Saturday Reads: Obama’s War on Old People, Solyndra-gate, and Violent Protest in Cairo

Good Morning!!

Things are getting so bad for President Obama that I almost feel sorry for him. The reactions to his speech last night are still coming in, and they aren’t all that great. Sure Krugman tried to sound a little enthusiastic, but he ended up damning Obama’s jobs plan with faint praise.

O.K., about the Obama plan: It calls for about $200 billion in new spending — much of it on things we need in any case, like school repair, transportation networks, and avoiding teacher layoffs — and $240 billion in tax cuts. That may sound like a lot, but it actually isn’t. The lingering effects of the housing bust and the overhang of household debt from the bubble years are creating a roughly $1 trillion per year hole in the U.S. economy, and this plan — which wouldn’t deliver all its benefits in the first year — would fill only part of that hole. And it’s unclear, in particular, how effective the tax cuts would be at boosting spending.

Still, the plan would be a lot better than nothing, and some of its measures, which are specifically aimed at providing incentives for hiring, might produce relatively a large employment bang for the buck. As I said, it’s much bolder and better than I expected. President Obama’s hair may not be on fire, but it’s definitely smoking; clearly and gratifyingly, he does grasp how desperate the jobs situation is.

But his plan isn’t likely to become law, thanks to Republican opposition.

Robert Reich applauded the President’s “passion,” but not the plan itself. Reich’s reaction to the Jobs plan:

$450 billion sounds like a lot – and is more than I expected — but some of this merely extends current spending (unemployment benefits) and tax cuts (in Social Security taxes), so it doesn’t add to aggregate demand.

The net new boost to the economy is closer to $300 billion. That doesn’t approach even half the gap between what the economy is now producing and what it could produce at or near full employment.

And much that $300 billion is in the form of temporary tax cuts to individuals and companies. Some of these make sense — enlarging the Social Security tax cut, extending it to employers, and giving small businesses a tax holiday for new hires.

But temporary tax cuts haven’t proven to be particularly effective in stimulating new spending in times of economic stress. People tend to use them to pay off debts or increase savings. Companies use them to reduce costs, but they won’t make additional hires unless they expect additional sales – which won’t occur unless consumers increase their spending.

That leaves some $140 billion for infrastructure – improving outworn school buildings, roads, bridges, ports, and so on. And $35 billion to help cash-starved states avoid more layoffs teachers. Both good and important but still small relative to the overall need.

Just exactly what Dakinikat has been telling us forever. And when The New York Times talked to employers about the plan, most said the tax cuts and credits would be welcome but would not stimulate new hiring until there is consumer demand for their goods and services. Again, exactly what we’ve been hearing from Dakinikat all along.

The saddest article I have seen about Obama’s jobs speech is Dana Millbank’s column from yesterday: The irrelevancy of the Obama presidency. According to Millbank, Congressional Republicans treated the speech as “a big, fat joke.”

“You should pass this jobs plan right away!” Obama exhorted. Sens. Bob Corker (R-Tenn.) and Lindsey Graham (R-S.C.) chuckled.

“Warren Buffett pays a lower tax rate than his secretary — an outrage he has asked us to fix,” Obama went on. Widespread laughter broke out on the GOP side of the aisle.

“This isn’t political grandstanding,” Obama said. Rep. Paul Ryan (R-Wis.) guffawed.

“This isn’t class warfare,” Obama said. More hysterics on the right.

“We’ve identified over 500 [regulatory] reforms, which will save billions of dollars,” the president claimed. House Majority Leader Eric Cantor (R-Va.) and Whip Kevin McCarthy (R-Calif.) giggled.

And according to Millbank, Democrats weren’t all that thrilled either.

In fact, the empty seats were on the Democratic side. Democrats lumbered to their feet to give the president several standing ovations, but they struggled at times to demonstrate enthusiasm. When Obama proposed payroll tax cuts for small businesses, three Democrats stood to applaud. Summer jobs for disadvantaged youth brought six Democrats to their feet, and a tax credit for hiring the long-term unemployed produced 11 standees….Rep. Jesse Jackson (D-Ill.) stared at the ceiling. Rep. Peter Welch (D-Vt.) scanned the gallery. Rep. Jim Moran (D-Va.) was seen reading a newspaper.

Before the speech, Joe Biden actually discussed golf with John Boehner! I really think this President is done. I suppose a miracle could happen and something could stop the train wreck, but I can’t imagine what it would be.

Maybe Obama should read Joe Conason’s article about how Rick Perry tried to privatize Medicaid in Texas and ended up “wasting millions and enriching lobbyists and hedge funds. Oh wait — maybe not. I think that’s probably what Obama wants to do with Social Security and Medicare.

Another problem facing Obama is the Solyndra Energy bankruptcy and investigation. As I wrote a few days ago, Solyndra is a solar energy company which received $535 million in federal loans from Obama’s stimulus plan. Many observers, including the CBO, questioned whether the loan was too risky, but the White House may have intervened to make sure it happened. One of Obama’s biggest donors, George Kaiser owns more than 30% of Solyndra. For some time, Republicans in the House have been asking for an investigation of the circumstances surrounding the loan, especially since the company went bankrupt last week. Now, in a new development the FBI raided Solyndra’s headquarters and today visited the homes of its corporate officers.

From Bloomberg:

An FBI raid on Solyndra Inc., a solar-panel maker that failed after receiving a $535 million loan guarantee from the U.S. Energy Department, may signal the escalation of a probe into the Obama administration’s clean- energy program.

Agents for Energy Department Inspector General Gregory Friedman, who has called the department’s clean-energy loan program lacking in “transparency and accountability,” joined in the search yesterday at the Fremont, California, headquarters of Solyndra, which filed for bankruptcy protection on Sept. 6.

Republicans critical of the program stepped up their attacks following the raid, and two House Democrats questioned the integrity of the company, indicating a potential political crisis for the president. A foundation headed by an Obama campaign contributor was a principal investor in Solyndra….

Friedman, a watchdog within the Energy Department, said in a March report that a lack of adequate documentation for loans “leaves the department open to criticism that it may have exposed the taxpayers to unacceptable risks associated with these borrowers.”

From the Wall Street Journal

The Federal Bureau of Investigation continued its probe into solar-panel maker Solyndra LLC on Friday by visiting the homes of President and Chief Executive Brian Harrison, as well as former executives and co-founders Chris Gronet and J. Kelly Truman, according to two people familiar with the situation.

Solyndra, which filed for bankruptcy earlier this week, is the target of an investigation into whether executives knowingly misled the Department of Energy to secure a $527 million loan guarantee, The Wall Street Journal reported. On Thursday, the FBI seized documents and computers from Solyndra’s headquarters in Fremont, Calif.

Harrison’s home wasn’t searched on Friday, but he was questioned, according to one person with knowledge of the matter. Harrison, who joined the company in 2010, after the loan was awarded, didn’t respond to a request for comment.

Gronet, Solyndra’s former CEO, didn’t respond to requests for comment. Truman, a former senior vice president at Solyndra, is currently president and chief executive of energy storage developer Deeya Energy. A person answering the phone at Deeya said, “He is not taking phone calls.”

I guess it’s a good thing for Obama that we suddenly heard about a terror threat yesterday, huh?

In other, completely unrelated news, a protest by thousands of people in Cairo “turned violent” yesterday.

A demonstration that brought tens of thousands to this city’s central Tahrir Square turned violent on Friday, when thousands of people — led by a heavy contingent of soccer fans — tore down a protective wall around the Israeli Embassy, while others defaced the headquarters of the Egyptian Interior Ministry.

About 200 people were injured in clashes with the police at the Israeli Embassy and 31 were injured near the Interior Ministry, the Ministry of Health said late Friday night. Protesters apparently had scaled the walls of the Israeli Embassy to tear down its flag.

Mustafa el Sayed, 28, said he had been among about 20 protesters who broke into the embassy. He showed a reporter video from a cellphone, of protesters rummaging through papers and ransacking an office, and he said they had briefly beaten up an Israeli employee they found inside, before Egyptian soldiers stopped them. He said the soldiers removed the protesters from the building, but let them go free.

By 11:30 p.m., about 50 trucks had arrived with Egyptian riot police officers, who filled the surrounding streets with tear gas. Witnesses said that protesters had set a kiosk on fire in front of a security building near the embassy, and that the police had fired rubber bullets to disperse the crowd from both buildings. In addition, a fire broke out in the basement of the Interior Ministry, but it appeared to have been started from the inside and not by the protesters surrounding the building. The fire was in a room believed to store criminal records.

Did White House Push for $535 Million Loan to Now Bankrupt Solyndra?

Obama visiting the Solyndra plant

Minkoff Minx highlighted this story earlier today, but I thought I’d expand on it a little bit. As Minx wrote earlier, Solyndra is a solar energy company that the Obama admnistration has hyped as an example of the potential of green energy technology to create jobs in the U.S. From the LA Times editorial page:

Solyndra was the first company to be awarded a federal loan guarantee under the stimulus, worth $535 million. Taxpayers are likely to end up on the hook for much if not all of that amount, a highly embarrassing development for President Obama because he was among the company’s biggest cheerleaders. He visited its Fremont plant in May 2010 even though PricewaterhouseCoopers had weeks earlier raised doubts about its plans for an initial public offering by questioning whether it could continue as a going concern.

That’s especially troubling because Solyndra is backed by one of Obama’s key fundraisers, George Kaiser of Tulsa. Congressional Republicans were raising alarms about Obama’s connections to Solyndra well before Wednesday’s announcement, with GOP members of the House Energy and Commerce Committee voting in July to subpoena documents from the Office of Management and Budget on the loan-guarantee decision.

Two important questions are raised by Solyndra’s failure: Should the government be in the business of picking winners and losers by providing loan guarantees to risky energy ventures? And is Obama using stimulus funds to reward his political contributors?

The Times says “yes” to the first question and “maybe” to the second, pending the results of the House investigation.

As the LA Times noted, questions were being asked about the Solyndra loan even before the bankruptcy announcement. Brian Ross and his colleagues at ABC News have also been looking into the White House connection.

ABC News and the Center for Public Integrity’s iWatch News first reported on questions about the choice of Solyndra for the loan in May after the Department of Energy disclosed it was being forced to restructure its loan package for the company, which was showing early signs of financial distress. One of Solyndra’s major investors was George Kaiser, an Oklahoma billionaire who raised between $50,000 and $100,000 for Obama during the 2008 election.

Following the ABC News and iWatch News reports, the House Energy and Commerce Committee opened their own investigation into the loan and into the Kaiser link, which Stearns office said in a statement “raised concerns that politics may have played a role in putting taxpayer dollars at risk making this loan guarantee.” ….

White House officials deferred ABC News’ request for comment on this report to the Department of Energy. There, officials told ABC News and iWatch News that it used objective factors in selecting Solyndra. The department released a statement Wednesday on its website blaming changing economics in the industry — including a major push by Chinese firms to drive down solar panel prices — for the company’s collapse along with two other domestic firms. According to the Energy Department, the price for solar products dropped 42 percent in 2011.

I don’t know why anyone would be surprised to learn that Obama was using government money to help his big donors. Isn’t that what he’s been doing with Wall Street since the fiscal crisis began? Even before he was elected, Obama whipped for TARP. If he hadn’t convinced members of the Congressional Black Caucus to vote for it, the bailout bill never would have passed. So now Republicans control the House, and they can’t wait to investigate.

House Energy Committee Chair Fred Upton (R-MI) sent a letter to the White House

which calls on the White House to turn over correspondence between administration officials, Solyndra and its investors….”How did this company, without maybe the best economic plan, all of a sudden get to the head of the line?” Upton told ABC News in an interview this week. “We want to know who made this decision … and we’re not going to stop until we get those answers.”

The White House denies any involvement in the approval of the loan, although members of the administration have enthusiastically and publicly praised it. Yet more neutral observers have been critical of the deal.

While Energy Department officials steadfastly vouched for Solyndra — even after an earlier round of layoffs raised eyebrows — other federal agencies and industry analysts for months questioned the viability of the company. Peter Lynch, a longtime solar industry analyst, told ABC News the company’s fate should have been obvious from the start.

“Here’s the bottom line,” Lynch said. “It costs them $6 to make a unit. They’re selling it for $3. In order to be competitive today, they have to sell it for between $1.5 and $2. That is not a viable business plan.”

Furthermore, OMB considered the loan to be “risky,” according to ABC News.

The White House’s Office of Budget and Management viewed the arrangement as a riskier bet to taxpayers than DOE had. That forced the government to set aside millions more in case of a default, iWatch reported last month.

I guess we’ll have to wait and see what happens, but I can only assume that Republicans in the House are going to be on this like white on rice. They hate Obama and they hate green energy.