The Washington Post reported today that officials in the Obama Energy Department successfully pressured Solyndra to delay layoffs that were planned for October 2010 until after the November 2010 mid-term elections.
Solyndra was preparing to make necessary job cuts in light of its difficulty generating revenue. Rather than allow the company to make a decision that would maximize its chances to eventually balance its books, Obama officials used their leverage to push Solyndra to make a decision that would jeopardize federal loan guarantees but avoid an embarrassing news story on the eve of an election.
Solyndra indeed held off announcing its job cuts. On the morning after the 2010 mid-term elections, Solyndra announced it would lay off 190 workers and close one of its factories. The Obama Energy Department rewarded Solyndra by thereafter giving the floundering company still more taxpayer dollars even though its ultimate fate was by then readily apparent.
Economists rightly speak about how government shouldn’t be in the business of picking winners and losers in the free market. As these latest revelations of political corruption regarding the Obama administration and Solyndra show, not only is government unqualified to pick winners and losers in the marketplace, but such decisions encourage government corruption as well.