Freedom New Mexico
A California state agency will suspend giving sales-tax exemptions to renewable energy manufacturers in the wake of the scandalous bankruptcy of Solyndra, the Fremont-based maker of solar panels that received a $535 million federal loan guarantee before closing its doors in September.
Meanwhile, the federal government last week approved another $1 billion in loan guarantees to two other solar companies, despite the Solyndra scandal. Those were imprudent moves. Washington could learn from Sacramento.
The state action was urged by California Treasurer Bill Lockyer, chairman of the California Alternative Energy and Advanced Transportation Financing Authority. Board members are willing to suspend the program at their Oct. 25 meeting, the treasurer’s office told us.
It’s commendable that the state realizes taxpayer subsidies of questionable technology are unwise, “in light of recent events,” in Lockyer’s words. Solyndra was one of 33 companies receiving sales-tax exemptions.
“We owe it to the taxpayers to see if there is more we can do to make sure we don’t give their money to companies headed for a fall,” Lockyer said. In California, 33 sales tax exemption applications valued at $104 million were approved, $31.4 million of which has been used. No new applications are pending.
Closing the barn door after the horses have dashed out isn’t the best solution. But at least California is thinking twice about subsidizing such endeavors.
In Washington, more than a year before Solyndra filed for bankruptcy, the Obama administration was aware of the company’s financial troubles, and even provided more tax support after the Department of Energy learned Solyndra was violating its existing loan deal, federal officials have confirmed.
A criminal investigation is under way, and two top Solyndra executives, who made 20 trips to the White House while their loan was being considered, invoked the Fifth Amendment rather than answer a House committee’s questions.
It is incredible that the Energy Department last week approved two more loan guarantees worth more than $1 billion for solar energy projects in Nevada and Arizona from the same program that paid Solyndra, just two days before the program expired.
The rush to throw taxpayer money at questionable technology is unwise and reeks of special interest pandering. Federal investigators should determine whether laws or regulations were broken. But more fundamentally, the Solyndra fiasco and subsequent developments show that government has no business picking commercial winners and losers, particularly when endeavors are economically nonviable on their own.
Some say that when development of a technology or enterprise is risky, the government should take the risk rather than private investors. That’s backward. Government should be a prudent spender of the public’s money. If an endeavor can’t attract private funding, there’s usually a good reason. The government shouldn’t gamble with taxpayer money.