The Washington Examiner brings us marvelous news from the frontiers of Obamanomics, as we learn “a heavily subsidized solar company received a U.S. taxpayer loan guarantee to sell solar panels to itself.”
First Solar is the company. The subsidy came from the Export-Import Bank, which President Obama and Harry Reid are currently fighting to extend and expand. The underlying issue is how Obama’s insistence on green-energy subsidies and export subsidies manifests itself as rank corporate welfare.
Here’s the road of subsidies these solar panels followed from Perrysburg, Ohio, to St. Clair, Ontario.
First Solar is an Arizona-based manufacturer of solar panels. In 2010, the Obama administration awarded the company $16.3 million to expand its factory in Ohio — a subsidy Democratic Gov. Ted Strickland touted in his failed re-election bid that year.
Five weeks before the 2010 election, Strickland announced more than a million dollars in job training grants to First Solar. The Ohio Department of Development also lent First Solar $5 million, and the state’s Air Quality Development Authority gave the company an additional $10 million loan.
After First Solar pocketed this $17.3 million in government grants and $15 million in government loans, Ex-Im entered the scene.
In September 2011, Ex-Im approved $455.7 million in loan guarantees to subsidize the sale of solar panels to two wind farms in Canada. That means if the wind farm ever defaults, the taxpayers pick up the tab, ensuring First Solar gets paid.
But the buyer, in this case, was First Solar.
You see, St. Clair Solar, the Canadian company buying those solar panels, was itself a wholly owned subsidiary of First Solar. They collected both Ohio and national subsidies to produce solar panels, which they purchased from themselves with a foreign subsidiary… collecting more federal subsidies through the Export-Import Bank in the process.
But don’t worry, it’s okay, because they paid sales taxes on the transaction. Yes, a First Solar spokesman really said that.
Timothy Carney of the Washington Examiner explains this kind of nonsense makes a mockery of the Export-Import Bank concept, which is supposed to assist American companies against foreign competitors. Instead, Obama’s cronies at First Solar raided the Ex-Im bank in precisely the same way Enron did:
This week, First Solar unloaded its St. Clair wind farm to NextEra Energy, and so First Solar’s financial troubles don’t threaten to put the taxpayer on the hook for this deal. But the Ex-Im subsidy itself was a great case in point as to how national industrial policy pitched in the name of helping the U.S. economy often does nothing to help the broader economy, instead helping only those companies lucky — or politically connected — enough to get the handouts.
Obama, Reid and most of the Republican leadership want to reauthorize Ex-Im this month and boost the amount of debt it can have outstanding. The lobbyists at Boeing, the Chamber of Commerce and the National Association of Manufacturers agree. They’ll claim Ex-Im is crucial to prosperity. And for a few companies, it is.
Obamanomics is all about piling up subsidies until they collapse into black holes. Unlike real black holes, Obama’s budget-blasting policies are not “sustainable” at all.
Update: I received an email from Ted Meyer, VP of Communications for First Solar, who takes exception with the Tim Carney piece at the Washington Examiner and offers the following response:
After reading Tim Carney’s column, “Firm sells solar panels – to itself, taxpayers pay,” or the summary on this blog, readers might assume that First Solar sold panels to itself, and that taxpayer money was at risk. Neither is true. Though Ex-Im Bank did originally propose a financing arrangement to support the export of solar panels from our 1,250-worker Ohio factory to the project in Canada, the transaction recently closed without Ex-Im financing. No taxpayer money was involved.
The owner of the solar panels, and the Canadian project they were exported to, is one of the world’s leading renewable energy investors, NextEra. And while Carney implies this was a hasty transaction, it was announced in 2010 (http://investor.firstsolar.