A California solar power company touted in 2010 by President Obama during a press conference as a "testament to American ingenuity and dynamism" filed for bankruptcy this week. The company had received $535 million in loan guarantees in 2009 as part of the stimulus, $527 million of which was spent. Now the Daily Caller is reporting that executives and shareholders are politically and financially connected to the Obama administration, which fast-tracked the company's loan application. However, things are not that one-sided. The company applied for loans long before President Obama was elected, and the Energy Department said that they were simply completing a process begun years before. Finally, the L.A. Times says that despite the failure, such subsidies are a good idea because ... well, the government has been subsidizing nuclear power for decades.
The direct results of half a billion dollars in borrowed taxpayer-backed money? 1,100 jobs lost, and 4,000 promised jobs (at $125,000 per job) vanished. Over $1 million was spent by the company from 2008 to 2011 on lobbying, $500,000 of that in 2010 alone.
“The project that we supported succeeded,” insisted Damien LaVera, a spokesman for the Department of Energy.
“The facility was producing the product it said it would produce, and consumers were buying the product,” he said. “The company struggled because the market has changed dramatically.”
This is the fundamental problem with stimulus spending. In the absence of the market signals of price and profit, the government allocates money based on politics and opinion. They do so regardless of the cost, because the money they spend isn't theirs and they are not on the hook for any losses; if they need more, they can simply take more taxpayer dollars or borrow more against future dollars. It doesn't matter if a Republican or a Democrat is in charge, nor who controls Congress - the programs and the losses simply continue while cronies on both sides grow rich. The project accomplished exactly what it was designed to do, and yet the company went bankrupt and cost taxpayers hundreds of millions of dollars.