we have no place to interfere in their affairs unless it is a threat to our national security.

One reason that GE and Whirlpool do not pay any U.S. corporate taxes is because they have been able to lobby for favorable legislation that provides them tax credits for making energy efficient products. Is this fair? Of course not since the same regulations do not even apply to other green companies. Why are some companies and organizations receiving waivers to certain provisions within Obamacare legislation and other are not? It is simple; those that are represented by expensive lawyers in DC do not have to follow the same set of laws that other, less wealthy, businesses or organizations have to.

The same concept is true for organizations as well as companies. As long as ACORN and the AFL-CIO continue to receive government funding, they will continue to use any means possible to get the candidates who support their causes elected into office. ACORN and AFL-CIO leaders have stooped to fraud and corruption to get the politicians of their choice elected into office and they too, employ expensive DC lawyers to lobby for favorable legislation – card check, the fairness doctrine, or lenient voter registration requirements.

As long as the federal government continues to interfere into the business of private sector organizations and companies, there will be a vicious cycle of fraud, corruption, and waste that is part of the process. Decisions on legislation, policy, and regulation will be made based solely on which company or organization has the biggest pockets. Who are the losers from these actions? The common American citizen and small businesses are the big losers. This goes a long way to explain why there is a growing gap between rich and poor (the poor do not have lobbyists). Yes, class warfare is due to the greed of not only corporations, but the greed of government and private organizations.

My Book: Is America Dying? (, Barnes and Noble)

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