By Carol D. Leonnig, Joe Stephens and Alice Crites
With trips that began two months after he took office, President Obama has devoted more than half of his out-of-town private-business visits to promoting a single industry: clean technology, which the president says will lead the nation back to economic prosperity.
His praise for renewable-energy projects has been effusive. A day after this year’s State of the Union address, he stood among workers at a small Wisconsin lighting company and dubbed it a “model for the future,” helped by government incentives offering a “leg up to renewable-energy companies.”
He praised workers for “helping to point the way” to a cleaner future while visiting a Charlotte company that makes an electric-car battery component. In Reno, Nev., in April, he lauded a start-up for “growing by leaps and bounds” as it markets a machine that converts waste heat into electricity.
He used similar words a few weeks ago at a Durham, N.C., company that makes energy-efficient lighting, saying it is “helping to lead a clean-energy revolution.”
In all, Obama has visited 22 clean-tech projects on 19 separate trips, all emphasizing economic recovery and a $90 billion stimulus program to promote energy independence. The president has underscored his support by singling out specific companies in speeches and White House radio addresses.
Obama’s unwavering focus has helped him fulfill a campaign pledge to push clean tech, from solar energy and wind power to electric vehicles. But it also has come with political exposure: By emphasizing a sector in which the risks are high, the president has prompted questions on Capitol Hill and from industry about the wisdom of his singular strategy and his political ties to some of the companies chosen for federal attention.
The oil and gas industry, for example, has invested billions in energy innovation and job creation and could benefit from similar presidential attention, said Martin J. Durbin, executive vice president of the American Petroleum Institute.
“He’s missing an incredible opportunity he has to join with us to make a difference in economic growth, job creation, national security and clean technology,” Durbin said. “If you went and added up the number of jobs at these clean-tech companies he visited, in all honesty, I think you’re going to find a very modest number of jobs.”
This month, a congressional energy subcommittee chairman accused the administration of picking clean-tech “winners and losers” by pouring government money into a sector best determined by free-market forces.
Republicans and outside critics also have honed in on the political connections of some companies that have received federal help. The most attention has focused on Solyndra, a Silicon Valley solar company that ran into financial trouble after receiving a $535 million federal loan guarantee commitment. Last week, Republicans on the House Energy and Commerce Committee pressed the Office of Management and Budget to account for its role in the selection. Obama visited Solyndra’s factory in May 2010, only weeks after it became public that independent auditors had questioned whether it could remain a “going concern.”
Some of the biggest investors in Solyndra, which makes easy-to-install solar panels, were venture capital funds associated with Tulsa billionaire George Kaiser, a key Obama fundraiser. Rep. Cliff Stearns (R-Fla.), chairman of the Energy and Commerce Committee’s subcommittee on oversight and investigations, said he is “concerned that there was a hurry to get this money out of the door and that companies and individuals that supported the president were among the beneficiaries.”
Obama was scheduled to visit California for a political event when Solyndra’s communications director, David Miller, called the White House to ask that a factory tour be added to his itinerary.
The White House already knew about the ambitious start-up, which had won an Energy Department commitment for a $535 million federal loan guarantee, the first awarded under the stimulus plan. Guarantees make it easier for companies to secure private financing at lower interest rates and assure lenders that a loan will be covered by taxpayers if a recipient defaults.
Energy Secretary Chu flew out for a Solyndra factory groundbreaking, and Vice President Biden’s image was beamed to the ceremony through a video feed.
After Obama’s visit was scheduled, waves of Secret Service agents, military communications crews and White House advance teams descended on Solyndra. When the president strode onto the factory floor, the mood was festive as the crowd listened to him praise what he said were Solyndra’s plans “to hire a thousand workers.”
“The future is here,” Obama said.
Buoyed by government confidence, Solyndra planned an initial public stock offering expected to raise $300 million. Its largest investors were venture capital funds associated with Kaiser, the Tulsa oil executive who served as a major Obama fundraiser in 2008 and who has been a frequent White House visitor.
But just weeks before Obama’s arrival, the company released sobering news from independent auditors evaluating its public offering plan. PricewaterhouseCoopers said Solyndra’s losses and negative cash flow raised “substantial doubt about its ability to continue as a going concern.” The report, covered by financial media, added to doubts on Wall Street.
Solar analyst Ramesh Misra, who works for the investment firm Brigantine Advisors, was skeptical about Solyndra’s signature product. Its solar panels are composed of an array of glass tubes that are expensive to produce, causing investment advisers to question whether the product could compete with less-expensive Chinese models. Misra, who has no financial interest in Solyndra or its rivals, questioned the administration’s decision.
“To think they could compete on any basis, that took a very big leap of faith,” Misra said.
“Solyndra stands out,” agreed Robert Lahey, an analyst with Ardour Capital who added that he thinks the government took a substantial risk in backing Solyndra.
A month after Obama’s visit, the company withdrew its public offering plans. A few weeks later, congressional auditors announced that Energy Department had given favorable treatment to some loan-guarantee applicants. A Government Accountability Office report found that the department had bypassed required steps for funding awards to five applicants, including Solyndra. The GAO did not publicly identify those five in its report; the Energy Department asked that some information about companies be excluded asbusiness sensitive.
“Contrary to the GAO report, the department met every requirement for the Solyndra transaction,” an Energy Department spokesperson said, adding that all reviews were completed before any taxpayer money was obligated.
Solyndra announced in November that it would close its older factory and reduce its workforce by 127 people. Plant expansion plans were put on hold.
This year, the Energy Department’s inspector general criticized the agency for not maintaining e-mails discussing selections of loan-guarantee winners, and the House Energy and Commerce Committee, led by Rep. Fred Upton (R-Mich.), began investigating Solyndra’s selection. At a hearing last week, Republicans criticized the Office of Management and Budget for not answering questions and suggested that they may resort to subpoenas. â€¦
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