Occupy Wall Street Should Protest Crony Capitalism
If the Occupy Wall Street movement is really motivated to stop corporate greed and corruption it would focus on President Obama and his tight circle of crony capitalists, who have looted the public treasury under the guise of promoting clean energy. The problem plaguing our economic system is crony capitalism, not capitalism.
The government bailouts outraged Americans from all political persuasions and ignited the Tea Party movement but those unfortunate events are history.
What’s even more outrageous is President Obama followed the episode of Wall Street, auto company bailouts, and funding of clean energy initiated by President Bush with a $787 billion economic stimulus that funneled massive amounts of public funds to private businesses, many of which have close political ties to the president.
The tens of billions of tax dollars allocated for clean energy turned into an orgy of big business special interest group politics that has spectacularly failed to create meaningful job growth.
The high profile bankruptcy of solar panel maker Solyndra brought national attention to cronyism associated with the clean energy stimulus. Billionaire George Kaiser – an Obama donor and fundraising bundler for the president – was a key investor in the failed clean energy venture that resulted in a $535 million loss of taxpayer money.
ABC News recently reported that a $529 million loan from the Energy Department was used to back an electric car company, Fisker Automotive, that is creating jobs in Finland and not in the U.S. The loan announced in 2009 to Fisker Automotive was part of the Energy Department’s Advanced Technology Vehicles Manufacturing (ATVM) loan program that was initiated during the Bush administration.
The loan to Fisker Automotive financially benefited Al Gore and his billionaire venture capital business partner John Doerr, who is a member of President Obama’s Council on Jobs and Competitiveness and a big political donor to Democrats. Al Gore and John Doerr are partners in the venture capital company Kleiner Perkins Caufield & Byers (KPCB).
Fisker Automotive was not the only company in which KPCB’s financial interest overlaps with Obama’s clean energy push. Silver Spring Networks, a company that is involved in developing the smart electricity grid, also benefited from the stimulus money. According to the New York Times, of the $3.4 billion in smart grid grants awarded by the Energy Department, “more than $560 million went to utilities with which Silver Spring has contracts.”
Outrageously, General Electric – a major recipient of the government’s bailout effort during the stock market meltdown in 2008 – is also cashing in under CEO Jeff Immelt by using taxpayer money to boost the company’s investment in renewable energy.
GE was saved because it borrowed $16 billion from the Federal Reserve and the company took advantage of a Federal Deposit Insurance Corporation program that guaranteed its debt allowing the company to borrow money at lower rates. Under the latter plan GE issued $74 billion in short and longer-term debt.
After being rescued by taxpayers, General Electric dove into Obama’s clean energy money pit. According to Recovery.gov, GE has received over $126 million in grants and contracts from the stimulus plan, including a $31 million grant from the Energy Department for research on gas turbines that has been estimated to have created about 31 jobs.
Political access certainly has its privileges. Immelt serves as the chairman of President Obama’s Council on Jobs and Competiveness, where panel participants have the opportunity to leverage their position to advance their respective business interests.
"Taking Action, Building Confidence," a report just released by the jobs panel, makes five recommendations to spur job growth. The first initiative, "Invest Aggressively and Efficiently in Cutting-Edge Infrastructure and Energy," calls for additional government support to back the country's energy infrastructure through a federal financing institution to amplify clean energy investments.
Translation: In the wake of the failures of the government to function as a venture capital company, Obama’s jobs advisors are looking for even more money from taxpayers to back their business ventures.
Doubling down on government support of clean energy exposes the desperation of the sector’s dependence on government subsidies for its survival. Reliance by a business on the government for its very existence is not capitalism.
When the government enters the marketplace and picks winners and losers with cash infusions it leads to marketplace distortions and political shenanigans from a feeding frenzy of lobbyists and the politically-connected.
Crony capitalism existed before President Obama’s inauguration, but it has greatly accelerated under his watch. The answer, regardless of which political party runs Washington D.C., lies with smaller government.
Today, the Tea Party movement is challenging crony capitalism and its envoys, including President Obama and CEOs such as Immelt.
If the Occupy Wall Street movement is seriously concerned about representing the 99 percent, it should too.
Tom Borelli is director of the National Center for Public Policy Research's Free Enterprise Project.