The Great Green Obama Scandal! Brace yourselves!

GOP's Issa engaged in oversight.

Joe Nocera at the NYTs on the GOP-led investigation into a failed solar panel manufacturer, Solyndra, which originally was given the green light for government loans by the Bush administration. The federally-guaranteed loan materialized after Obama took office, with the new administration's support of green energy innovation:

The company’s recent bankruptcy — which the Republicans are now rabidly “investigating” because Solyndra had the misfortune to receive a $535 million federally guaranteed loan from the Obama administration — was largely brought on by a stunning collapse in the price of solar panels over the past year or so. The company’s innovative solar panels, high-priced to begin with, became increasingly uncompetitive in the marketplace. Solyndra didn’t have enough big commercial customers to create the necessary economies of scale...

The purpose of the hearing — indeed, the point of manufacturing a Solyndra investigation in the first place — is to embarrass the president. That’s how Washington works in the modern age: the party out of power gins up phony scandals aimed at hurting the party in power.

Undoubtedly, the Solyndra “scandal” will draw a little blood: there are some embarrassing e-mails showing the White House pushing to get the deal done quickly so it could tout Solyndra’s green jobs as part of the stimulus package.

But if we could just stop playing gotcha for a second, we might realize that federal loan programs — especially loans for innovative energy technologies — virtually require the government to take risks the private sector won’t take. Indeed, risk-taking is what these programs are all about. Sometimes, the risks pay off. Other times, they don’t. It’s not a taxpayer ripoff if you don’t bat 1.000; on the contrary, a zero failure rate likely means that the program is too risk-averse. Thus, the real question the Solyndra case poses is this: Are the potential successes significant enough to negate the inevitable failures?

I have a hard time answering “no.” Most electricity today is generated by coal-fired power plants, operated by monopoly, state-regulated utilities. Because they’ve been around so long, and because coal is cheap, these plants have built-in cost advantages that no new technology can overcome without help. The federal guarantees help lower the cost of capital for technologies like solar; they help spur innovation; and they help encourage private investment. These are all worthy goals.

To say “no” is also to cede the solar panel industry to China, which last year alone provided some $30 billon in subsidies for its solar industry. Over all, the American solar industry is a big success story; it now employs more people than either steel or coal, and it’s a net exporter.

But solar panel manufacturing — a potential source of middle-class jobs, and an important reason the White House was so high on Solyndra, which made its panels in Fremont, Calif. — is another story. Not so long ago, China made 6 percent of the world’s solar panels. Now it makes 54 percent, and leads the world in solar panel manufacturing. Needless to say, the U.S. share of the market has shrunk. The only way America can manufacture competitive solar panels is to come up with innovative technologies that the Chinese can’t replicate. Like, for instance, Solyndra’s.

At the hearing on Friday, several of the Republican congressmen boasted that, in passing the continuing resolution to keep the government running the day before, they had succeeded in slashing the program that had made the loan to Solyndra. It’s true: of the $4 billion that remained in the program, $1.5 billion was cut.

But the real winner isn’t the American taxpayer or even the House Republicans. It’s the Chinese solar industry.

The GOP is intent on playing politics and engaging in demagogy with the Solyndra failure, rather than learning how better to target investment to build the domestic solar industry and keep it competitive. At this stage of development, the government should be playing a constructive role and assist the growth of our green, solar energy sector like...uh...the Chinese government is doing for their own.  A New York Times article on the changing solar industry earlier this month noted that:

Really the reason that countries like China are able to sell product at lower cost is they have cheaper access to capital," because of government investments.

Incentives from the U.S. government might be hard to hold on to and gaining new ones all but impossible with the partisan battles in Congress over spending and "green jobs."