By now everyone is well aware what the main tension involving this year's presidential campaign as far as Mitt Romney is concerned, will be his professional past, namely his experience at, and exposure to, Bain Capital. By now most have also gotten a sense of the angle of attack that the incumbent will rely on in order to discredit his GOP challenger, and if they haven't, they will soon enough: after all in Obama's own words "Mitt Romney's record at Bain Capital is what this campaign is going to be about." In other words, Romney's history with managing private (emphasis added) equity. Yet at Marc Thiessen at the WaPo points out, the logical retort from the Romney camp would be to shift attention to something potentially more embarrassing: Obama's record with public equity. Because, frankly, it is deplorable. And while one may debate the number of job losses at the companies that Bain took private, the driving prerogative for Romney was to generate value for his investors and shareholders. This in itself will hardly be debated by Obama. In other words, for any and all of his other failings, Romney succeeded at his primary task. The question then is: did Obama do the same? Did he succeed in investing public equity, i.e., the taxpayer capital that the US financial mechanism has afforded him. Sadly, the answer appears to be a resounding no.
Since taking office, Obama has invested billions of taxpayer dollars in private businesses, including as part of his stimulus spending bill. Many of those investments have turned out to be unmitigated disasters — leaving in their wake bankruptcies, layoffs, criminal investigations and taxpayers on the hook for billions.
One could just utter the world Solyndra here, and all would be made clear. However, that is just the beginning. Here are some other notable public equity failings of the administration:
- Raser Technologies. In 2010, the Obama administration gave Raser a $33 million taxpayer-funded grant to build a power plant in Beaver Creek, Utah. According to the Wall Street Journal, after burning through our tax dollars, the company filed for bankruptcy protection in 2012. The plant now has fewer than 10 employees, and Raser owes $1.5 million in back taxes.
- ECOtality. The Obama administration gave ECOtality $126.2 million in taxpayer money in 2009 for, among other things, the installation of 14,000 electric car chargers in five states. Obama even hosted the company’s president, Don Karner, in the first lady’s box during the 2010 State of the Union address as an example of a stimulus success story. According to ECOtality’s own SEC filings, the company has since incurred more than $45 million in losses and has told the federal government, “We may not achieve or sustain profitability on a quarterly or annual basis in the future.” Worse, according to CBS News the company is “under investigation for insider trading,” and Karner has been subpoenaed “for any and all documentation surrounding the public announcement of the first Department of Energy grant to the company.”
- Nevada Geothermal Power (NGP). The Obama administration gave NGP a $98.5 million taxpayer loan guarantee in 2010. The New York Times reported last October that the company is in “financial turmoil” and that “[a]fter a series of technical missteps that are draining Nevada Geothermal’s cash reserves, its own auditor concluded in a filing released last week that there was ‘significant doubt about the company’s ability to continue as a going concern.’ ”
- First Solar. The Obama administration provided First Solar with more than $3 billion in loan guarantees for power plants in Arizona and California. According to a Bloomberg Businessweek report last week, the company “fell to a record low in Nasdaq Stock Market trading May 4 after reporting $401 million in restructuring costs tied to firing 30 percent of its workforce.”
- Abound Solar, Inc. The Obama administration gave Abound Solar a $400 million loan guarantee to build photovoltaic panel factories. According to Forbes, in February the company halted production and laid off 180 employees.
- Beacon Power. The Obama administration gave Beacon — a green-energy storage company — a $43 million loan guarantee. According to CBS News, at the time of the loan, “Standard and Poor’s had confidentially given the project a dismal outlook of ‘CCC-plus.’ ” In the fall of 2011, Beacon received a delisting notice from Nasdaq and filed for bankruptcy.
It gets worse:
A company called SunPower got a $1.2 billion loan guarantee from the Obama administration, and as of January, the company owed more than it was worth. Brightsource got a $1.6 billion loan guarantee and posted a string of net losses totaling $177 million. And, of course, let’s not forget Solyndra — the solar panel manufacturer that received $535 million in taxpayer-funded loan guarantees and went bankrupt, leaving taxpayers on the hook.
Yet if it was merely pure incompetence from a president without any real business background, that would at least explain it, if not justify it. However, it appears that inexcusable crony capitalism plays a far greater role in Obama's public equity failings:
Obama has declared that all the projects received funding “based solely on their merits.” But as Hoover Institution scholar Peter Schweizer reported in his book, “Throw Them All Out,” fully 71 percent of the Obama Energy Department’s grants and loans went to “individuals who were bundlers, members of Obama’s National Finance Committee, or large donors to the Democratic Party.” Collectively, these Obama cronies raised $457,834 for his campaign, and they were in turn approved for grants or loans of nearly $11.35 billion. Obama said this week it’s not the president’s job “to make a lot of money for investors.” Well, he sure seems to have made a lot of (taxpayer) money for investors in his political machine.
All that cronyism and corruption is catching up with the administration. According to Politico, “The Energy Department’s inspector general has launched more than 100 criminal investigations” related to the department’s green-energy programs.
So while attacking Romney for his beliefs, views, and outlook on life may be one thing, Obama may be wise to redirect his current strategy of attacking Romney's professional background, unless the tables are turned, and his own track record of gross public capital missalocation ends up under the prime time microscope.