Earlier this month, Solyndra, the solar panel company that received $535 million in federal loan guarantees and was touted as the symbol of President Barack Obama’s “green jobs” initiative, declared bankruptcy and had its offices raided by the FBI.
The failure of a company Obama described as “a true engine of economic growth” has raised obvious questions about the advisability of risking taxpayer money on such endeavors. But presidential surrogates have countered by arguing that failure is merely a natural byproduct of progress.
“The reason why fledgling, cutting-edge industries need this kind of assistance is because they can be high-risk as well as high-reward,” White House Press Secretary Jay Carney said. He also observed, “What happened here is an investment did not pan out.”
Last Wednesday, two administration officials appearing before the House Energy and Commerce committee, which is investigating the Solyndra loan, made a similar case.
Yet back in 2005, when Obama was in the U.S. Senate fighting President George W. Bush’s efforts to reform Social Security in the Senate, he offered a much different perspective on risk.
“Part of what the president calls an ownership society is really a society in which we do not have social insurance and each of us are on our own, managing risks and returns in the free marketplace,” Obama explained at an appearance at the National Press Club. “There’s a proud lineage to such thinking. I just happen to think it’s wrong.”
During the 2008 campaign, Obama said that Bush-style Social Security reform “would gamble the retirement plans of millions of Americans on the stock market.”
In reality, the Bush proposal didn’t involve government gambling taxpayer money. It gave younger workers the option of investing a portion of their payroll taxes in personal accounts, choosing among investment funds rather than random stocks.
But Obama’s comments have fresh meaning in the wake of the Solyndra scandal, and provide insight into what he and his fellow liberals consider appropriate risk.
Obama thinks it is OK for government to risk taxpayer money on business ventures that he deems worthy of investment. But he’s outraged at the suggestion that younger Americans be allowed to have more control over the allocation of their own tax dollars.
This derives from the liberal belief that a central authority run by experts will spend money intelligently (in the case of Solyndra, by jump-starting alternative energy), whereas individuals will act irresponsibly if left to their own devices (in the case of Social Security reform, by blowing their retirement on personal accounts).
Experience teaches us differently. Like many failed government ventures before it, Solyndra was a case where ideologically driven geniuses doled out money to a well-connected company despite repeated red flags that its business model was fatally flawed.
And Social Security is insolvent even though government experts have hiked the payroll tax rate that finances the program 20 times since its inception.
Beyond acknowledging this reality, a free society should recognize the moral distinction between individuals putting their own money at risk, and government bureaucrats playing venture capitalists with taxpayer dollars.
Philip Klein is a senior editorial writer for The Washington Examiner.