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Originally Posted by Fionn mac Cumh
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Headlines are interesting. There have been several times I've clicked on a headline on FB or some news/blog site and found that the headline was misleading.
This headline, too, is misleading. "Solyndra Program Vilified by Republicans Turns a Profit." It's interesting, and misleading, the use of the word "Solyndra," as though Solyndra itself turned a profit. Most politically well read people understand and know that Solyndra was an abysmal failure.
Solyndra was crony capitalism coupled with "moronic" mismanagement and a terrible product which no one wanted. obama donors connected to Solyndra won a sweetheart deal from the energy department and promptly blew it.
Had it been donors of a Republican president who got a deal, the Democrats would have protested just as much -- and rightly so! Change the D to an R, change the name Kaiser for Koch and the Democrats would have just as outraged.
Also, as usual with any party in power, the numbers are fuzzy and inaccurate.
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But, according to a respected economist and experienced Washington budget hand, these numbers are misleading.
In a blog post Monday, Donald Marron, a former acting director of the Congressional Budget Office and director of economic policy at the nonpartisan Urban Institute, wrote that taxpayers are losing more money in financing the clean-energy program than they are getting back in interest on the loans. Yes, the government has collected $810 million so far, and indeed it may collect about $5 billion in interest on loans over the next two decades or so -- which is more than the amount the government expects to lose on loans like Solyndra's that go bad.
But, that's not the whole story. "It’s technically true, but tells you nothing about profits," Marron writes.
Let's look at the math. To finance the Energy Department's loans, the Treasury Department borrows money from global investors by issuing bonds. The loans to clean-energy companies were at rates only slightly above what the Treasury paid to borrow. Thus, while the interest that the Treasury collects is substantial, the Treasury itself will pay close to the same amount in interest to global investors.
When you add the administration's $780 million in losses on Solyndra and other firms to the interest Treasury pays bondholders, it's almost certainly more than the $810 million in interest the government has collected from successful borrowers like Tesla and Ford, Marron writes.
Relative to the massive scale of the loans, the program is close to breaking even either way, but there's still a difference between profit and loss.
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Marron actually likes the programs, and believes they've done well to curb carbon emissions; however, he'd like a little honesty from the administration.
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"These programs are making losses. They're costing us money," he said. "We should be open and honest about that."
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