Congress, Not Steven Chu, Is To Blame for Solyndra

This morning, Energy Secretary Steven Chu was grilled by the House Energy and Commerce Committee over his role in the ongoing Solyndra debacle. In September 2009, the California-based solar panel manufacturer received a $535 million loan guarantee from a stimulus-funded green bank operated by the Department of Energy. Last September, Solyndra declared bankruptcy, and now taxpayers are on the hook for almost a half billion dollars. Lawmakers on the Energy and Commerce Committee want to lay responsibility for this fiasco at the feet of Secretary Chu, but they have misidentified the perp. In fact, the Congress has only itself to blame.

This is not to say that Secretary Chu is faultless. His stewardship of the stimulus-funded green bank was rash. From the outset, the Energy Secretary intended to rush money out the door, which is conducive to fiscal mismanagement. Two weeks after the creation of the green bank, Secretary Chu promised to “start cutting checks” within months, despite the fact that the Department of Energy was essentially creating an investment bank from scratch.

Secretary Chu’s need for speed, however, wasn’t enough for Members of Congress. In September 2010, the Senate Energy and Natural Resources Committee held a hearing decrying the supposedly languid pace of loans from the Energy Department’s green bank. A month before that, Senate Majority Leader Harry Reid (D-NV) bemoaned that, “They [the Department of Energy] have been, in my opinion, very, very slow in putting that money out.”

Reid is a Democrat, but this wasn’t a partisan matter. By the fall of 2010, there was widespread understanding—on both sides of the aisle—that the Department of Energy’s green bank wasn’t disbursing loans fast enough. If there’s one thing Republicans and Democrats can agree on, it’s the need to spend taxpayer money in their districts, post haste. As was noted by Rep. Henry Waxman at today’s Energy and Commerce hearing, the Energy Department received over 500 letters from Members of Congress on behalf of loan guarantee applicants (presumably constituents).

A year ago, the bipartisan “solution” for getting loans issued faster was to…wait for it…remove taxpayer protections! Under the 1990 Federal Credit Reform Act, the Office of Management and Budget plays an important part overseeing federal loan guarantees. A year before Solyndra imploded, Republicans and Democrats alike blamed the OMB for the slow pace of loans by the Energy Department. At the aforementioned September 2010 Senate Energy and Natural Resources Committee Hearing, Sen. Richard Burr (R-NC), “urge[d] my colleagues to join with me in making sure that we overcome the obstacles, not just of this Administration at OMB, but every Administration at OMB (hearing transcript, p 4).” He was seconded by Sen. Byron Dorgan (D-ND), who said, “I think it is the case and it’s a fair point some of you have made that trying to move things through OMB is a little like walking through wet cement (ibid, p 63).” After the hearing, Energy and Natural Resources Chairman Jeff Bingaman (D-NM) told Greenwire (subscription required) that, “As far as I can tell from the testimony today they [OMB] are a significant part of the problem.” Of course, in the wake of the Solyndra debacle, Members of Congress have ceased demanding for less oversight of federal loan guarantees.

While it’s true that Energy Secretary Steven Chu was fast and loose in issuing green energy loans, it’s also true that the Congress wanted him to be even faster and looser. Lawmakers appropriated the money, right? So how can Secretary Chu be faulted for doing their bidding?