Tag Archives: Stimulus

News

Obama administration knew $535 million Solyndra loan was too risky

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FBI agents remove evidence from Solyndra Headquarters
FBI agents remove evidence from Solyndra Headquarters

Here’s the latest from the radically leftist New York Times.

Excerpt:

Republican lawmakers, escalating the political furor over the collapse of a solar equipment manufacturer that received a $528 million government loan, released excerpts from Obama administration e-mails on Wednesday suggesting that the White House pressed federal officials to wrap up their review of the loan quickly for political purposes.

In the e-mails, officials at the Office of Management and Budget expressed frustration that they were being put under time pressure to sign off on the loan to the company, Solyndra, two years ago so that Vice President Joseph R. Biden Jr. could announce its approval at a groundbreaking for a factory. The White House wanted an announcement that would show progress on job creation.

The disclosure became a focus of a House Energy and Commerce subcommittee hearing on Wednesday about the loan to Solyndra, which has developed into a political headache for the Obama administration. The administration used the company as a prime example of stimulus bill dollars creating “green jobs.” But Solyndra recently filed for bankruptcy protection and closed its factory, and its headquarters was raided by the Federal Bureau of Investigation, apparently in connection with the loan.

The bankruptcy filing and the raid “clearly show that the committee was more than justified in its scrutiny of the deal,” said the panel’s chairman, Representative Fred Upton, Republican of Michigan. “Why did the administration think Solyndra was such a good bet?”

[…]Suspicions that the administration might have pushed the loan for political reasons have centered on the fact that a major investor in the company is a charitable foundation associated with George B. Kaiser, a billionaire from Tulsa, Okla., who raised $50,000 to $100,000 as a “bundler” for President Obama’s 2008 presidential campaign.

Logs show that Mr. Kaiser visited the White House on several occasions during the spring and summer of 2009, while the loan to Solyndra was being considered. Among the officials he met with were the chief of staff, Rahm Emanuel, and Pete Rouse and Valerie Jarrett, both senior advisers to Mr. Obama.

[…]While Mr. Kaiser’s connection to the Obama campaign and to Solyndra, based in Fremont, Calif., have helped draw attention to the loan, he was not a major topic of discussion at the hearing on Wednesday. Republicans did, however, press those testifying on whether the Solyndra bankruptcy offered proof that the government should not be lending to companies that have trouble raising money from private investors.

“In this time of record debt, I question whether the government is qualified to act as a venture capitalist, picking winners and losers in speculative ventures and shelling out billions of taxpayer dollars to keep them afloat,” Mr. Upton said.

ABC News reported on the contents of the e-mails: (H/T Director Blue)

The company’s solar panel factory was heralded as a centerpiece of the president’s green energy plan — billed as a way to jump start a promising new industry. And internal emails uncovered by investigators for the House Energy and Commerce Committee that were shared exclusively with ABC News show the Obama administration was keenly monitoring the progress of the loan, even as analysts were voicing serious concerns about the risk involved. “This deal is NOT ready for prime time,” one White House budget analyst wrote in a March 10, 2009 email, nine days before the administration formally announced the loan.

“If you guys think this is a bad idea, I need to unwind the W[est] W[ing] QUICKLY,” wrote Ronald A. Klain, who was chief of staff to Vice President Joe Biden, in another email sent March 7, 2009. The “West Wing” is the portion of the White House complex that holds the offices of the president and his top staffers. Klain declined comment to ABC News.

I think people need to get very clear on what “stimulus” spending is. Stimulus spending is nothing more and nothing less than taking money from the private sector job creators (“tax the wealthiest Americans”) and giving it to the people who got the socialists elected (“rebuilding our crumbling roads”).

More details from the Daily Caller.

Excerpt:

In light of the Solyndra bankruptcy, terms like “economic stimulus package” and “green jobs” now appear to be Team Obama code words for “kickbacks to political supporters so huge they would make a third-world despot green with envy.”

Solyndra is (or, more accurately, was) a California solar energy company that was the crown jewel of Obama’s first economic stimulus package, which cost $787 billion. Solyndra’s chief investor, George Kaiser, was also a bundler for Obama’s 2008 campaign, gathering over $50,000 in campaign contributions. Kaiser, together with Solyndra executives and board members, donated $87,050 to Obama’s campaign.

As part of the economic stimulus, Obama’s Department of Energy (DOE) fast-tracked a loan of $535 million (at the lowest interest rate granted by the DOE program) to Solyndra in 2009 to create green jobs. All other energy companies that received loans are paying an interest rate three to four times higher, and Solyndra got this amazing deal despite a Dun & Bradstreet credit rating that was only “fair.”

About a year later, Solyndra wasn’t making the payments and needed refinancing. In 2011, Solyndra’s CEO communicated with members of Congress, claiming that the company was on sound financial footing and would be able to repay a refinanced loan. DOE had a man attending Solyndra’s meetings, so they should have known whether the CEO was telling the truth. DOE arranged for refinancing.

Just a few months later, Solyndra laid off nearly all of its 1,100 workers and declared bankruptcy. Just a few days after that, agents of the FBI and the inspector general were raiding Solyndra headquarters and the homes of the CEO and two other executives, with search warrants.

That means that criminal charges are possible. But in the bankruptcy, DOE allowed Kaiser and other investors to recover their investments first, before DOE attempted to recover the $535 million in taxpayers’ money. What a sweetheart deal. America’s taxpayers have been left holding the bag.

Mark Levin took a call from a Solyndra worker who says that “everyone already knew that China had developed a more inexpensive way to manufacture these solar panels. Everyone knew that the plant wouldn’t work. But they still did it. They still built it.”

News

Republicans react to Obama’s new $447 billion borrow-and-spend stimulus

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Obama Unemployment Stimulus Graph
Obama Unemployment Stimulus Graph

From the conservative Weekly Standard.

Excerpt:

As they filed out of the Capitol Thursday evening, a few Republican House members told the WEEKLY STANDARD what they thought of President Obama’s address to Congress on jobs:

Ben Quayle (R-Ariz.): “For somebody who keeps saying we should get beyond politics, that was a pure political speech tonight. It was unfortunate.”

Paul Ryan (R-Wisc.): “It was, um, I didn’t hear any new ideas. The only new idea from him that I was encouraged by is corporate tax reform. Broad based, lower rates. That’s something we called for in our budget, we’ve always wanted to do. So perhaps some room for common ground there…I lost count of all the straw men up there. I mean, I was losing count at about 14 or 15. But we’re used to hearing that. I think the last third of it was pretty much straw men…All the ideas in the front that he ticked off were the same things that he put in the stimulus that he proposed earlier, which are more Keynesian-style ideas that have already sort of proven to fail. I would rather we pass ideas that have proven to work rather than double down on ones that have proven to fail.”

Tom Price (R-Ga.): “I felt it was desperate. I felt he was desperate and I though the speech was desperate…He mocked many of the proposals that we’ve put forward, and none of it was productive or constructive to the political discourse. Somehow, he’s incapable of appreciating that many of the things that he says actually thwart positive political discourse.”

Diane Black (R-Tenn.): “There was something new. The president was saying we should look at Medicare, Medicaid. First time I ever heard that…What he does in there is like what my kids do. They take my credit card, they spend, and then they want me to pay for it.”

Renee Ellmers (R-N.C.): “At one point, he said, some of you believe if we cut regulation and cut spending, that’s going to be enough. I couldn’t have applauded harder. I believe that very much…His approach is not very pro-business. When he talks about Warren Buffett, that’s a little far-removed from the average businessperson. If any of those guys want to send in more tax dollars to the treasury, they can. They can just write the check.”

Michael Grimm (R-N.Y.): “I thought it was a little bit of a campaign speech…Part of it was a little bit demeaning. The president sometimes can be a bit arrogant.”

Patrick McHenry (R-N.C.): “It’s a rehash. I think this is the stimulus part deux or, I guess when you’re talking about multiple stimuluses, stimuli. You could call it the stimuli speech.”

Obama is just a petulant child. One minute, he is in his ranting mood and has a tantrum against the responsible grown-ups. The next minute he wants to borrow the car keys. We elected a 14-year old to be President. One who has no experience as a job creator in the private sector. He is out of his league.

Robert Stacy McCain posts many more reactions to the President’s stimulus speech from the scholars at the Heritage Foundation.

Excerpt:

In his remarks tonight, President Obama argued that his jobs proposal would create more jobs for teachers. He went as far as to say laying off teachers…”has to stop”.

But since 1970, student enrollment in public elementary and secondary schools has increased just 7 percent, while public elementary and secondary staff hires have increased 83 percent. Moreover, in the 1950′s, there were approximately 2.36 teachers for every non-teacher in a school district. Today, in our nation’s school systems, that ratio is closer to 1 to 1. So every teacher in the classroom has an administrative counterpart in your local public school district. That is a tremendous strain on state budgets. But it is also a huge boon the education unions.

President Obama’s call to spend more precious taxpayer dollars to “prevent teacher layoffs” may do more to inflate schools’ non-teaching rosters than to retain teachers.

On a per-pupil basis, federal spending on education has nearly tripled since the 1970′s. And those who have benefited the most from this profligacy aren’t the children sitting in the nation’s classrooms. No, the increase in federal education spending (and commensurate increase in Washington’s involvement in local schools) hasn’t led to improvements in academic achievement, to increased graduation rates, or even to a narrowing of the achievement gap. It hasn’t served to improve outcomes for children, but it has propped-up the public education jobs program that too often aims to meet the needs of the adults in the system, not the children it was designed to educate.

And more:

As expected, tonight President Obama called on taxpayers to send their hard-earned money to the federal government so that Washington can pour that money into public school construction. In an attempt to boost job growth, the president suggested spending billions on school infrastructure projects to “modernize 35,000 public schools.”

Since President Obama came into office, spending on public education has skyrocketed:

Education budget in 2008: $59.2 billion
Education budget in 2011: $69.9 billion
Department of Education “stimulus” award (Spring 2009): $98 billion
“Edujobs” public education bailout (Summer 2010): $10 billion

And state and local school construction spending has also seen significant increases.

By some estimates, inflation-adjusted school construction spending has increased 150 percent in the last two decades. And unfortunately, profligacy and waste are the norm. Remember the $500 million RFK high school in Los Angeles, built last year after a California bond referendum was enacted? There are certainly schools in ill-repair, but this maintenance should be a local concern. Washington should not be in the business of school window repair, updating facilities, or repainting buildings. Schools don’t need increased federal funding for school repairs; they need more flexibility with funding to be able to use dollars for needs they consider pressing.

The president’s proposal to funnel more taxpayer dollars into school construction has both constitutional and pragmatic problems. School construction has historically been – and should remain – the job of states and localities. Federal forays into school construction have been rare and indirect. Federally-funded school construction is also a terribly expensive way to build schools: Washington-funded jobs must pay prevailing wages, increasing costs on average by 22 percent.

In calling for federally-funded school construction, President Obama is once again supporting Washington overreach in education. But he’s also behind the game in terms of the direction school policy is trending. As states and localities begin embracing online learning  – and as education shifts to a world outside of the walls of physical school buildings – President Obama is pushing to subsidize the old model. The administration might think “school construction” polls better than other government “jobs” projects, but it’s just as destined to be a waste of taxpayer money, and a public policy failure.

Robert Stacy McCain is a Herman Cain supporter. Wouldn’t it have been great to see Herman Cain debating Obama? The job creator against the community organizer?

News

Obama’s plan: raise taxes and borrow $447 billion for more stimulus spending

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Obama wants to stay the course: more stimulus spending
The Democrats took over the House and Senate in January 2007 - and it all went downhill from there

From the liberal Globe and Mail: IT’S JUST ANOTHER STIMULUS BILL.

Excerpt:

Barack Obama is seeking legislative backing for economic stimulus worth $450-billion (U.S.), making the U.S. President a lonely advocate for spending at a moment dominated by calls for austerity.

Mr. Obama told a joint session of Congress Thursday evening that the United States must get a grip on its rising debt, but not at the expense of condemning millions of people to the unemployment rolls and welfare because traumatized companies refuse to hire.

[…]The President’s proposals Thursday were the same as those telegraphed in the U.S. media over the previous 48 hours. He’s responding to an economy that is quickly losing momentum, expanding at an annual rate of only 0.7 per cent in the first half of the year. The unemployment rate is 9.1 per cent, compared with 8.8 per cent in March, and 14 million Americans are unemployed more than two years into the recovery.

[…]Like the roughly $800-billion stimulus program Mr. Obama shepherded through Congress in early 2009, his new proposal would ease the tax burden on the middle class; send money to states, which have cut almost 500,000 jobs since 2010; and seek to create jobs for millions of unemployed construction workers by plowing millions into refurbishing roads and schools.

[…]The U.S.’s publicly held debt is on track to reach 82 per cent of gross domestic product by the end of the decade, higher than in any year since 1948, according to the Congressional Budget Office.

[…]The U.S. economy is faltering in part because previous stimulus programs are dwindling, while private demand has yet to return in robust way.

[…]Mr. Obama also proposes direct transfers worth $140-billion. Some $35-billion will go to states to help them retain teachers, police officers and fire fighters, while $30-billion would be used to refurbish schools, an initiative the White House likes because the work involved tends to be labour intensive and the contracts can be signed quickly.

I found this amusing summary of the jobs speech on National Review.

Spend $450 billion dollars now, it will create jobs, and I’ll tell you how I’m going to pay for it a week from Monday. If you disagree, you want to expose kids to mercury.

That about sums up the Obama years.

Yes, that about sums it up. Obama says: Let me spend your money on turtle tunnels, or you will be blamed and insulted for being “greedy”.

Fact-checking Obama’s speech

The very liberal AP fact-checks Obama’s speech here. (H/T Doug Ross)

Excerpt:

A look at some of Obama’s claims and how they compare with the facts:

OBAMA: “Everything in this bill will be paid for. Everything.”

THE FACTS: Obama did not spell out exactly how he would pay for the measures contained in his nearly $450 billion American Jobs Act but said he would send his proposed specifics in a week to the new congressional supercommittee charged with finding budget savings. White House aides suggested that new deficit spending in the near-term to try to promote job creation would be paid for in the future – the “out years,” in legislative jargon – but they did not specify what would be cut or what revenues they would use.

Essentially, the jobs plan is an IOU from a president and lawmakers who may not even be in office down the road when the bills come due. Today’s Congress cannot bind a later one for future spending. A future Congress could simply reverse it.

Currently, roughly all federal taxes and other revenues are consumed in spending on various federal benefit programs, including Social Security, Medicare, Medicaid, veterans’ benefits, food stamps, farm subsidies and other social-assistance programs and payments on the national debt. Pretty much everything else is done on credit with borrowed money.

So there is no guarantee that programs that clearly will increase annual deficits in the near term will be paid for in the long term.

—OBAMA: “It will not add to the deficit.”

THE FACTS: It’s hard to see how the program would not raise the deficit over the next year or two because most of the envisioned spending cuts and tax increases are designed to come later rather than now, when they could jeopardize the fragile recovery. Deficits are calculated for individual years. The accumulation of years of deficit spending has produced a national debt headed toward $15 trillion. Perhaps Obama meant to say that, in the long run, his hoped-for programs would not further increase the national debt, not annual deficits.

Let’s now look at some of the specific proposals.

But will it work?

Hans Bader explains the plan in this excellent post at the Competitive Enterprise Institute. (He has lots of links, so I removed them, but you can find them in his post on the CEI web site)

Excerpt:

It contains more money for the long-term unemployed, more infrastructure spending, and funds for hiring laid-off teachers. It also would extend a cut in the portion of payroll taxes paid by employees. The measures would be financed mostly by deficit spending, but partly by raising taxes on the so-called “rich” — a category that includes most of the small business owners who actually hire people — and by eliminating what the administration refers to as “tax loopholes” — which are not really tax loopholes at all, but rather provisions that allow industries disfavored by the administration to benefit from the same tax code provisions as other industries.

[…]Even the least-bad of Obama’s proposals will not grow the economy. Aid for the long-term unemployed will reduce the size of the economy by encouraging some people to not accept jobs that pay far less than they were accustomed to, even when those are the only jobs available to them. Obama’s proposed infrastructure spending will not grow the economy either, as Veronique de Rugy and others note, since it will be accompanied by costly Davis-Bacon mandates designed to favor unions (which raise the cost of transportation projects and exclude many small non-union contractors), and some of it will be wasted on rail boondoggles and pork rather than roads and bridges, or on Obama Administration pet projects, like energy efficiency, that require specialized skills that most unemployed construction workers lack. (Ironically, Obama removed most transportation spending from the original $800 billion stimulus package for political reasons, replacing it with more harmful welfare and social spending.)

How about Obama’s previous stimulus plan?

Meanwhile, by sucking money out of the private-sector economy, the stimulus wiped out a million private-sector jobs, even as other stimulus provisions outsourced American energy jobs to foreign countries, and wiped out jobs in America’s export sector, resulting in a net loss to the economy of 550,000 jobs, according to two economists. The Obama administration’s use of taxpayer money to subsidize above-market wages for government employees is at odds with what economists like Lord Keynes (the father of the Keynesian school of economics) counseled in past recessions, and what Franklin Roosevelt did in the Great Depression, when he hired people to do construction and transportation projects in the WPA but paid them only very modest wages, providing opportunities to the unemployed without siphoning off useful talent from private-sector businesses.

But isn’t it a good idea to help the unemployed and public school teachers?

As the Heritage Foundation notes, “The consequences of extended unemployment benefits are some of the most conclusively established results in labor economic research. Extending either the amount or the duration of UI benefits increases the length of time that workers remain unemployed. UI benefits subsidize unemployment. They reduce the incentive unemployed workers have to search for new work and to make difficult choices–such as moving or switching industries–to begin a new job.”

The President’s proposed subsidies for laid-off teachers discriminate in favor of one occupation, without any legitimate reason for doing so: the unemployment rate among teachers is vastly lower than for many occupations, and lower than for most.  It is best understood as the Administration pandering to the teachers’ unions.

This man only has one thing in his mind and it’s spending your children’s money and giving speeches about how great that makes him. He likes to hear the crowds applaud him for spending your children’s money. I do not think well of people who, in tough economic times, come into my house, take my credit card, and spend a bunch of my money on public sector union workers who have job security, benefits and pensions that I can only dream about. Where does he think that the money he is spending comes from in the first place?

Unemployment Rate (Not seasonally adusted)
Unemployment Rate (Not seasonally adjusted)

We need an exit strategy from this Keynesian deficit spending quagmire. This man has spent over a trillion dollars on the job-killing Obamacare program, and over a trillion more on stimulus spending. He is running 1.65 trillion dollar annual deficits and he wants to spend even more. And what have we got to show for it? The worst economic recovery in the history of the country – after a recession caused by his own party – and an unemployment rate that is more than double what Bush’s unemployment rate was when he had a Republican House and Senate in 2006.

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