Cronyism Chronicles: Obama's DOE Playing Political Favorites

Jan 09, 2013

The Washington Post reports that two start-up electric car companies "sued the U.S. Department of Energy, claiming Secretary Steven Chu and his federal agency awarded money to politically-favored firms and strung along their firms and others in a 'fixed' race for federal funds."

They continue:

The two lawsuits filed in federal court by the fledgling San Francisco companies echo what has become a familiar complaint since 2010 and throughout the presidential campaign: that the Obama administration's signature investment of tens of billions of dollars in the clean energy industry frequently benefited companies who were backed by the president's campaign donors and political allies.

The Department of Energy denies that any of these claims are true, asserting that all of the energy loans and grants were "decided on the merits" of the vying companies.

Yet, there is ample reason to believe otherwise. For example, the $25 billion Alternative Technology Vehicle Manufacturing Loan Program has already loaned $8.5 billion of its authorized funds to five companies, with the "lion's share" going to Ford Motor Co. "Two companies that won $1 billion in loans, Tesla Motor and Fisker Automotive, have come under scrutiny because their investors or advisers were prominent Obama political donors and supporters."

And it gets worse:

Fisker last year halted its plans to manufacture in the United States, after the department froze its funding due to missed deadlines. The company's fate, and whether taxpayers will recover the $193 million it spent in federal funds, remains in question.

The law suit calls out defendants Chu and other agency personnel for fixing the loan program to "advance the businesses and political interests of government cronies," making loans "only to companies with political clout, contributions and influence-peddling patrons."

Moreover, it is not as though this type of political favoritism is an isolated incident. The article adds:

Two separate Congressional investigations into a related clean-energy loan program found politics were often a consideration in the timing of decisions and in handling applications, and that some staff felt political pressure to rush decisions on funding particular companies. Records obtained in the probe show staff discussing how the president's most senior advisers, including Vice President Biden, expressed keen interest in specific applicants.

At the moment, apparently, we cannot definitively say that cronyism was at play here, but if it was it wouldn't be the first time. Last year, there was a Congressional hearing to expose "further details on just the kind of political maneuvering that was going on between the Obama Administration and beneficiaries of Department of Energy (DOE) loan guarantees."

Obama's DOE just doesn't have the best track record. And honestly, statements issued from the DOE aren't the most effective fig leaf.

To be clear, we don't want to suggest that any investment made by the federal government is a prudent one, or one that will be worthwhile for that matter. But this lawsuit is dripping with irony. With his penchant for meddling in the free market and pushing green technologies on the American people before they're viable, President Obama is getting what he asked for with this lawsuit.