Sunburned: Solyndra & Its Critics

Across the country critics of the Obama administration’s multimillion-dollar support for Northern California’s Solyndra solar panel factory are railing against government stupidity. How is it possible, they ask, that federal and state governments could have invested hundreds of millions of taxpayer dollars in a company that went belly up? Why didn’t the officials take more precautions, do more research, put in place more safeguards? How could they have been so dumb and so wasteful of precious government dollars?

But really, what the conservative Obama critics are saying is that the federal government and states such as California and Wisconsin that invested millions in the company should have had more bureaucratic red tape. Yes, that most hated of terms, “red tape” is something that could have actually prevented a huge loss of government dollars in an unwise investment.

Extreme right-wing conservative Wisconsin Congressman Paul Ryan said it well in an article this week on Fox.com:

. . . Loan guarantees were pushed out the door with great haste and the company was given a decided leg up on their competitors that lacked the political capital that Solyndra enjoyed . . .The federal government’s job is . . . to make and enforce clear rules of the road so that markets are fair, transparent and competitive.

Yes, in the face of the failed Solyndra investments, Congressman Ryan is arguing that part of the problem is that there was not enough government review and evaluation –  i.e., bureaucracy and red tape – of the Solyndra deal to make sure that it was a wise investment of taxpayer dollars.

As someone who’s spent  nine years as a public official, as a member of the board of commissioners of the Los Angeles Community Redevelopment Agency (CRA), I know a lot about bureaucracy. I have presided over the investment of billions of taxpayer dollars and creation of hundreds of economic development deals. I have seen my share of red tape. On some occasions, I have left a CRA meeting feeling badly for a particular developer who had to jump through so many hoops to get a good deal approved. But most of the time, I have left those meetings feeling pressured to agree to things that did not have enough black-and-white safeguards in place to protect the public interest.

Meaning, by and large, like Congressman Ryan, I think that our government needs to put in place more protections, more evaluation, more remedies — yes, more red tape.

Part of the problem with public investment in private economic development in this country is that wealthy companies like Solyndra are allowed to spend millions of dollars on lobbyists to pressure government officials to move deals faster, without a lot of thought put into clearly defined contractual provisions protecting the public interest in case the deal goes bad. True, this means time put into drafting boring contracts, looking into deadly dull financial viability assessments, remedy provisions, indemnity protections, all of those crucial things that make an economic development deal a sound investment for scarce public dollars.

But it’s most often conservatives rather than liberals that – in my many years of experience – put the pressure on public officials like me to eliminate the so-called red tape and to move projects faster, sooner (should have been done yesterday!), before all of the appropriate evaluation and vetting have been done. Conservative politicians are the ones who most often don’t care about things like good return on investment, enforceable community benefits, well-drafted contracts, good clawback provisions or enforceable remedy plans. They just want the deal done.

Another part of the problem is that conservatives have put pressure on local, state and federal government departments to cut processing and planning staff — exactly those kinds of people whose jobs exist to make sure that our investment decisions are made with forethought and good sense.

So the next time a developer or political leader complains to me about too much red tape, I’m going to take a red pen, write on my hand, and then hold it up for all to see: “Remember Solyndra!”