The GOP's Solyndra Problem WSJ.com 10/10/11
On Friday Rick Perry delivers his first major policy address, unveiling an aggressive energy and jobs plan. It will no doubt be good. It will no doubt address serious problems. It will no doubt be ignored.
That's because, unfortunately for Mr. Perry, drilling isn't the energy topic du jour. The buzz is the bankrupt Solyndra, which is why the only energy question that came to Mr. Perry at Tuesday's New Hampshire debate was this: How, exactly, is his state's vaunted "Emerging Technology Fund"—which has dumped some 200 million taxpayer dollars into private companies—any different from Obama programs that subsidized the likes of Solyndra?
It isn't, of course, and that's a problem for Mr. Perry. The political merit of Solyndra is that it perfectly illustrates the failed Obama economic mentality—that politicians should allocate capital, that government creates industries. Nothing should be further from a free-market mentality, and Solyndra ought to be providing Republicans a potent contrast with the president. Instead, candidates like Mr. Perry and Mitt Romney are dragging green baggage.
Congressional Republicans are now investigating the solar panels out of Solyndra, and rightly so. But no one should forget it was Republicans who in 2005 created the loan program that Mr. Obama would later expropriate to funnel stimulus dollars to his green boondoggles. This was the height of the Bush-era spending craze, when the GOP had come to see green energy as a slick way to funnel yet more pork (ethanol, nuclear, wood chips) to their states. As a side benefit, it offered cover against charges that Republicans were stooges of Big Oil.
Where the handouts really got rolling was at the state level. It used to be that Republican governors competed for business by lowering taxes and regulations. Then some genius worked out that it was easier to flat-out bribe companies to relocate by offering cold, hard taxpayer cash. And with green energy all the rage, a lot of state tax dollars started flowing to Solyndra-like ventures.
Mr. Perry did all this on a grand scale, convincing his legislature to create two investment funds, one being the Emerging Technology Fund, which has acted as state venture capitalist to more than a hundred firms, including green companies. In fairness, he wasn't alone. Indiana's Mitch Daniels, Mississippi's Haley Barbour, Louisiana's Bobby Jindal—conservatives all—have happily staked their taxpayers' dollars on green bets.
But it's Mr. Perry who is running for president, and who came out of the primary gates touting his funds as a centerpiece of Texas's job-creation story. As Solyndra has escalated, the Obama political liabilities have begun to attach to the Texan. The press is churning out exposés about how many jobs the Texas grants actually produced, or how many recipients had donated to Mr. Perry. His rivals, notably Michele Bachmann, have directly called the funds Mr. Perry's "Solyndra."
Mr. Perry's response has been to say that "the federal government shouldn't be involved in that kind of investment, period," but that it is "fine for states" to pick winners and losers in the economy. All of which sounds a bit like a certain governor attempting to explain away RomneyCare.
Speaking of Mr. Romney, he's taken his own shots at Solyndra, and his 59-point economic plan warns that government "should not be in the business of steering investment toward particular politically favored approaches." The former governor seems to be hoping that the press won't notice a day in early 2003 when he used a solar company as the backdrop to announce that his state was shifting millions to a new Green Energy Fund (still in existence) that would provide venture capital and loans to renewable companies.
True, the Massachusetts fund wasn't run out of the governor's office, and the amounts were a smidgen of Mr. Obama's green stimulus. Bets are Team Obama won't make that distinction when highlighting Mr. Romney's prior support for state-sponsored venture capital for solar.
Past mistakes aside, why aren't candidates using this moment to disavow green slush? Congressional Republicans—the tea party at their backs, Solyndra in their sights—are themselves beginning to envision the upside of abandoning green pork.
Yet Mr. Perry sticks to his flawed federalism argument. And the Romney jobs plan insists "government has a role to play in innovation in the energy industry," although Romney spokesman Ryan Williams tells me his candidate is focused on "basic research through programs that ensure long-term, apolitical funding for a wide variety of early stage technologies," and that he "opposes President Obama's efforts to play venture capitalist."
The problem is that there are no apolitical subsidies. The economics of political venture capital are bad, but the politics are worse. For Republicans in particular, the green subsidy road leads only to scandals, job-number embarrassments, poor excuses, and a missed opportunity to draw distinctions with big-government liberals.
At Tuesday night's debate, Mr. Romney told Herman Cain that "simple answers are . . . often inadequate." But when it comes to green subsidies, Mr. Cain's simplicity is to die for. Government simply "should not be in the business of picking winners and losers, because most of the time they pick the losers," said Mr. Cain. Now there's a presidential energy philosophy for the ages.