Solyndra, the White House, and the Most Dangerous Conflict of Interest of All

It isn’t a Republican or a Democratic Party problem, and it isn’t unique to the Obama Administration. It is a structural problem in American government, a conflict of interest that pits the best interests of the American people against the political interests of the party in power. The only solution to the problem, since it is here to stay, is leaders who acknowledge the conflict, are dedicated to doing the right thing anyway, and have the courage to demand that their staffs do likewise.

The Soyndra scandal shows that Barack Obama is not such a leader. That does not make him unique, but it is a serious ethical flaw nonetheless.

As e-mails obtained by the Washington Post showed, the Obama White House tried to rush federal reviewers for a decision on a more than half-billion-dollar loan to the solar-panel manufacturer Solyndra, despite the fact that the Office of Management and Budget protested repeatedly that it was not being given sufficient time to evaluate the transaction. The reason for the rush? Pure politics. White House political strategists wanted to make sure Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory. This would mean satisfying the President’s environmentalist base. That it also meant that rashly risking a half-billion taxpayer dollars when the nation was already deeply in debt was acceptable to these people, whose job it is to win election and massage popularity polls, not to govern. And should a half-billion dollars intended to work for the nation as a whole be the tools of partisan political manipulation? Of course not. But they were, and often are.

The August 2009 e-mails show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan to the Silicon Valley company, a centerpiece in President Obama’s initiative to develop clean energy technologies.  Anxious White House political managers noted a fast-approaching press event at which Biden planned to announce the deal. Under pressure, OMB officials expressed concern that their diligence was being compromised, that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers. One e-mail from an OMB official referred to “the time pressure we are under to sign-off on Solyndra.” Another complained, “There isn’t time to negotiate.” A message written by a senior OMB staffer and sent to Terrell P. McSweeny, Biden’s domestic policy adviser, concluded, “We would prefer to have sufficient time to do our due diligence reviews.”

The loan was approved. Solyndra collapsed this month, leaving taxpayers liable for all $535 million, and serving as a perfect example of what can happen when national policy is driven by politics rather than objective analysis—in other words, when governance is polluted by conflict of interest.  White House officials have said that no one in the administration tried to influence the OMB decision on the loan, stressing that the e-mails show only that the administration had a “quite active interest” in the timing of OMB’s decision.
This is a lie. When the White House, speaking for the President of the United States as the White House by definition does, keeps making it clear that what is wanted from the OMB is not a careful, well-reasoned, thorough analysis of a transaction whatever the final determination is, but an approval as quickly as possible, that is influence. It is interference. If the only way the OMB could do its job properly was for someone there to say, “Get out of our face! We will not be rushed. This will get done when it gets done, because we want to do the job right,” then the White House has influenced the process and the results.
Before the collapse, the White House had previously said that it had no involvement in the Solyndra loan application and that all decisions were made by career officials based on the merits of the company. This may be literally true, but it is deceit, which is just a particularly effective form of lie, Bill Clinton’s specialty. The White House was pushing for the loan to be approved, and this is, in fact, “involvement.”

Investigators for the House Energy and Commerce Committee, which is holding a hearing on Solyndra, concluded that the White House set a closing date for the OMB approval even before the OMB review had begun, and that White House pressure may well have had a “tangible impact” on the OMB’s risk assessment of the loan.

Of course it did.

This is what happens when the political side of the White House becomes involved with the policy side, and in this White House, the sides have been all but indistinguishable. It should be a primary objective of every President to avoid this political pollution like the plague on democracy that it is, but instead, our recent Presidents have embraced it. Karl Rove had no business being a White House advisor. Neither did James Carville. These  people aren’t paid to consider what’s best for America; they are paid to suck up to voters—donors, interest groups, and core constituencies in particular. When Obama appointed the likes of Rahm Emmanuel, David Plouffe, and David Axelrod, all hope that this administration would be less conflicted than its predecessors vanished.

Solyndra is just one, stinking, expensive example of the dozens of bad decisions aimed at political gain rather than national welfare that have occurred in all recent administrations. We should not shrug it off as business as usual, and we should not tolerate it. It is the result of a dangerous conflict of interest, and if the President himself will not work to mitigate its effects, this is the kind of fiasco that occurs.

President Obama hasn’t addressed it, and isn’t addressing it, and with the election approaching, he won’t address it. When more awful decisions result, he is accountable.

23 Comments

Filed under Business & Commercial, Government & Politics, Leadership

23 responses to “Solyndra, the White House, and the Most Dangerous Conflict of Interest of All

  1. fattymoonJeff Fielod

    Damn, when you’re good you’re really GOOD.

  2. Elizabeth

    I have to admit that don’t usually go to the links Jack cites for additional information, but in this case I did. Here’s the real stinker — and the killer for me — from The Washington Post article:

    “The e-mail exchanges could intensify questions about whether the administration was playing favorites and made costly errors while choosing the first recipient of a loan guarantee under its stimulus program. Solyndra’s biggest investors were funds operated on behalf of the family foundation of Tulsa billionaire and Obama fundraiser George Kaiser. Although he has been a frequent White House visitor, Kaiser has said he did not use political influence to win approval of the loan.

    “The White House has previously said that it had no involvement in the Solyndra loan application and that all decisions were made by career officials based on the merits of the company.”

    LIARS! One of Solyndra’s biggest investors also just happened to be Obama fund raiser and pal George Kaiser? Do we have a little conflict of interest here? And throughout the article, which cites OMB practically BEGGING for more time to vet the company, what is learned? That the Obama Administration wanted to “showcase” the company on a date certain, regardless of the due diligence the OMB was supposed to conduct.

    So, hmmm. Obama gives half a billion dollars to an unvetted company with whom he has a major conflict of interest, AND interferes with the function of a major Federal agency.

    How many Solyndras are out there? Why should we trust this president and his minions? How many billions have been wasted on this White House version of “pork?”

    I want to watch this investigation, and I hope it leads to others. We cannot afford this, Obama knows it, and just plain damn doesn’t care, apparently. He is all talk, all show, and all ego. Not a leader, not the president we need. He likely will, slippery as he is, give yet another speech aimed at exonerating himself; fortunately, these have given him little traction and little support of late. “Transparent administration” indeed. Corrupt, inept, and somehow absolutely certain it can get away with just about anything. More of this crap and we’ll be finding an impeachable offense, as well as falling deeper and deeper into the recession Obama continues to insist he didn’t cause. “If you love me, vote for the [jobs] bill.” Even if I did love him, I wouldn’t vote for one single thing he proposed from this moment forward.

    Congress may be a quagmire right now, but unfortunately I think we as a nation are dependent on them, because we sure can’t depend on Obama, for anything, anything at all.

    Aside from all of the above, I am speechless (!)… and very distressed and depressed.

    • Mr. Fusion

      Jonathan Silver, who heads the energy department’s loan guarantee program, said the loan was not rushed and was based on “several years of due diligence.” He told the House Energy and Commerce’s oversight and investigations panel the loan was granted based on merits, not political pressure or favoritism.

      The U.S. Department of Energy created the loan program for green energy projects under the Bush Administration in 2005, but the first loan guarantee wasn’t extended until four years later when the loan office received stimulus funding.

      The solar-power panel maker received a $535 million federal loan guarantee in 2009, the first awarded under the program to support innovative green technologies.
      http://www.reuters.com/article/2011/09/14/us-congress-solyndra-idUSTRE78D5B420110914

      There was over $1 Billion from private investors. As well, there are currently at least 42 projects being supported by the DoE.

      One reason for Solyndra’s demise was a huge drop in solar panel prices that might have been caused by China’s heavily subsidized solar panel manufacturers dumping below-cost panels on the world market.
      http://www.usatoday.com/news/opinion/editorials/story/2011-09-13/Solyndra-Obama-bankrupt-solar/50393704/1

      Of course, actually bothering to discover any real facts is too much for some.

      • One more comment like your last one, and you are gone. That’s your second warning, second reason.

        The OMB e-mails prove that the White House was pressuring OMB to approve the loan. The pressure was for political purposes, and may have contributed to the awarding of a gigantic, unsound loan. EVEN IF IT DIDN’T, the point of the post was 100% accurate—the involvement of the political advisors in policy hurts the nation, and should be stopped. I don’t care about your links–anyone can play that game. Don’t waste my time.

        It was a half-billion dollar loan that was made without due diligence, and the business failed, as many predicted it would. It was motivated at least as much by political show as genuine policy reasoning. Your arguments are just meant to deflect from real issues—conflict of interest, fiscal irresponsibility, political hackery, cowardice and incompetence. I don’t appreciate it, and you aren’t convincing anyone. Why don’t you just report Ethics Alarms to attackwatch.com, so the IRS can audit me?

        • Mr. Fusion

          You take snippets of information and turn them into irrefutable facts. You refuse to notice any contrary facts to your opinion.

          Then below you claim I am being unethical? If you wish to ban a contrary opinion, it is your blog. But how ethical would that be?

          • I don’t ban contrary opinions, ever. I ban contrary commenters who are only interested in political warfare and not ethics, and distort the discussion. I either ban them, or ignore them. Which depends on how obnoxious they are.

  3. Mr. Fusion

    The loan was approved. Solyndra collapsed this month, leaving taxpayers liable for all $535 million, and serving as a perfect example of what can happen when national policy is driven by politics rather than objective analysis—in other words, when governance is polluted by conflict of interest.

    Wrong. It is unknown how much the taxpayers are on the hook for until the bankruptcy audited is complete.

    Our National policy for many administrations has been to wean us from imported oil and dirty coal with greener energy. Solyndra is just one of many projects covering many types of technology. Obama is the first to actually do something to try and replace carbon energy.

    Many looked at so many of FDR’s projects as boondoggles. The TVA was ridiculed as a useless project, until it’s energy was used to win WWII. Hoover and Bonneville Dams were severely criticized (although Hoover was started under Hoover). Planting trees was a waste of time until recent droughts showed the benefits of blocking the wind.

    Without Federal money, we would not have transcontinental trains, an interstate highway system, most large airports, GPS, and all the discoveries from the space programs. Sometimes a project is just so big the government is required to help out.

    • This is, like 95% of your comments so far, political spin, unrelated to ethics. Cut it out. Your function is not to use partisan activist tricks to obscure the truth…not here. It was a dubious enterprise, supplied with a huge loan without adequate vetting, and wasted precious funds. There may have been other aspects of corruption as well. At best it was an incompetent act. At worst it was criminal. Your “good intentions” argument is ethically irrelevant.

      • Mr. Fusion

        “Ethics” is a value judgment. It is quite “ethical” to have a National Policy and follow through with that policy.

        It is not partisan to follow a national policy. Every President since Nixon has been wanting to get us off imported oil. In regards to Solyndra, we don’t know the details. I suggest it is unethical to pass judgment without knowing all the facts. In your comment you passed judgment on the loan and used a few e-mails to form your opinion. Now, you deny any other evidence exists that might be relevant.

        In order for the loan to be ethically correct, doesn’t mean it must be approved by anyone specifically. The furtherance of the National Policy is sufficient. If people were taking money from the company, then yes, I agree that we can start applying the “unethical label”. Until the FBI finish their investigation we won’t know though.

  4. jan chapman

    If it is a problem, I would certainly agree that it is a bipartisan one. The loan for Solyndra was actually initiated by the Bush administration as part of their clean-energy program and was handed over to Obama with the same team in charge. It was not George Kaiser, a donor to the Obama campaign, but the Kaiser Family Foundation that invested in Solyndra. George Kaiser stood to gain nothing monetarily from the investment. Another major contributor was Madrone Capital Partners, funded by the Walton family, who have donated millions to Republican candidates. As private investors, the Waltons did stand to personally profit. So if you investigate Obama, there should be a parallel investigation of Bush.

    • Cut it out. I did not address allegations of cronyism; that was not the point. The point was that the loan was rushed because the political arm was meddling in process, which it was. You’re changing the subject, because you don’t like the facts. Th e-mails speak for themselves.

    • Mr. Fusion

      The reason the company failed may be because of dumping by the Chinese. That doesn’t absolve the company OR the government of any ineptness.

      Apparently the Bush White House or Bush Department of Energy refused or didn’t sign off on the loan. I don’t know why; it may be have been financial or it may have been political reasons.

    • Elizabeth

      Jan: Do you really believe that the Kaiser Foundation is something completely separate from George Kaiser? I’ve worked in the non-profit, foundation sector, and know differently. It isn’t necessarily money, but power and access that some family foundations seek. Check the board of the Kaiser Foundation: bet you’ll find George Kaiser right up there.

      As to investigating Bush: you should note that the Bush administration did NOT approve the loan, listened to the OMB, and didn’t interfere with the OMB’s vetting process to push a political agenda along.

  5. Michael

    Mr. Fusion is on to a bigger ethical issue raised by this mess. A few years ago, when companies like Solyndra were starting up, solar panels cost ~$4/watt. This was not a competitive price for mass production of electricity. It also was a price that we couldn’t match with US production due to international exchange rates. Because of this, new types of solar panels have been developed in the US and Europe that are less polluting (in the manufacturing process) and also less costly, allowing the US to be competivitve globally in the manufacture of solar panels. Partially as a result of this (and also because of the world economy), China has been dumping solar panels on the market at less than $1.70/watt. This is destroying companies like Solyndra just as they are starting out, and destroying hard won US manufacturing jobs.

    By playing favorites and giving into cronyism, this administration has submerged the bigger issues of trade competiveness, protectionism, and the viability of the US manufacturing sector into a partisan scandal on conflicts of interest and pork appropriations. Now, I don’t know much about Solyndra specifically (their product of cylindrical solar panels seems kind of faddish and doesn’t seem to have any good proven performance ratings) but this area is doing the kind of innovative work we are told will allow US manufacturing to be competitive in the global marketplace. The fact that they did it and then are getting crushed by the dumping of cheap solar panels should be a big issue. How can we compete if we allow these things to happen?

    This mess isn’t just about the misappropriation of half a billion in taxpayer money. It is about our trade policies and our hope for a better employment outlook. This was a good industry for the government to support and help. This industry could have given us a lot of hope for our economy. Instead, we have a bungled approach has probably tainted the entire sector with a scandal that will make it harder for them to succeed. We spent $500 billion and the situation is probably worse off than if we hadn’t spent a dime. Is incompetence ethical?

    • No, incompetence is unethical. There are many things to write about Solyndra, and I picked one that was in my wheelhouse and being ignored by the press: the outrageous influence political hacks, who have no accountability except regarding electoral success, have in this and many other White Houses. The results are often horrible, expensive, even deadly. This is a conflict of interest issue, and a bi-partisan one. Mr. Fusion, who debases one of my favorite trilogies by his name, employs the radical dialectic technique of turning the discussion away from the unethical process, which is beyond debate, and the messy issues of green industries, good intentions, environmental trade-offs, etc.

      Your point is a good one…go ahead and debate him on it. I try to address ethical issues that are being missed elsewhere—yours is a good one, and important, and a direct result of the conflicts the White House allows to persist.

    • Mr. Fusion

      A well made point.

      To add, is it ethical to just stand with out hands over our ears singing LA LA LA LA while America continues to import so much oil?

      In my opinion it was entirely “ethical” to support a non-traditional green form of energy. As with nuclear power, the TVA, intercontinental railroads, and so many other programs, it took government support and money to get them going. If we want American industry to succeed it is important to support it. The White House was only supporting policy when they saw the DoE guarantee the money.

      We spent $500 billion and the situation is probably worse off than if we hadn’t spent a dime. Is incompetence ethical?

      I’m not so sure. Although most of that money went to building a new manufacturing facility, the physical plant still remains as does the technology. Are they worth the $1.5 Billion invested? I don’t know and I doubt anyone else does either. Our contribution so far was a guarantee, not cash, as I understand it.

      Incompetence is no more unethical than mental retardation. Many would argue about similarities. If someone could have and didn’t do their due diligence then we can apply the incompetent moniker. If they willfully failed to do what is right, then that is unethical. we won’t know until after all the investigations are complete how the company went under. If outside forces pushed the company then we can’t really claim there are ethics issues at the company, DoE, or White House.

  6. Michael

    It may be a loan guarantee, but if they can’t cover the loan, we have to pay (and probably will). The plant was made to produce a specialty “gimmicky” cylindrical panel. The technology they were using is being used by others more effectively, but they are all suffering from the dumping of cheap panels on the market. The association of the industry with this scandal will make it harder for the others to survive and makes it really doubtful anyone will take the plant over since they all have excess capacity already.

  7. Becky

    A pal of mine runs a solar panel biz in the local DC area. He’d like to use American panels. BUT HE CAN’T, because no one can/will pay for the cost difference. He can offer them, but no one buys them. Until the trade imbalance is addressed, American know-how can’t trump cheap Chinese pricing. How many years did it take for steel to finally get up there on the world stage and someone get their wrist slapped about steel dumping? Too many. Ask a lot of PA about when good-old American steel was king…

    Not really addressing the ethics, but that’s because I agree whole-heartedly with Jack that the political folks should be OUT of the process and the White House. Go run campaigns and stop messing with running the actual country.

  8. Michael Boyd

    I am sort of frustrated reading the blog and posts on this subject. I understand the ethics involving the situation as Jack has pointed out. At the same time I am wondering where 9 billion dollars went over in Iraq a few years ago. Now I don’t know if anyone researched the ethics on that gaffe and blogged about it. Or the ethics of the last administration losing track of emails during certain investigations. In a sense I didn’t see very much transparency there. I am disturbed by what has happened with Solyndra and feel that there needs to be a full investigation. Then we should also investigate other administrations and their incompetencies. I see many ethics violations in many of the past administrations. I see many ethics violations. Each and every one should have been or should be investigated now. No score keeping along bipartisan lines, either. Let the chips fall…..

    • One thing that always seemed clear to me was that whatever one can say about the decision to invade Iraq, it wasn’t a decision made by the political arm, because it was risky and controversial (still is, obviously.) So I don’t see that particular mess (I wouldn’t necessarily call it a gaffe—I think all decisions regarding warfare are governed by moral luck) as raising the same issues as Solyndra. Plenty of other Bush White House calls did, but not that one. Unfortunately, investigations tend to concentrate on legality and process rather than ethics.

      • Michael Boyd

        Jack, I wasn’t talking about the decision to invade Iraq. Although some may argue that a certain former CEO of Haliburton might have pushed just a little bit…a teeny bit. I was talking about 9 billion dollars disappearing in another country that we have no idea if it was due to ethics or not. Just gone…poof. No answers. I like what you say about investigations and believe that to be true. So why do we use emails as evidence in proving whether something is ethical or not?

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