Freedom Line Blog

Politico reports that an Inspector General’s investigation concluded the Department of Energy’s loan to Solyndra corrupted a process to serve a political agenda.

The Treasury Department’s review of Solyndra’s $535 million federal loan guarantee was “rushed” through in about one day in March 2009, “based on an expedited review request from DOE so that a press release could be issued,” according to a Treasury inspector general report that gives further evidence of the early Obama administration’s eagerness to announce progress in funding clean energy.

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The report also found that DOE didn’t consult with Treasury on the terms and conditions of the loan deal before or during the Energy Department’s own review process, including the review of Solyndra’s credit worthiness.

Nor did DOE include Treasury in negotiations that later allowed private investors to skip past taxpayers in the repayment line in the event – which turned into a certainty – that Solyndra went bankrupt.

The corruption in the Solyndra loan process is unique in that – so far – no one inside the government has been accused of being bribed for making so many financially ruinous decisions with taxpayer money.

The only explanation is the triumph of ideology over process.

In the Teapot Dome scandal members of the Harding administration got kickbacks for no-bid contracts on oil drilling.  The HUD scandals of the late 1980’s made some officials, lobbyists, and construction companies rich at the expense of the poor.  But with Solyndra and other failed alternative energy busts, Obama’s DOE blew billions of dollars on nothing more than a bankrupt ideology; namely, the fantasy that green technology can be subsidized into sustainability.

At least with bribes you can follow the money.  The Obama administration’s version of corruption is something arguably new.  The only way to ensure its eradication is to fire the people who hire the ideologically-driven bureaucrats.

Rick Perry got some (admittedly earned) grief last week after a cringe-worthy moment at the CNBC Republican Presidential Debate in Michigan, when he couldn’t recall the third of three cabinet departments he wants to abolish (for the record, they were the Department of Education, the Department of Commerce, and — the one he blanked on — the Department of Energy).

The media fixation on the gaffe overshadowed a bigger point: Rick Perry is proposing some of the most dramatic reforms to the federal government of any presidential candidate in decades. At a speech in Iowa earlier today, the Texas governor laid out an agenda that makes clear that the cabinet proposals were far from an aberration. Check out this list of proposals from the remarks:

• Term-limiting federal judges
• Converting Congress into a part-time legislature, with half the salary and half the staff
• Tying legislative pay to balancing the budget
• Bringing federal spending down to 18 percent of GDP
• Passing a Balanced Budget Amendment to the Constitution
• Privatizing Fannie Mae and Freddie Mac
• Privatizing the TSA
• Dramatically scaling down and repurposing the EPA
• Performing a full audit of the federal government
• Creating an across-the-board moratorium on new federal regulations and auditing all regulations from the past five years
• Freezing federal salaries (Except for military and law enforcement) and cutting the president’s salary in half until there is a balanced budget.

Perry may be faltering in the polls, but this list reminds us why he was a contender in the first place. At the very least, let’s hope that the eventual Republican nominee has the good sense to co-opt this agenda.

The bad news about the Obama Administration’s more than half a billion dollar investment in Solyndra — the California solar energy company that has gone bankrupt and laid off approximately 1,100 employees — keeps piling up. In addition to being a waste of taxpayer money, there are also issues about whether or not the federal loan guarantees were properly vetted, about private investors getting to jump in front of the taxpayers as secured creditors, and about why Solyndra received dramatically lower interest rates than similarly situated firms.

While all those issues are both troubling and relevant, the proliferation of trees runs the risk of obscuring the forest here. That’s why this passage from Matthew Continetti’s new piece in the Weekly Standard is so valuable:

In today’s economy, risks are socialized while profit is privatized. The government uses deficit spending to shape investment decisions and support markets that otherwise wouldn’t exist. Political connections determine the recipients of government largesse. Rentiers conceal their self-interest behind the organic hemp cloak of environmentalism and global “competitiveness.” The illusion can be maintained for a time, but in the end the bill comes due. There’s no money left. And everything disappears.

Ably stated. There’s a reason they’re starting to call it “venture socialism”.

Because the mortgage giant’s former CEO Franklin Raines was trying to make yet another corrupt buck from his government perch.  After concluding his five year run as chief executive, Raines agreed to pay a nearly $25 million fine for Enron-style accounting gimmicks that netted he and other officers millions more in compensation.

Now, World Net Daily is reporting that Raines and others applied twice for the same residential cap-and-trade patent; the first time on behalf of Fannie Mae, the second time for themselves as private “inventors.”  Since the same people applied both times the second application supersedes the first, meaning any profits from the patent go not to Fannie Mae, but Raines & Co.

These distinctions matter because Raines – acting in his capacity as head of Fannie Mae – initially claimed to apply for the patent in order to give the mortgage backer a strong position in encouraging more “green” housing.  That claim proved phony when his second application guaranteed him a windfall if “comprehensive reform” ever came in the form of cap-and-trade legislation.

Sound familiar?  CFIF readers will recall a recent column discussing the same kind of self-enrichment in Obama’s Energy Department, and another analyzing the government’s inability to run any enterprise – and specifically Fannie Mae – like a business.

Who knew we’d get an example that combined them so soon?