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President Obama’s Green Jobs Pretense Is An Unmitigated Fiasco

The Obama green jobs stimulus program has proved to be such an unmitigated fiasco that even the administration’s mainstream loyalist New York Times has given notice. A recent article, “Number of Green Jobs Fails to Live Up to Promises,” characterized the administration’s goal of creating 5 million new green jobs in 10 years as a “pipe dream.” The article notes, for example, that a much- heralded weatherization program “never caught on.”

About half of the $186 million of federal weatherization funds California has spent so far produced a total of 538 full-time jobs during the last quarter. Another $59 million in state, federal and private money spent there for green job training resulted in only 710 placements, equivalent to an $82,000 subsidy for each.

Just before Earth Day last year, Seattle Mayor Mike McGinn went to the White House to announce a $20 million grant that would create 2,000 home insulation weatherization industry jobs and reduce the city’s climate-threatening carbon footprint.  It later became apparent that that the primary footprint would be left in the mayor’s mouth.

The Seattle Post-Intelligencer reported in August that “As of last week, only three homes have been retrofitted and just 14 jobs have emerged from the program. Many of the jobs are administrative, and not the entry-level pathways once dreamed of for low-income workers.” Michael Woo, director of Got Green, a Seattle community organizing group focused on environmental and social justice commented: “It’s been a very slow and tedious process. It’s almost painful, the number of meetings people have gone to. Those are the people who got jobs. There’s been no investment for the broader public.”

A report issued by the Government Accountability Office, the investigatory arm of Congress, raised concerns last year about favoritism in awarding some stimulus loan guarantees. The Energy Department’s inspector general admitted to Congress that there might be reasons for such suspicion — that some contracts may have been steered to “friends and family.”

Some scrutiny is being directed to Solyndra, the administration’s chosen recipient of a much ballyhooed $535 million loan guarantee in 2009 to finance the first phase of an expansion plan to create a new photovoltaic solar panel manufacturing facility. An Energy Department press release estimated that the guarantee would create 3,000 construction jobs to build the plant, and 1,000 more after it opened.

President Obama repeated the projected 1,000 job creation benefit in a May 2009 speech at the plant. On the occasion of the groundbreaking event with Secretary of Energy Steven Chu and former California Governor Arnold Schwartzenegger in attendance, Vice President Biden lauded the venture as one which would “serve as a foundation for a stronger American economy.” He went on to say: “These jobs are the ones that are going to define the 21st century that will allow America to compete and lead like we did in the 20th century.”

Unfortunately, it hasn’t worked out quite that way. About six months later, Solyndra announced plans to postpone the expansion, putting taxpayers on the hook to the tune of $390.5 million, 75% of the loan guarantee. And instead of hiring 1,000 workers, they  intended to close one of its older facilities and lay-off 135 temporary or contract workers along with 40 full-time employees. As for any hope for taxpayer reimbursement, forget about it. The company has filed for bankruptcy.

Was this an unpredictable business reversal? Not really. According to Securities and Exchange Commission (SEC) filings, the company had never turned a profit since the time it was founded in 2005. Solyndra’s auditor declared in a March 2010 amendment to its SEC registration statement: “…the company has suffered recurring losses, negative cash flows since inception and has a net stockholder’s deficit, among other factors, [that] raise substantial doubt about its ability to continue as a growing concern.”

A letter to Energy Secretary Chu from Energy and Commerce Committee Chairman Fred Upton (R-Mi.) and Oversight Committee Subcommittee Chairman Cliff Stearns (R-Fla.) challenges the basis for support to the company. “While we understand the purpose of the Loan Guarantee Program is to help private companies engaging in clean energy products to obtain financing by providing loan guarantees, subsequent events raise questions about [whether] Solyndra was the right candidate to receive a loan guarantee in excess of half a billion dollars.”

Was political cronyism possibly at play here, given that Solyndra’s majority owner, Oklahoma billionaire George Kaiser, was a big funding bundler for the 2008 Obama-Biden campaign? Kaiser has flatly denied that he had anything to do with obtaining the loan guarantee. Still Leslie Page, a spokeswoman for Citizens Against Government Waste commented to the Daily Caller that in light of personal involvement of the president and vice president in the project, “This seems like a quid pro quo, and it raises a lot of questions.”

A report issued by the nonprofit Center for Public Integrity in Washington, D.C., and ABC News links $510 million in stimulus loans and grants to green-tech companies in a portfolio owned by another top Obama campaign money bundler. Steve Westly raised more than $500,000 for the president, and was appointed by Secretary of Energy Chu in August to serve on his 12-member Advisory Board where he is able to help set national priorities that affect his business interests. The four companies in question include Tesla Motors, RecycleBank, EdeniQ and Amyris. Tesla and Amyris went public with stock offerings in 2010.  Tesla stock rose 6% on news in February that the Obama administration proposed to stimulate electric car sales with $7,500 federal buyer rebates. Although his Westly Group firm reportedly sold its nearly 2.5 million shares, he remains a shareholder.

Other enigmatic circumstances surround a stimulus tax credit worth $584,000 awarded to Serious Materials, a small window manufacturer for new equipment investments. Robin Roy, a Serious executive, is married to Cathy Zoi, a former assistant secretary for the Energy Department’s office of Energy Efficiency and Renewable Energy (EERE) which was responsible for $16 billion in stimulus money. She had been nominated by President Obama for that position, and Vice President Biden visited a Serious plant to praise and publicize the award prior to her confirmation. Zoi and her husband reportedly owned 120,000 Serious stock option shares at that time.

In fairness, the Obama stimulus is creating many new jobs. The bad news is that they’re mostly being created overseas.

A new solar power plant being built in Blythe, California initially received a $1,9 billion stimulus loan which was increased to $2.1 billion six months later.  Speaking there in June, Interior Secretary Ken Salazar projected that the project would create more than 1,000 construction jobs in the area, would advance U.S. global competition in green technologies, and would support the president’s goal of “generating 80% of electricity from clean energy sources by 2035.”  Not highlighted was that the massive $6 billion project was awarded to a German firm, Solar Millennium.

While Solar Millennium will have the project work performed by its U.S.-based subsidiary, Solar Trust of America, STA is actually a joint venture between Solar Millennium and Ferrostall, another German solar developer. That venture was created in 2009, just in time to cash in on the stimulus. As stated on their website investor’s page, STA engaged Citigroup Global Markets, Inc., and Deutsche Bank Securities, Inc. to provide “advisory services to secure the competitive award of U.S. Department of Energy (DOE) loan guarantees and develop models for debt and equity project financing for its solar plant projects.”

DOE also provided $1.45 billion in loan guarantees to Abengoa Solar, a Spanish firm, to build plants in California and Arizona. Necessary profitability for repayment is likely to depend upon large additional subsidies from economically-strapped Spain.

Of the $6.9 billion doled out in stimulus grants so far, more than 80% has gone to wind farms (covering up to 30% of all project costs). A Meadow Lake development in Indiana that is owned and operated by Horizon Wind Energy received $276 million. Horizon is a wholly owned subsidiary of EDP Renovaveis, a Portuguese company. The turbines are manufactured by Vestas in Denmark, and are mounted atop 350 foot towers imported from Vietnam. EDP and Horizon also own and operate the Blackstone wind farm in Illinois that received a $171 million grant.

Stumping for stimulation back in January 2009, President Obama pledged: “We will put Americans to work in new jobs that pay well and can’t be outsourced—jobs building solar panels and wind turbines.” And just how well is this plan working out so far?  Apparently not so great. The more taxpayer dollars our government dishes up for that green pork, the less appetizing it looks and smells.

Forbes, 7 September 2011