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Michelle Malkin
Michelle Malkin
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Eco-Scams Are as Easy as “A123”

Comment

While President Obama was busy lambasting Big Oil tax breaks on Thursday, yet another one of his environmental welfare recipients (the very kind he wants to redistribute oil subsidies to) was teetering on the edge of bankruptcy. Who needs to win the Mega Millions lottery? Start a pie-in-the-sky eco-boondoggle, and a half-billion-dollar jackpot ripe for squandering is all yours!

The Solyndra of the week is A123 Systems, an electric vehicle battery company based in Massachusetts. The firm also has battery plants in Michigan, where former Democratic Gov. Jennifer Granholm once heralded A123 as a federal stimulus "success story." Former House Speaker Nancy Pelosi visited the company headquarters and hailed it as a "great example of how Recovery Act funding is helping American companies." In addition to nearly $300 million in Obama Recovery Act funds, Granholm kicked in another $135 million in tax credits and subsidies to bribe the company to keep jobs in her state.

How's the return on government investment? This green dud will have taxpayers seeing red. A123's official company motto is "Power. Safety. Life." But the firm's reality is "Out of power. Endangering safety. Clinging to life."

Earlier this week, the company announced a recall of malfunctioning battery packs manufactured in Livonia, Mich. A123 makes the products for Fisker, Chevrolet and BMW electric cars. Consumer Reports flagged the potentially hazardous defect caused by faulty calibration earlier this month. The recall will cost upward of $55 million.

A Deutsche Bank analyst wrote: "We no longer have enough confidence that (A123) can raise sufficient capital (without massive equity dilution) and/or continue to augment their book to future business. Recent quality issues may lead to concerns over (A123's) ability to manufacture with quality at high volumes, potentially leading to customer defections or at least difficulty in procuring new contracts."

When it rains, it pours. The dead battery debacle follows news of 125 layoffs in November due to diminished vehicle production by top client Fisker Auto.

That troubled company (which A123 has itself dumped $20.5 million of stock equity and cash into) admitted faulty wiring problems with its electric cars.

While Michigan workers lost their jobs, Massachusetts executives burned through $155 million in cash this year and the company stock plummeted to just over $1. A123 lost a net $172 million over the first three quarters of 2011 and has yet to see a profit. Like Solyndra's top brass, A123 managers have been living high on the hog and partying it up with Democratic Party bigwigs.

The Michigan-based Mackinac Center reports that in February, "A123's Compensation Committee approved a $30,000 raise for (Chief Financial Officer David) Prystash just days after (its primary customer) Fisker Automotive announced the U.S. Energy Department had cut off what was left of its $528.7 million loan it had previously received."

Prystash's hike was 8.5 percent, taking his base salary from $350,000 to $380,000. One A123 vice president, Robert Johnson, received a 20.7 percent pay increase that saw his salary grow from $331,250 to $400,000. Another vice president, Jason Forcier, vice president of the automotive solutions group, climbed from a $331,250 base salary to $350,000.

Analyst Paul Chesser of the D.C.-based National Legal and Policy Center raises pointed questions about the timing of the pay raises: "Were their actions intended as greater protection for their executives in the case of a sale or bankruptcy of the company?" Inquiring House GOP investigators looking into the Obama Department of Energy's big green boondoggles should want to know.

And taxpayers should want to know more about the cozy ties between A123 and the White House and Democratic politicians. A123 Systems CEO David Vieau showered Barack Obama, the Democratic National Committee and key Democrats on Capitol Hill with nearly $17,000 before receiving the stimulus injection. A123 enviro-boodle also flowed to Mass. Sen. John Kerry and Rep. Ed Markey. Betting on "smart grid" cronyism has been a bonanza for the well-connected — and a big, bad bet for taxpayers.

Michelle Malkin is the author of "Culture of Corruption: Obama and his Team of Tax Cheats, Crooks & Cronies" (Regnery 2010). Her e-mail address is malkinblog@gmail.com.

COPYRIGHT 2012 CREATORS.COM



Comments

9 Comments | Post Comment
Oh my GOD, they gave Obama $17,000, how much super pac has Romney, Gingrich, and Santorum gotten, What favors are expected if any of them win, or is the donation just a gift?
Pot calling Kettle
Comment: #1
Posted by: Bloom Hilda
Thu Mar 29, 2012 5:46 PM
$435 million blown by the end of the second paragraph. No wonder the government is broke.
Comment: #2
Posted by: Tom
Fri Mar 30, 2012 4:37 AM
I'm sick of having the government keep interfering in business with their loans and subsidies that waste taxpayer money. If an idea is good, the economy will produce it on its own. We have ipads, big screen TVs, life saving medical equipment, and all this other good stuff because they were good ideas and companies produced them. On the power front, scientists are developing a new type of nuclear reactor that consumes nuclear waste. How awesome is that? When alternative energies are affordable and ready to be developed, the market will produce them. Government needs to butt out of bussiness.
Comment: #3
Posted by: Chris McCoy
Fri Mar 30, 2012 7:01 AM
Re: Tom

Tom, Tom, I've been looking for you, glad to see you are OK, I know you dodged my question about how the average welfare recipient makes 37K plus a year, tax free. I asked for numbers and facts to back up your statement, you hid out to avoid standing by your statement. Now that I know you are OK, let's hear it. Please show the figures that prove that the average welfare recipient makes 37K plus a year, tax free.....

Drum roll, Please
Comment: #4
Posted by: Bloom Hilda
Fri Mar 30, 2012 7:10 AM
Great article Michelle, just another example how whatever the government touches they screw up. That is what happens when we trust a bunch of elitist, corrupt, incompetent, fools who haven't the slightest clue about business.
Comment: #5
Posted by: Thetruth
Fri Mar 30, 2012 7:43 PM
music to my ears
Comment: #6
Posted by: john bauer
Sun Apr 1, 2012 5:42 AM
I disagree with President Obama because in my opinion, it's ok for government to subsidize what may be "the future" when times are booming. When times are such as these, we should be tightening our belts. I also disagree with Republicans willing to continue subsidizing the oil industry. How can we continue to subsidize any industry when we have so much debt? Do you realize, if we go to war with one of China's allies we'll have to borrow money from China to pay for it???????????
I'm a proponent of Eco friendly anything, but at this juncture we seem to be heading for an Eco friendly environment in a bankrupt country. I supported Simpson/Bowles and supported the grand deal President Obama and John Boehner reached but which was stonewalled by the 83 uncompromising Republicans and Norquist. Let's fix our financial house and make the obvious and the difficult cuts, then look at subsidies when we are on the way to paying down this astronomical debt. In the meantime, let those private entities with the means and interest subsidize the future because it seems they have no interest in paying down the debt, created by them, of the past.
Comment: #7
Posted by: Steve
Sun Apr 1, 2012 7:30 AM
Steve's comment get an A+
Comment: #8
Posted by: Chris McCoy
Mon Apr 2, 2012 6:54 AM
There's another step to many of these publicly-subsidized "green" scams that Michelle left out. A lot of these companies are publicly traded. When they get these big federal loans and grants, they tout the news, which drives their stock price up. Potential investors see the government's participation as a "seal of approval."

Then, just before the inevitable crash, the original investors (typically the corporate officers) dump their shares and cash out, pocketing huge profits. The taxpayers, along with more recent investors, are left holding the bag.
Comment: #9
Posted by: Jeff Gunn
Mon Apr 2, 2012 11:51 PM
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