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President Obama came into office just over five years ago promising to reduce the power of corporate lobbyists and to increase government’s role in the economy.
In his first month, he showed that the two promises were incompatible. His $787 billion-dollar stimulus provided the lesson: Every time government gets bigger, some special interest is getting richer.
“President Barack Obama’s $787 billion stimulus package has put clean-tech companies in a feeding frenzy,’” reported tech journal GigaOm in 2009, quoting industry analyst Jesse Berst.
Every special interest Obama had attacked or would later attack supported the law. From the Chamber of Commerce to General Electric, Big Business loved the stimulus.
Tech CEOs literally got access to the Oval Office while the bill was being shaped, the New York Times reported in those heady early days of Hope and Change, while the CEOs’ lobbyists met down the hall with top economics aide Jason Furman.
All this lobbying paid off, and the well-connected companies made out like bandits. “The biggest recipients so far of the federal contracts awarded with stimulus money are large companies that faced little competition for the funds,” the Wall Street Journal reported in September 2009. Of the 22,000 stimulus contracts, only 20 percent had gone to small businesses, the Journal found.
Green tech companies got plenty in the stimulus bill, including a 10 percent tax credit for people who convert their gas-powered cars into electric cars. Section 1603 of the law provided a “tax credit” for renewable-energy installations like solar panels or windmills. This “tax credit” is really just a check from the U.S. Treasury.
Section 1603 largely benefitted big business. The ten largest projects subsidized by Section 1603 (nine wind farms and one solar farm) pocketed $2.5 billion of the total $20.3 billion given out by the program. (This probably low-balls the actual share of the ten largest projects because of the Treasury Department’s opaque reporting.)
The second-largest 1603 project (as far as I can tell) is the Meadow Lake Wind Farm, which got $346 million of taxpayer money. The farm is owned by a U.S. subsidiary of Portuguese firm EDP Renováveis and, according to investigative reporting by Russ Choma, the turbines are made in Denmark and sit on 350-foot-tall poles made in Vietnam.
Installing the turbines created temporary jobs in the U.S., but otherwise this was a case of American taxpayers subsidizing foreign companies.
Often politics – rather than worthiness – seemed to determine who got the stimulus money. Most famous was solar-panel maker Solyndra, which went bankrupt after getting a taxpayer-backed loan guarantee of more than a half billion dollars through a stimulus program.
One of Solyndra’s lobbyists was K Street firm McBee Strategic, an epicenter of green stimulus lobbying. The firm’s founder, Steve McBee, was a former top aide to senior House appropriator Norm Dicks, D-Wash. Energy lobbyists told me that McBee crafted the stimulus provision that loosened lending standards for green-energy programs, thus paving the way for Solyndra’s guarantee. “We definitely were pretty involved in that,” a McBee spokesman told me at the time.
Another McBee client that got into trouble with green-energy stimulus money was Elon Musk, who gave the maximum $35,800 to the Obama Victory Fund $35,800.
One of Musk’s companies, Solar City, installs solar panels. Solar City was one of the biggest beneficiaries of the 1603 program, as its customers all got taxpayer money for buying solar panels. But investigators found something fishy about these subsidies.
Independent investigators at the Treasury Department launched an investigation into whether Solar City was inflating the price of its solar installations in order to get bigger tax credits.
Obama and friends bragged that the stimulus contained no earmarks, but that was a smokescreen. President George W. Bush’s Energy Department had begun and abandoned a clean-coal project called “FutureGen.” The stimulus legislation never named the Illinois project, but it set aside $1 billion for a program everyone understood to be FutureGen.
Obama’s partisans claim the stimulus helped the economy. It certainly helped companies like Solar City. It may have cushioned the impact of the recession.
But it also made one thing clear: Special-interest lobbying would be very lucrative in the Obama years.
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