One of the points I make in my “President Solyndra” story in the Weekly Standard is that the loan guarantee program turned Solyndra from a $300 million mistake confined solely to stupid private investors into a $1 billion dollar mistake that took taxpayers for more than a half-billion, and that this is merely the largest (so far) emblem of the Obama administration’s economic philosophy that is wiping out lots of capital that could be productive if it was invested elsewhere, by the private sector, of course, in, say, fossil fuel production, which has delivered a housing boom and 3.4 percent unemployment to North Dakota.
And keep in mind, too, the story that has been going around for almost two years now in Washington and lately ratified in the new Ron Suskind book, Confidence Men, that Obama and his senior political team essentially don’t listen at all to their economic team.
The Los Angeles Times reports this morning that Obama’s economic advisers tried to warn him that Solyndra was a bad idea, and that the loan guarantee program was poorly designed and likely to lead to bad results. As the story reports, “’It was completely predictable that there would be a colossal failure among the bets,’ said one person familiar with the internal debate.”
At a White House meeting in late October, Lawrence H. Summers, then director of the National Economic Council, and Timothy F. Geithner, the Treasury secretary, expressed concerns that the selection process for federal loan guarantees wasn’t rigorous enough and raised the risk that funds could be going to the wrong companies, including ones that didn’t need the help.
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.
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?
They’re just now asking that question?
Meanwhile, the deadline for letting out all the loan guarantees is this week. And guess what? Several companies, such as FirstSolar, say they won’t make it. Good news for the taxpayers, who will avoid having to shell out $1.92 billion on this one proposed loan.