Another week, another disconcerting e-mail dump to push the Solyndra scandal deeper into the history books as an example of why industrial policy in the United States tends to go badly. According to newly released emails, the former Solyndra CEO Brian Harrison told officials at the Department of Energy that he wanted to announce a round of layoffs on October 28, 2010, to head off leaks to the press about his company’s perilous condition.”I would like to go forward” with the announcements, Harrison wrote to an official at the Department of Energy. It sounded less like an announcement than a request.
Indeed, another batch of e-mails indicates that the Department of Energy then pushed back, telling Solyndra to hold off the announcement until after the midterm elections on Nov. 2. “They did push very hard for us to hold our announcement of the consolidation of employees and vendors to Nov. 3rd–oddly they didn’t give a reason,” wrote an investment adviser to the company in another email thread. That is just what the company ended up doing.
The implications here push the Solyndra story forward. Up until now, Obama Administration officials have pointed out repeatedly that in all of the thousands of documents that have been released there is no evidence that political influence played a role in the awarding of funds to Solyndra. They have claimed that the Soyndra failure was a failure that took place on its own merits, not because of cronyism. To date, that argument has mostly rung true. There is evidence that administration officials fretted over the political impact Solyndra’s fate, and pushed to have a quicker approval process so that Administration officials could boast of the accomplishment. But nothing that showed meddling in Solyndra’s business.
These e-mails appears to be different. If the e-mails accurately describe what happened, there is evidence that the Obama Administration was intervening in normal business decision by company executives–a decision on when to announce layoffs–for the clearly political reason of preventing bad news a few days before an election. This, of course, is not the sort of decision that the Obama Administration should be involved in, at least according to the Obama Administration’s own protestations that the Solyndra investment was handled in an apolitical way.
Perhaps more importantly, the e-mails are another black eye for the very idea of an American industrial policy. There has long been bipartisan consensus that the U.S. government should provide incentives to certain sectors of the economy–especially agriculture and energy. But historically, those goals have been frustrated by improper meddling, by politicians in the businesses and by businesses in the political process. As a result, there is little public faith in the effectiveness of such specialized treatment of certain companies or industries. As a result, the country has found itself at a clear disadvantage, as other countries, including China and Germany, pursue far more aggressive industrial policies that has had the effect of putting American firms at a disadvantage.
Before America can compete in this global game of government-backed industry, the American political establishment will have to show that it can be trusted to operate in the national interest, and not their own personal interests. And when all the e-mails are released, this will likely be the legacy of the Solyndra scandal: A distrust of the federal government’s ability to uphold the national interest.
On Thursday, Energy Secretary Steven Chu will testify on Solyndra before a subcommittee of the House Energy and Commerce Committee. The story will continue.
UPDATE: The Department of Energy just released excerpts of Chu’s prepared statement at Thursday’s hearing. The comments focus on the issue of American competitiveness.
When it comes to the clean energy race, America faces a simple choice: compete or accept defeat. I believe we can and must compete. Investments in clean energy reached a record $243 billion last year. Solar photovoltaic systems alone represent a global market worth more than $80 billion today. In the coming decades, the clean energy sector is expected to grow by hundreds of billions of dollars. We are in a fierce global race to capture this market. We appreciate the support the loan programs have received from many members of Congress — including nearly 500 letters to the Department — who have urged us to accelerate our efforts and to fund worthy projects in their states… While we are disappointed in the outcome of this particular loan, we support Congress’ mandate to finance the deployment of innovative technologies, and believe that our portfolio of loans does so responsibly. As you know, the Department has consistently cooperated with the Committee’s investigation, providing more than 186,000 pages of documents, appearing at hearings, and briefing or being interviewed by Committee staff eight times. As this extensive record has made clear, the loan guarantee to Solyndra was subject to proper, rigorous scrutiny and healthy debate during every phase of the process.