I'm reading Peter Schweizer's excellent new book Throw Them All Out, which details how politicians ranging from Nancy Pelosi to John Boehner to John Kerry to Dennis Hastert use their political positions to massive advantage in trading stocks. And how politically connected fat cats such as Warren Buffett and George Soros use their access to lawmakers to swing sweetheart deals, stimulus dollars, and government-loan guarantees their way. The book is an appallingly thoroughgoing and transpartisan expose of crony capitalism as it is practiced today.
Over at Big Goverment, Schweizer talks about how green energy tycoon Robert F. Kennedy Jr. has gotten his knickers in a twist over claims that his "politically-connected solar company called Brightsource (of which Mr. Kennedy's firm is the largest investor) landed a sweetheart billion-dollar plus taxpayer-guaranteed loan." RFKjr calls Schweizer a "sock puppet" for "Big Oil."
What has been so remarkable to me with the reaction to the book is the incredible disconnect between those on the inside getting these deals and those of us on the outside watching the rich getting rich with our money. I think the vast majority of people had no problem with the late Steve Jobs getting fabulously wealthy. He simply provided products and services people wanted. But those getting richer courtesy of our money and special loans? People are sick of it.
The bottom line is that Brightsource Energy got a sweetheart deal and it did so thanks to political connections. This is a company that admittedly has huge problems.
Kennedy never disputes that Brightsource got the money, nor that a former Principal at his firm, Sanjay Wagle, was a fundraiser for Obama and went to work in the Department of Energy's alternative energy grant program after the 2008 election. Nor does he dispute that Brightsource admitted in filings with the Securities and Exchange Commission (SEC) that the Ivanpah project is highly risky, or that Brightsource is in financial trouble. (The company is $1.8 billion in debt, had total revenue of just $13.5 million in 2010 and ran an operating loss of $71 million.) The company openly admits that its technology may not perform as planned and that it faces technological challenges. It's also curious to note on the SEC filing (on page 42 linked above) that Brightsource is spending almost six times as much on "marketing, general and administrative" costs than research and development. And more than twice in those areas than it is spending on project development. Does this sound like a company that could survive without taxpayer money?…
Mr. Kennedy wants to do is divert us from the real scandal: the green energy program that he has advocated for is socialism for the super-rich. Wealthy investors likes Kennedy and his partners try to portray themselves are disinterested parties who are trying to help the environment and our country, but they have a stake in the game….
Schweizer concludes by discussing the old "Baptist-Bootlegger" coalitions that formed around alcohol prohibition and noting that folks such as RFKjr have managed a neat trick: By being both sanctimonious greens and politically connected entrepreneurs, they are simultaneously Baptists and bootleggers.