Americans have heard all about how the Obama Administration gave a $535 million loan guarantee to the now-bankrupt solar company Solyndra, but details are emerging about others who have won a windfall on the taxpayers’ dime. The latest example? President John F. Kennedy’s nephew, Robert Kennedy, Jr., who secured a $1.4 billion bailout for his company, BrightSource, possibly through political connections.
The details of how BrightSource managed to land its ten-figure taxpayer bailout have yet to emerge fully. However, one clue might be found in the person of Sanjay Wagle.
Wagle was one of the principals in Kennedy’s firm who raised money for Barack Obama’s 2008 presidential campaign. When Obama won the White House, Wagle was installed at the Department of Energy (DOE), advising on energy grants.
From an objective vantage point, investing taxpayer monies in BrightSource was a risky proposition at the time. In 2010, BrightSource, whose largest shareholder is Kennedy’s VantagePoint Partners, was up to its eyes in $1.8 billion of debt obligations and had lost $71.6 million on its paltry $13.5 million of revenue.
Even before BrightSource rattled its tin cup in front of Obama’s DOE, the company made it known publicly that its survival hinged on successfully completing the Ivanpah Solar Electrical System, which would become the largest solar plant in the world, on federal lands in California.
The report comes just as Energy Secretary Steven Chu is set to testify before Congress on the Obama Administration’s energy subsidy program. Despite Solyndra’s failure and intense criticism of the program, Chu still defends it, as NPR reports:
The government should play a role in this because it’s a competitive world out there. Other countries are helping their companies. In order to even just level the playing field, the U.S. government should play a role.
Heritage’s Nick Loris, though, says these kinds of loan guarantees promote crony capitalism and should be scrapped:
There are two kinds of companies that seek loan guarantees: (1) those that are economically uncompetitive, and (2) those that can be competitive. The former need loan guarantees to stay alive. But as we’ve seen with Solyndra, even they will eventually fail. For those that can be competitive, loan guarantees are nothing more than handouts that pad their bottom lines. Neither case can be justified.
Read more about how and why Congress should eliminate these subsidies in Loris’ paper, No More Energy Subsidies: Prevent the New, Repeal the Old.