First up, my apologies. This has been a very… complicated week for me, personally. Some good, others… not so much. But they’ve combined to leave me with little time or motivation to do some serious blogging.
Anyway, this one is gonna be a bit complicated. There are two companies that have been in the news of late that really seem to embody the Obama administration’s attitude towards big business: they love it as long as it knows its place, and its place is in the Obama administration’s pocket.Ladies and gentlemen, I give to you Solyndra and LightSquared.
Solyndra: Solyndra is/was one of those “green energy” companies that didn’t have anything to do with Ryan Reynolds’ last superhero outing movie, but the type dearly beloved of environmentalist nutjobs everywhere. They developed a system to produce electricity from solar power that was so wonderful, even President Obama visited them and (if you’ll pardon the expression) blew sunshine up their asses.
Their business model, however, was seriously boned up. Their process for manufacturing their product had, roughly, a fixed cost of $6.00 a unit. They intended to make their fotune by selling them at $3.00 a unit, presumably by making it up in volume. Sadly, their main competitors (including the Chinese) had a less technically advanced but still very useful product they were selling for less than $2.00 a unit. For those who’ve never worked in the retail sector (like President Obama), this is what is known as a “problem.”
But no fears, the guys running Solyndra had a plan. Their plan? Simple. Keep going on more and more borrowed money until they could arrange for their IPO (Initial Public Offering, when the company and its investors sell stock in the company). Then, presumably, the big investors would take their money and run, leaving the buyers to figure out how to make more money with the company.
Well, they first started getting into trouble during the Bush administration, and sought federal loan guarantees. This is the equivalent of getting Uncle Sam to co-sign the loan: if Solyndra couldn’t pay it off, we would do it for them. And the Bush administration looked at it over and over and just couldn’t see a way that Solyndra would ever be able to pay off its debts, so they said “no.” In fact, they even went out on a limb and said that Solyndra would run out of money by September 2011.
But then the Obama administration came in, and just knew that they needed a backup plan to “having unicorns poop Skittles.” To the wonderful geniuses that are Barack & Co., the lack of a plan whereby Solyndra would make money wasn’t that big a deal; someone else would take care of it — hopefully, after November 6, 2012 (the next presidential election). So they said “sure, we’ll co-sign for you, guys!” In fact, they were so confident that Solyndra would work out fine, they even agreed to “subordinate” the loan guarantees to those who actually issued the loans. This meant that Obama’s Department of Energy was so confident that Solyndra would be just fine, they said “if they go belly-up, you guys get paid first; we’ll worry about our money later.” And that hunk of “our money” was just over half a billion dollars — $535 million, to be precise. Coincidentally, that’s one million dollars per member of Congress.
There was one slight complication there; according to federal law, the Department of Energy simply cannot subordinate its loans. When Uncle Sam gets involved, he gets to the front of the line, and others suck it up.
Fortunately, there was a precedent available: the auto bailouts. In those cases, the Obama administration told the bond holders (who, legally, should have been first in line to be paid off) “suck it up and take it in the shorts; we’re going to take over the companies, make sure our buddies in the unions get taken care of, and you greedy SOBs can be grateful if we give you anything.”
And, of course, it’s just a wild, wild coincidence that the first person in line to lend Solyndra money — backed by guarantees drawn on you and me, folks — was George Kaiser, a very, very, very big Obama donor and bundler. And — in what must have been a wild coincidence — the big Obama backer got to cut to the front of the line and get theirs before anyone else got their own — and screw the law.
Congress (as in, “the Republican-controlled House of Representatives”) is currently looking into this whole wretched mess, and the Democrats are doing their best to cooperate — which means, as usual, “change the subject, smear the Republicans, and call everyone racists.” It’s not overly helpful, but it has worked for them in the past.
So, in a nutshell: Obama’s pet “green energy” company with a totally doomed business plan gets federal money it didn’t deserve and couldn’t repay, then a big Democratic donor gets protected from sinking his money into said doomed company by an illegal loan contract that no one in the government had ever seen or signed.
LightSquared: This one is a bit newer, and odder. LightSquared is a company that wants to get into the mobile broadband biz — the idea of allowing people to sign up for high-speed internet through a wireless connection. (Personal admission: I currently have such service through my own cell phone provider, and it’s not terrible.) Their business model is a bit less “Underwear Gnomes” – like; it actually has potential to make money. In fact, it was good enough that President Obama and a bunch of other big Democrats invested in it.
Well, while the model is a bit more feasible than Solyndra’s, it still has a catch: the hunk of EM spectrum that they want to use is awful darn close to the hunk of spectrum used by the GPS system — which is used in cell phones, navigation systems, and a whole lot of military hardware. If it’s too close, it could mess them up — and cause problems anywhere from Grandma and Grandpa trusting OnStar and ending up lost in the woods to guided missiles missing Al Qaeda in Pakistan and instead taking out the Vatican. In brief, this would be a Bad Thing.
Anyway, it’s up to Congress to decide if LightSquared can get its hands on that hunk of bandwidth. And they’re holding hearings on it. So the White House calls up the Pentagon and says ‘”we’d like you to send over an Air Force general to talk to Congress about that.” Naturally, the Pentagon says “yes, sir!” and grabs the first blue-suiter with stars on his shoulders to look through all the studies they’ve done and go talk to the Congresscritters.
Before he goes, though, he sends a copy of his prepared testimony to the White House. Now, this is nothing unusual; this keeps the White House from getting blindsided by the Pentagon, and lets them spot any problems or mistakes in advance. It’s perfectly normal and completely ethical — it would only be unethical if the White House tried to deny it.
But while that is normal and acceptable, what followed is where things got seriously scummy. First, the White House sent along a copy of General Shelton’s testimony to LightSquared itself. And then after they had time to critique it, the White House sent it back to General Shelton with some (probably figurative) red-pencil marks. Marks that spelled out two things they wanted him to emphasize:
1) LightSquared’s use of the designated bandwidth would in no way, shape, or form interfere with any military hardware whatsoever.
B) General Shelton, both personally and as a representative of the Air Force and the Department of Defense, supported the civilian use of the bandwidth.
That’s where I (and a lot of others, mainly before me) cried foul. First up, Shelton himself had expressed concerns prior to the whole mess about how this could screw with our hardware. It’s awful damned close to the important frequencies, and could easily interfere.
But that’s just technical stuff. I suspect that SCIENCE!!!!! could find ways around that. What really threw me off was that Shelton was told to express support for the general plan.
Now, I can see the Pentagon opposing such a move. If it turned out that it would — or even could — mess up the GPS system, they should do all they can to stop it.
But if it wouldn’t, then there’s absolutely no reason for them to have any kind of opinion at all. In fact, I would be thrilled if they never expressed a single opinion on any kind of commercial enterprise that doesn’t interfere with the military, like this case. To my way of thinking, the military should either say “this affects us badly, so we oppose it” or “this doesn’t affect us at all, so we don’t care.” It’s the equivalent of the commander of the local Army base sending a representative to the neighboring town’s Zoning Board to weigh in on whether or not they should allow a new 7-11 three miles down the road from the base.
But again, LightSquared did some fairly smart things. Smart things like getting big Democratic donors to invest in their business, and giving healthy donations to Democrats. So that means that when they need a little extra juice before Congress, they just might feel entitled to call up those people and say “hey, what can you do to help us out a little?”
Now, it must be spelled out that in both cases, there are only allegations and implications and inferences of wrongdoing (with the exception of the illegal loan guarantee’s subordination clause in the case of Solyndra). There’s no fire visible yet — just an awful, awful amount of smoke.