Cronyism, Corruption, and the “War on Terror”

The partisan furor surrounding the collapse of solar equipment manufacturer Solyndra, a Fremont, Calif. firm which secured a $535 million government loan from the Energy Department, underscores congressional hypocrisy when it comes to widespread cronyism and corruption.

The Washington Post reported that “The Obama White House tried to rush federal reviewers for a decision on a nearly half-billion-dollar loan to the solar-panel manufacturer Solyndra so Vice President Biden could announce the approval at a September 2009 groundbreaking for the company’s factory, newly obtained e-mails show.”

According to Post stenographers Joe Stephens and Carol D. Leonnig, those “August 2009 e-mails released exclusively to The Washington Post,” shorthand for a controlled leak by Republican staffers, “show White House officials repeatedly asking OMB reviewers when they would be able to decide on the federal loan and noting a looming press event at which they planned to announce the deal.”

In response to White House pressure, “OMB officials expressed concern that they were being rushed to approve the company’s project without adequate time to assess the risk to taxpayers, according to information provided by Republican congressional investigators.”

Solyndra, a poster-child for the administration’s PR campaign to expand “green jobs” was part of Obama’s lifeless “stimulus package” which White House flacks argued would ameliorate unemployment through tax cuts and other perks to corporations in the wake of the on-going economic meltdown.

“It was alarming,” Frank Rusco, a program director at the Government Accountability Office, told The New York Times.

GAO auditors found “Energy Department preliminary loan approvals–including the one for Solyndra–were granted at times before officials had completed mandatory evaluations of the financial and engineering viability of the projects.”

“They can’t really evaluate the risks without following the rules,” Rusco said.

But in Washington, the well-connected follow their own rules so it was hardly surprising that Solyndra executives hired Washington lobbyists in early 2009, retaining McBee Strategic Consulting.

“Five lobbyists employed by the McBee group eventually worked on Solyndra’s behalf,” the Times disclosed, “including Michael Sheehy, a former top aide to Representative Nancy Pelosi of California, the House Democratic leader. Solyndra has paid McBee Consulting $340,000 since 2009.”

However, despite intense pressure to approve the loan the firm’s business model in the highly-competitive solar energy market was flawed from the get-go.

Although the unique design of their solar panels may not have relied on silicon, and executives assumed their “competitors would continue to pay a relatively high price for silicon, allowing Solyndra to charge the premium required to turn a profit,” industry experts “outside the federal government, going back to 2008, were predicting silicon prices were headed for a steep fall.”

Between 2008 and 2009 when the loan was approved, sinking demand for solar energy as a result of the economic crisis, drove down the price of silicon from more than a $1000 a pound to less than $100 in the twinkling of an eye.

Despite high-profile investors, loan guarantees, a new factory, and frankly a better made, more efficient product, Solyndra was forced to sell its panels well-below production costs, seriously wounding the company.

Taxpayers and laid-off workers were left holding the bag.

Factor in the collapse of the commercial and home real estate markets, the dearth of new factory construction, and allegations of “unfair-trade complaints against China for out-sized subsidies to its clean-energy companies,” Bloomberg News averred, and the entire renewable-energy sector was in deep trouble.

“China provided $30 billion in credit to its biggest solar manufacturers last year, about 20 times the U.S. effort, Jonathan Silver, executive director of the Energy Department’s loan program, told a congressional panel Sept. 14,” Bloomberg reported.

The former socialist republic, which learned a lesson or two from other Asian “tigers” and the United States for that matter when it came to development, “frequently provides both zero-cost financing, occasionally free land and other kinds of incentives and subsidies” to its wind and solar companies, Silver told Congress.

The problem is not that the Chinese state subsidizes manufacturing but that the United States refuses to do so. Witness the near hysteria by rightist troglodytes over modest efforts by the federal government to construct a network of high-speed bullet trains across the United States.

Grifters in Congress, academia and the business press however, in thrall to Reaganite fantasies of “free trade” and “free markets” are willfully blind to the historical role played by the American state, and it was hardly an “invisible” one, in directing national priorities and resources during the period of rapid industrialization.

As readers are well aware, Antifascist Calling does not carry water for the Obama administration, a government as duplicitous as the previous Bush regime. However, there is more than a hint of a manufactured scandal by congressional Republicans over the Solyndra affair. While political blood sport may titillate Washington pundits, something far more sinister than a questionable loan is going on here.

In fact, the targets of the Republican attack machine are two-fold: discredit any government efforts to boost the industrial sector while disparaging renewable energy entirely as a potential, albeit weak threat, to the multinational energy conglomerates who provided 77% of their $18.8 million in campaign contributions to the GOP, according to OpenSecrets.org.

Contrast congressional market fundamentalist zeal here with their deafening silence when it comes to the heavily-subsidized U.S. “defense” industry, where mammoth cost overruns and mega-profits for the Military-Industrial Complex are factored in to the acquisition of weapons systems which have cost the American people trillions of dollars in investments elsewhere.

Deepening Crisis

That Solyndra went belly-up and filed for bankruptcy protection last month, laying off nearly 1,100 workers, is another sign that the global crisis which eviscerated productive sectors of the economy, continues to have disastrous effects for the vast majority of Americans.

As the World Socialist Web Site reported, “census bureau figures that came out Tuesday, showing the largest number of Americans living in poverty since records began in 1959, are a damning indictment of American capitalism and the entire political system.”

The manufacturing sector, long the staple of a healthy economy, has undergone a major transformation since the 1970s. As U.S. firms, challenged by stiff competition from their capitalist rivals, sought to lower costs and increase shrinking profit margins, jobs were offloaded to low-wage platforms.

Yankee corporations however, that fled offshore to hide their assets and dodge taxes in so-called “free trade” and other “special” industrial zones where high productivity and low labor costs were guaranteed by repressive, U.S.-allied comprador regimes, made out like proverbial bandits.

As a result, entire industries withered and died, and large swathes of America’s industrial heartland were transformed into economic dead zones.

Those corporatist chickens, demented stepchildren of neoliberal globalization, have now come home to roost.

“In 2010 there were 46.2 million people–almost one out of every six residents–living below the official poverty line, including 16.4 million children,” socialist critic Jerry White wrote. “Of these nearly half, or 20 million, were described as living in deep poverty, subsisting on less than half the income the US government says is needed for basic food, shelter, clothing and utilities.”

Contrast deepening levels of poverty with administration moves to secure a “settlement” with financial elites who profited on both ends of the 2007-2008 crisis. Their reckless, and fraudulent, credit default swaps and brisk trade in worthless mortgage-backed securities have cost American taxpayers trillions of dollars with no end in sight.

But as New York Federal Reserve board member Kathryn Wylde told The New York Times, “Wall Street is our Main Street–love ‘em or hate ‘em. They are important and we have to make sure we are doing everything we can to support them unless they are doing something indefensible.”

As the World Socialist Web Site noted, “In the name of the free market, they slashed taxes on the corporations and the rich, deregulated industry and the banks and backed a corporate offensive against the jobs and living standards of the working class.”

And despite the fact that “corporations and the banks are now sitting on a cash hoard of $2 trillion,” said economic gangsters are “refusing to hire any workers,” thus exacerbating the crisis for average workers through unemployment, wage deflation and the loss of basic social benefits while boosting profits.

In his latest iteration as a “fighter” for “ordinary Americans,” Obama’s budget director told The New York Times that the president’s new “deficit-reduction plan” would impose “a lot of pain,” cutting some $320 billion from Medicare and Medicaid.

That proposal would impose higher premiums and deductibles for beneficiaries while slashing payments to “teaching hospitals and rural hospitals” as well as charging “co-payments to frail homebound older people who receive home health services,” the Times reported.

Under the plan the federal government would also “reduce the growth of federal payments to states for treating low-income people under Medicaid,” effectively telling older citizens and the poor, “hurry-up and die,” the mantra of “libertarian” Tea Party loons who view the lack of affordable health care as “the price of freedom.”

Meanwhile, Obama’s Air Force Secretary Michael Donley “signaled the service is ready for a fight and vowed to ‘protect’ most big-ticket hardware programs from steep budget cuts,” including the cost-overrun-plagued F-35 fighter program, The Hill reported.

As well, Donley “placed the multibillion-dollar effort to develop a new bomber aircraft on his don’t-cut list” saying, “developing the ‘long-range strike family of systems,’ including the new bomber, is essential.”

According to the Secretary, accepting cosmetic reductions in the bloated “defense” budget will mean “we will need to accept greater risk,” if by “risk” Donley means shaving a penny or two off the share price of the largest defense corps.

Grifter’s Ball

The Troubled Assets Relief Program (TARP) enacted by the Bush regime in 2008, and supported by then-candidate Obama and the Democrats, followed by 2009’s American Recovery and Reinvestment Act, the so-called “stimulus package,” were rushed through Congress under crisis conditions allegedly to “save the economy.”

In practice however, both legislative edicts were fantastic boondoggles that rewarded “too-big-to-fail” investment banks that brought on the crisis in the first place while shortchanging foreclosed homeowners and tens of millions of laid-off workers.

A so-called “stimulus” that disavowed any direct creation of jobs by government action, such as massive spending on public works and infrastructure repair as was done during the Great Depression, was doomed to fail.

This failure is borne out by an official unemployment rate of 9.1% with some 14 million people looking for work. However, the government’s broader, and more accurate index of the jobs crisis, which measures those who either stopped looking for work or are involuntary part-time workers rose to 16.2% in August, a staggering 25.3 million people.

As economist Michael Hudson observed: “From the outset in 2009, the Obama Plan has been to re-inflate the Bubble Economy by providing yet more credit (that is, debt) to bid housing and commercial real estate prices back up to pre-crash levels, not to bring debts down to the economy’s ability to pay. The result is debt deflation for the economy at large and rising unemployment–but enrichment of the wealthiest 1% of the population as economies have become even more financialized.”

How has this played out in the real world?

Marxist economist Richard Wolff wrote scant weeks before Solyndra’s collapse: “As demand for goods and services shrank fast, businesses and the rich stopped investing in production. Their investible funds were idled, and that only aggravated the crisis. The self-regulating, efficient capitalist market system proved to be the myth its critics had mocked. However, the market system did spread the US crisis quickly to Europe and beyond.”

“The bailout of casino capitalists vested a new ruling class with $13 trillion of public IOUs (including the $5.3 trillion rescue of Fannie Mae and Freddie Mac) added to the national debt,” Hudson noted. “The recipients have paid out much of this gift in salaries and bonuses, and to ‘make themselves whole’ on their bad risks in default to pay off.”

“An alternative,” Hudson wrote, “would have been to prosecute them and recover what they had paid themselves as commissions for loading the economy with debt.”

The result of these reckless policies are plain as day: from rising unemployment to collapsing infrastructure, and from a steady rise in home foreclosures to increased levels of immiseration, Bush-Obama policies have benefited those who wield real power in the capitalist world: the financial oligarchs and militarists who prospered from the bailouts and “War on Terror” military spending.

But the “government could have used its equity ownership and control of the banks to provide credit and credit card services as the ‘public option’,” Hudson noted. In other words, rather than bailing-out the fraudsters, the state could have invested public funds in programs that actually benefit the public, a novel idea rejected out of hand as “socialist tinkering.”

However, Hudson averred, “this is not the agenda that the Bush-Obama administrations chose. Only Wall Street had a plan in place to unwrap when the crisis opportunity erupted.”

“Stockholders were bailed out, counterparties were saved from loss, and managers today are paying themselves bonuses as usual,” Hudson wrote. “The ‘crisis’ was turned into an opportunity to panic politicians into helping their Wall Street patrons.”

But the bailouts did far more than merely enrich the thieves, it actually exacerbated the global meltdown.

“As the crisis flared in 2008,” Wolff observed, “governments unfroze credit markets by pouring money into tottering banks and insurance companies. Governments printed and created new money to pay for part of these policies; to cover the other part governments borrowed.”

And whom, pray tell, were the American people’s new creditors? Why “the banks and insurance companies they had bailed out” of course! “Governments,” Wolff wrote, “also borrowed from the companies and rich individuals who had withheld investing in the production of goods and services and had thereby worsened the crisis.”

Is this a great system, or what!

Ponzi Republic

Not a single top executive of any Wall Street firm has been prosecuted by the federal government for their crimes. Take Goldman Sachs as a prime example, a firm which journalist Matt Taibbi memorably described as “a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.”

As McClatchy News investigative reporter Greg Gordon revealed, on the cusp of the housing bubble’s collapse, “Goldman Sachs Group peddled more than $40 billion in securities backed by at least 200,000 risky home mortgages, but never told the buyers it was secretly betting that a sharp drop in U.S. housing prices would send the value of those securities plummeting.”

Those fraudulent deals “enabled the nation’s premier investment bank to pass most of its potential losses to others before a flood of mortgage defaults staggered the U.S. and global economies.”

“Only later,” Gordon wrote, “did investors discover that what Goldman had promoted as triple-A rated investments were closer to junk” and that “pension funds, insurance companies, labor unions and foreign financial institutions that bought those dicey mortgage securities are facing large losses.”

Taibbi recounted last spring for Rolling Stone that the Senate Subcommittee on Investigations mammoth 650-page report, Wall Street and the Financial Crisis: Anatomy of a Financial Collapse, supplied “a panoramic portrait of a bubble era that produced the most destructive crime spree in our history–‘a million fraud cases a year’ is how one former regulator puts it.”

“But the mountain of evidence,” Taibbi wrote, “collected against Goldman by [Senator Carl] Levin’s small, 15-desk office of investigators–details of gross, baldfaced fraud delivered up in such quantities as to almost serve as a kind of sarcastic challenge to the curiously impassive Justice Department–stands as the most important symbol of Wall Street’s aristocratic impunity and prosecutorial immunity produced since the crash of 2008.”

Contrast Justice Department inaction regarding Goldman Sachs, including ignoring potential perjury by Goldman’s CEO Lloyd Blankfein as Taibbi and other investigators revealed, with their zeal to lower the boom on Solyndra.

In connection with the company’s Chapter 11 bankruptcy filing, the FBI “executed a search warrant” on the firm September 8, the Los Angeles Times reported, “but declined to discuss what they were investigating. FBI spokesman Peter D. Lee said documents related to the search had been sealed.”

This is the same secret state agency that is curiously indifferent to far-larger grifts run by the big money boys. Keep in mind, this is the Justice Department satrapy waging covert war against the antiwar movement, illegally spying on Muslim-Americans, ginning-up phony “terror” plots through their employment of paid informants and provocateurs while allowing real terrorists, such as the network which assisted the 9/11 plotters as The Miami Herald recently disclosed, run wild in Florida. Yes, that FBI!

“Republicans,” the Los Angeles Times observed, “have seized on Solyndra’s downfall as a sign that President Obama’s stimulus and ‘green jobs’ campaign were failures.”

“They have also noted that key Obama backer George Kaiser was a major investor in Solyndra, the first company to receive a Department of Energy loan guarantee to boost alternative energy companies.” But then again, so was Madrone Capitol, a private equity fund affiliated with the powerfully-connected Walton family of Wal-Mart fame, long-time GOP supporters.

Kaiser, a Tulsa, Okla. billionaire and head of The George Kaiser Family Foundation, “holds about 35.7 percent of Solyndra, according to a company filing with the Securities and Exchange Commission. Kaiser made 16 visits to the president’s aides since 2009, according to White House visitor logs,” Bloomberg News reported.

A “bundler” for Obama’s 2008 presidential bid, Kaiser raised somewhere between $50,000 to $100,000 for the campaign and contributed some $2,300 personally, according to the Federal Election Commission. What Bloomberg fails to report however, is the more than $7.5 million in campaign contributions made over the last decade by the Walton family to the Republican party and assorted right-wing causes.

While evidence of irregularities may suggest that Solyndra executives were less than forthcoming in their application for federal loans, and that well-connected billionaire donors to the president’s campaign may have helped tip the scales in their favor, their behavior, and potential losses to taxpayers, pale in comparison to the far larger, and more damaging, crimes of Wall Street con artists who continue to thumb their noses at the public and evade justice.

Crony Capitalism Gone Wild: The ‘War on Terror’

While Republican bag men for the superrich point to the Solyndra scandal, and there is something fishy going on here, as evidence of corruption in the White House, the fact is, Obama, like every president who occupied the Oval Office before him, is a wholly-owned creature of the ruling class.

Never mind that Team Obama recently abandoned plans to beef-up national air quality rules to reduce the emission of cancer-causing chemicals in smog. That move followed an intense lobbying campaign by polluters in the chemical, mining and petroleum sectors and their bipartisan congressional pets who alleged that the $90 billion price tag would “kill American jobs.” Or that the “environmental president,” in a course reversal sure to have oil industry executives jumping for joy, will soon approve plans to build the Keystone XL pipeline that will carry mega-polluting Canadian tar sands oil to Gulf Coast refineries.

And never mind that the White House, the Republican-controlled House and the Democratic-controlled Senate are conspiring against the American people to gut Social Security, Medicare and Medicaid through a congressional Supercommittee whilst continuing to bailout financial jackals to the tune of some $13 trillion, even as the Securities and Exchange Commission blithely shredded thousands of incriminating documents that let the gangsters off the hook as Rolling Stone revealed in August.

And of course, pay no attention to the expansion of the imperialist Empire’s endless wars and occupations, its extension of outsourced “War on Terror” CIA torture programs into Somalia, or that the Obama administration, as The Washington Post recently reported “is assembling a constellation of secret drone bases for counterterrorism operations in the Horn of Africa and the Arabian Peninsula,” the on-going assault on civil liberties here in the heimat or mounting evidence that the provocateurs who murdered nearly 3,000 people on 9/11 may have been given a leg up by U.S. secret state agencies as they prepared to slam hijacked passenger airliners into buildings.

What partisan hacks in both corporatist political parties will never acknowledge, let alone investigate or prosecute, are orders of magnitude greater, “War on Terror” boondoggles. Two examples:

• The National Security Agency’s multibillion dollar fiasco, Trailblazer. As The Baltimore Sun revealed, the firm that NSA chose to head the project, Science Applications International Corporation, “forged close ties to several key defense and intelligence agencies, including the NSA. Among those who have served on SAIC’s board of directors are former NSA Director Bobby Ray Inman; former CIA Directors John M. Deutch and Robert M. Gates; and former Defense Secretaries Melvin R. Laird and William J. Perry.” As investigative journalist Tim Shorrock pointed out for CorpWatch, “SAIC is deeply involved in the operations of all the major collection agencies, particularly the NSA, NGA and CIA. SAIC, for example, managed one of the NSA’s largest efforts in recent years, the $3 billion Project Trailblazer, which attempted (and failed) to create actionable intelligence from the cacophony of telephone calls, fax messages, and emails that the NSA picks up every day. Launched in 2001, Trailblazer experienced hundreds of millions of dollars in cost overruns and NSA cancelled it in 2005.” Indeed, the Sun’s exposure of SAIC’s shoddy work on the project, as journalist Jane Mayer disclosed in The New Yorker, led Obama’s Justice Department to prosecute whistleblower Thomas Drake, not those responsible for ripping off taxpayers or standing-up illegal driftnet spying programs. Congressional action? Zero, but SAIC walked away with the money and continues to be rewarded by the secret state and now ranks No. 6 on Washington Technology’s “Top 100″ list of largest government contractors with some $5.1 billion in Defense Department contracts.

• The Department of Homeland Security’s Secure Borders Initiative or SBInet, a failed project to construct a “virtual electronic fence” along the border with Mexico. When DHS finally pulled the plug earlier this year, SBInet’s lead contractor, Boeing Corporation, held contracts valued between $2 and $8 billion according to estimates by the Government Accountability Office. Boeing is a major “War on Terror” beneficiary, clocking-in at No. 3 on Washington Technology’s “Top 100″ list, with some $8.4 billion in revenue largely from the Defense Department. As the CIA’s torture flight “booking agent,” Boeing subsidiary Jeppesen Dataplan, Inc. profited handsomely from illegal Agency programs that secretly kidnapped and transferred “terrorist” suspects to foreign prisons and CIA “black sites.” Victims who tried to litigate their claims against Jeppesen in the federal courts were rebuffed by Obama’s Justice Department which asserted bogus “state secrets privilege” claims, alleging that litigating cases involving CIA kidnapping and torture would endanger “national security.” In 2008, the GAO determined that there were “significant problems” with deployed technologies. Designed to detect a “target” with radar and then use video cameras to locate illegal entries, GAO investigators found that the radars were “too slow” and were often triggered by rain and “other weather phenomena.” Information derived from sensors were to be forwarded to “command centers” where a “common operating picture” would be compiled by Customs and Border Patrol analysts and shared with other agencies. The so-called “common operating picture” would appear on computer screens as a geospatial map where “border entries” could be tracked in “real time.” Despite congressional criticism, DHS Secretary Janet Napolitano said in January 2011, that the agency would be redirecting funding originally intended for SBInet “to a new border security technology effort.” At the time of this writing, Boeing gets to keep the boodle already doled out and will soon rake-in even more. Last month, Defense Systems reported that Boeing’s Phantom Ray, a jet-powered drone that can cruise at more than 600 miles per hour at 40,000 feet, is in the running to secure multibillion contracts for the Pentagon’s next generation fleet of killer robots. “Key to its intended role,” Defense Systems informed us, “the Phantom Ray can carry up to 4,500 pounds of ordinance, extra fuel and/or sensors in its payload bays. The bays are large enough to accommodate two 2,000 pound Joint Direct Attack Munition satellite guided bombs.” There’s no word yet from the Phantom Ray’s intended targets–Somali herders and Afghan and Pakistani villagers–what they might think about Boeing’s latest technological marvel.

What lessons can we learn from the examples cited above? Not many, if we rely on corporate media.

As part of capitalism’s manufactured “debt crisis,” the Associated Press reported that the Aerospace Industries Association (AIA), a Washington, D.C. lobby shop which represents America’s Military-Industrial-Security Complex, claimed that cuts to the bloated “defense” budget “would have a devastating impact on a defense industry.”

To meet the challenge, AIA has launched their “Second to None” campaign and a related web site. According to industry flacks, which include usual suspects BAE Systems, Boeing, General Dynamics, L-3 Communications, Lockheed Martin, Northrop Grumman, Raytheon and dozens more, “American leadership in aerospace and defense is being threatened by forces in Congress and the administration. The security of our troops, our technological future and our economic stability are all at risk. We must preserve jobs across the nation that keep our nation strong. Join us and act now before it is too late.”

Though there’s little chance AIA’s dire predictions will come to pass, alarmism sells particularly when the target audience are members of Congress.

As the bipartisan congressional Supercommittee prepares to gut the social safety net while leaving imperialism’s war budget virtually untouched, an investigation by Alternet and Salon revealed that “when it comes to the military budget,” Democrats “have received far more money from Pentagon contractors than [Arizona Senator Jon] Kyl or any of their Republican colleagues on the panel.”

“Since 2007,” investigative journalist Nick Turse wrote, “Democrats on the supercommittee have received more than $1 million in defense industry donations, while contributions to the Republicans added up to only $321,000.”

Indeed, “panel co-chair Sen. Patty Murray … has received more defense industry dollars over that period than the combined total of the top four Republican recipients on the supercommittee. Even so, her haul from the Pentagon’s weapons-makers isn’t the largest by a panel Democrat, a distinction held by her colleague from South Carolina, James Clyburn.”

“An analysis of official government data paints a disturbing picture of big money, cozy relationships and potential influence that, alongside a concerted lobbying effort by the Pentagon and its powerful defense contractors, makes substantial reductions to the Department of Defense’s budget improbable and steeper cuts to entitlement programs, like Medicare and Medicaid, more likely.”

“Before Thanksgiving,” Turse notes, “Clyburn and his supercommittee colleagues will be forced to make a clear decision for cuts to programs like Medicare and Medicaid or the type of budgets that have resulted in nearly $8 trillion in national security spending since 2001.”

Any bets on which way the axe will fall?

By the way, what was that $500 million loan flap to Solyndra about?

Tom Burghardt is a researcher and activist based in the San Francisco Bay Area. His articles are published in many venues. He is the editor of Police State America: U.S. Military "Civil Disturbance" Planning, distributed by AK Press. Read other articles by Tom, or visit Tom's website.