On Wednesday, the bankruptcy of a solar power company in California with political ties to the Obama administration appeared to be a story about the difficulties of nurturing green businesses in a cutthroat economy. Despite receiving a $535 million loan guarantee from the Energy Department, solar startup Solyndra Inc couldn't stay in business, citing competition from subsidized solar panel manufacturers in China. But today, findings from ABC News and the Center for Public Integrity, highlight the uncomfortable connection between the solar panel company and the Obama administration, which many suspect will lead to a House investigation. How did we get here? Here's a quick primer on the issues at play:
Solyndra's connections to Obama Back in May, ABC News reported that the Obama administration had "bypassed procedural steps meant to protect taxpayers as it hurried to approve an energy loan guarantee to a politically-connected California solar power startup." That company was Solyndra and one of its primary financial backers was Oklahoma oil billionaire George Kaiser, who bundled at least $50,000 for Obama during his 2008 campaign. At an appearance at the California-based company last year, Obama insisted that country's prosperity was inextricably linked to the success of energy company's such as Solyndra. "The true engine of economic growth will always be company's like Solyndra," he said. The Washington Post reports that the plant was also visited by Energy Secretary Steven Chu and Vice President Biden, who spoke at its groundbreaking.
Early problem with Solyndra One of the factors inspiring some of the president's critics were early signs that the solar energy company was a bad bet for taxpayers:
Peter Lynch, a longtime solar industry analyst, told ABC News the company's fate should have been obvious from the start.
"Here's the bottom line," Lynch said. "It costs them $6 to make a unit. They're selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan."
The investigation One of the key sources of conflict in this story is the level of support the White House gave to Solyndra. According to the Center for Public Integrity, the White House says it "did not intervene in the Solyndra deal or others benefiting companies backed by supporters of the president." However, Republicans say they've discovered information to prove the contrary. "We have learned from our investigation that White House officials monitored Solyndra's application and communicated with [Energy Department] and Office of Management and Budget officials during the course of their review," states a letter from House Energy Committee Chairman Fred Upton. The letter requests for all correspondence between administration officials related to the half a billion dollar loan guarantee. It also vows to accelerate the investigation of the issue.
What critics are saying Rich Lowry at National Review argues that the president deserves more scrutiny for his involvement with the company. "President Bush was flayed for the Enron bankruptcy, based on his tenuous ties to the firm. If the same media rules applied, Solyndra would be Obama’s Enron, given his active promotion of the company and his lavish funding of it." He adds, "At least the Obama administration can’t be accused of practicing industrial policy the old-fashioned way and picking winners. It is evidently quite ready to pick losers, too." Still, it's too soon to say if the Obama administration officials were personally involved in the Energy Department review of Solyndra—the House Republicans will have to provide sufficient evidence, uncovered in their investigation.
What the White House is saying When White House press secretary Jay Carney was pressed on the issue on Thursday, he explained that the investment in solar energy came with risks but because of the importance of energy independence, it was a risk worth taking. "I think there were Republicans who thought investments in clean energy were a mistake, that they were ready to cede that vital industry to foreign competition," he said. "They were ready to cede the automobile industry to foreign competition, a million jobs there. I -- we just disagree on that front."