Obama: The Public Equity President

Romney visits Solyndra as Republicans turn the tables on Obama’s private equity attack

June 1, 2012

Republican presidential nominee Mitt Romney made a surprise visit Thursday to the vacant headquarters of Solyndra, the latest move in a concerted GOP effort to turn the tables on the Obama campaign’s attack on Romney’s record as a private investor.

Solyndra manufactured solar panels in Fremont, Calif., before it filed for bankruptcy in September 2011. The firm received $535 million in taxpayer-guaranteed loans, and is currently under FBI investigation.

The Obama administration touted Solyndra in 2009 as an example of a successful government investment in green energy and proof that the controversial $787 billion stimulus package was working. The company was "exactly what [the stimulus] is all about," said Vice President Joe Biden.

President Obama went even further in a May 2010 speech at the company’s headquarters, declaring: "The true engine of economic growth will always be companies like Solyndra."

Republicans have refocused attention on the failed company in the wake of repeated attacks on Romney and his record at Bain Capital, a private equity firm. They argue that Solyndra exemplifies Obama’s record as a "public equity president" who makes risky investments with taxpayer dollars.

Polling experts told the Washington Free Beacon that Solyndra could become an effective campaign issue for Romney if he is able to incorporate it into a larger argument about the federal government’s role in the economy.

"Most voters have a negative impression of the way Washington works, in terms of waste, fraud, and abuse," said Karlyn Bowman, a senior fellow at the American Enterprise Institute. "[Solyndra] reinforces that view in the conservative base and is probably popular with independents, where trust and confidence in government is steadily declining."

Prominent pollster Scott Rasmussen agreed.

"If the choice comes down to what is a more effective way to help the economy—Bain and private equity versus Solyndra and government intervention—Romney wins on that one every day of the week," he said.

Another aspect of the Solyndra scandal that Republicans believe will resonate with voters is the issue of "crony capitalism"—the administration’s tendency to award federal funding to companies connected to large political donors.

Former White House economic adviser Larry Summers painted a damning picture of the administration’s approach to crafting the stimulus package in a confidential 2009 memo.

"The short-run economic imperative was to identify as many campaign promises or high priority items that would spend out quickly and be inherently temporary," Summers wrote. "The stimulus package is a key tool for advancing clean energy goals and fulfilling a number of campaign commitments."

More than 70 percent of Department of Energy (DOE) grants and loans under Obama went to Democratic donors and bundlers, Peter Schweizer reported in "Throw Them All Out."

One of those loans was Solyndra. The largest private stake in the solar firm was owned by an investment firm run by Oklahoma billionaire George Kaiser, a prominent Obama campaign bundler and frequent White House visitor.

When the DOE decided to restructure Solyndra’s loan guarantee after the company encountered financial difficulties, private investors like Kaiser were given priority over taxpayers with respect to who would be paid back first in the event of default. Republican investigators argue this was a violation of federal statute.

Despite the Obama campaign’s claims to the contrary, these investments in green energy have, by the administration’s own estimates, failed to create many jobs.

NRG Solar, for example, received a $1.2 billion taxpayer-guaranteed loan to build a mammoth solar facility in California. According to the DOE, the project created 15 permanent jobs—a rate of $80 million per job.

Billions have been awarded to firms based or operating in foreign countries. The DOE gave three taxpayer-guaranteed loans to Spanish clean energy conglomerate Abengoa worth $2.78 billion to create 195 permanent jobs (a rate of more than $14 million per job), as well as a $529 million loan guarantee to Fisker Automotive, a fledgling electric car company that manufactures its products in Finland.

The Obama campaign is clearly worried that voters may be receptive to the Republican narrative of a federal government giving handouts to political cronies, and has made efforts to distance itself from the Solyndra debacle.

"This was not our program per se," Obama said in March of the DOE loans program that funded Solyndra. "Congress—Democrats and Republicans—put together a loan guarantee program…"

Obama deputy campaign manager Stephanie Cutter on Thursday sought to blame the George W. Bush administration for initiating the review of Solyndra’s loan application. However, the DOE under Bush ultimately chose not to proceed with the loan.