Obama's green gold rush for pet millionaires

BrightSource Energy

BrightSource Energy employees assemble heliostats during construction of the Solar Energy Development Center. The company reveived $1.4 billion in loan guarantees to build the Ivanpah Solar Electrical System on federal land in California.

Article Highlights

  • Members of Congress made major stock moves in response to insider information from top Treasury & Fed officials

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  • $77 billion in stimulus money for alternative energy investments turned out to be a slush fund for the favored few

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Peter Schweizer has gotten lots of press on the charges in his just published book, Throw Them All Out: How Politicians and the Friends Get Rich Off Insider Stock Tips, Land Deals, and Crony Capitalism That Would Send the Rest of Us to Prison, that members of Congress made major moves in the stock market in response to information they received from top officials of the Treasury and the Federal Reserve. But there’s another dynamite charge there, on page 90, which has been picked up by Wynton Hall at Andrew Breitbart’s Big Government website, John Hinderaker at his Powerline blog and Brystan Preston at PJTatler. Here’s Schweizer’s story, on page 90:

"Obviously the $77 billion in stimulus money allocated for alternative energy investments—upped from $4 billion under the Bush-signed, bipartisanly-supported energy bill passed earlier—turned out to be a slush fund for the favored few." --Michael Barone

“A company called Brightsource reveived $1.4 billion in loan guarantees to build the Ivanpah Solar Electrical System on federal land in California. Who owns Brightsource? By far the single largest shareholder (25%) is Mr. Wagle’s VantagePoint Partners.”

Schweizer had introduced Sanjay Wagle several pages earlier thusly:

“Another Obama fundraiser who was positioned to lead the allocation of taxpayer money to Obama contributors was Sanjay Wagle, who served as the managing cochairman of Cleantech and Green Business Leaders for Obama, which raised millions for Obama’s campaigns. Wagle’s day job was as a principal at VantagePoint Partners. After the 2008 election, Wagle joined the Obama administration as a ‘renewable energy grants adviser’ at the Department of Energy. VantagePoint owned firms that would later see federal loan guarantees roll in.”

Back to pages 90 and 91:

“One of only four [VantagePoint] partners at the firm is Robert Kennedy Jr., from that famous political family. Although he initially supported Hillary Clinton, Kennedy came around to supporting Obama, comparing him to his father and his uncle. He declared during the election that Obama was a ‘transformational figure in American history who’s been able to excite the same intensity and feeling amoung [sic] Americans as I saw during my father’s 1968 campaign and my uncle John F. Kennedy’s 1960 campaign.’ Now an environmentalist and an investor in green technologies, Kennedy wrote an article for CNN.com in the summer of 2008 with the apt title ‘Obama’s Energy Plan Would Create a Green Gold Rush’ And now Kennedy was in a good position to cash in.

“Brightsource badly needed this infusion of taxpayer cash. It had been losing lots of money. It had debt obligations of $1.8 billion and  in 2010 lost $71.6 million on revenue of just $13.5 million. The company was blunt in its filings with the Securities and Exchange Commission: ‘Our future success depends on our ability to construct Ivanpah, our first utility-scaled solar thermal power project, in a cost-effective and timely manner.’ And there were no guarantees: ‘Our ability to complete Ivanpah and the planning, development and construction of all three phases are subject to significant risk and uncertainty.’ [Hinderaker has more extensive quotations from the SEC documents].

“A billion dollars in taxpayer money being sent to wealthy investors to bail them out of risky investments—does this sound familiar to anyone?”

Obviously the $77 billion in stimulus money allocated for alternative energy investments—upped from $4 billion under the Bush-signed, bipartisanly-supported energy bill passed earlier—turned out to be a slush fund for the favored few. That’s a scandal even absent bribery, improper lobbying or any other offense. But what about the arguments that the fact that the failure of private markets to invest in solar technology is an example of market failure. Well, over at The Atlantic, Megan McArdle demolishes that in her own inimitably thorough fashion. And you might want to read her discussion of why stars like the Nobel Prize winning scientist Steven Chu often prove to be duds as managers—which is about the best you can say from what we know now about Chu’s performance as Energy Secretary.

Michael Barone is a resident fellow at AEI.

 

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