Romney Didn't Pounce on the A123 Bankruptcy During the Debate. Here's Why.

By · October 17, 2012

Romney and Obama

Romney and Obama: A123 didn't become the political football it might have been.

In the first Presidential debate, Mitt Romney named both Fisker Automotive and Tesla Motors as green tech companies that President Obama had foolishly poured hundreds of millions of the taxpayers’ money. He pounced on Solyndra’s bankruptcy as proof the clean energy strategy wasn’t working. Given that, Romney would seem to have been handed a golden opportunity when, on the very morning of the second debate, Obama’s favorite battery company, A123, said it was filing for bankruptcy.

An Opportunity Missed?

Bloggers here and here touted the filing as ammunition for Romney. But the Republican hopeful didn’t mention A123 during the Long Island fisticuffs, or repeat his highly specific green tech attacks—despite Obama’s giving him repeated openings. What happened? My reading of the situation is that A123, as tempting as it might be as a target, cuts both ways politically.

A123 built two battery factories in Michigan with federal help, but they’re not being shut down. Instead, A123’s assets are being sold to battery giant Johnson Controls—an American company!—for $125 million. That follows A123’s flirtation with China’s Wanxiang Group, which had wanted to buy up to 80 percent of the company. One reason that deal—subject to approval from American regulators—soured was political objections from the likes of Senator Charles Grassley (R-IA). But even Grassley saw “something positive” in A123 going to Johnson Controls.

A Statement Instead

Conservative blogger Michelle Malkin urged Romney to hit hard on A123 in a tweet, and environmental site Grist seemed to think a mention of A123 was an inevitability. "During tonight’s second presidential debate, you will hear mention of A123. There’s no question of that," it said.

Romney held his fire, though he didn't totally ignore what happened at A123. His aide Andrea Saul described it in a statement as "yet another failure for the President's disastrous strategy of gambling away billions of taxpayer dollars on a strategy of government-led growth that simply doesn't work." But that statement, besides repeating the word "strategy" twice, wasn't heard by many millions during the debate. They did talk about the auto industry bailout, and here's video on that:



A123 got a $249.2 million grant from Obama, and drew down $132 million of it. But, clouding the picture, Republicans have given A123 money, too. George W. Bush awarded the company $6 million. And Romney’s home state of Massachusetts poneyed up a $5 million loan to the local company. Romney wasn’t personally involved in that deal, but as the Boston Globe points out, “[A] few weeks after taking office in 2003, Romney announced $9 million in grants for alternative energy companies, including Lowell solar cell maker Konarka Technologies Inc., which went bankrupt earlier this year.” Shades of Solyndra!

In total, Obama’s Department of Energy (DOE) made $2 billion in battery-related grants to 29 companies in 20 states, and most of them are doing well. Romney adds up Obama’s renewable energy awards as $90 billion. In the first debate he pointed to Obama’s next-generation energy loans and said that “about half of those companies have gone out of business,” which is quite an exaggeration. According to Annenberg’s FactCheck.org, only three of the 26 companies receiving loan guarantees in the program cited by Romney have filed for bankruptcy. The $90 billion includes a lot of things not related to solar and wind, including transit and grid-related investments—only $21 billion went for renewables.

Energy Department Worried

The DOE is quite concerned about A123 becoming a political football and sent me an email detailing that the company had received bipartisan kudos, including letters of support from Republicans, and adding that the firm’s nanotech-enhanced batteries won’t go out of production. Johnson Controls, the
DOE said, “is providing the funding needed to continue operations. In other words, the factories are going to keep producing batteries.”

One of A123’s customers, Smith Electric Vehicles, told me yesterday that it considers the switch to JCI a net positive.

In Tuesday’s debate, Obama took the offensive on energy, after sitting back and taking it on the chin in the first one. “We’ve got to control our own energy,” he said. “Now, not only oil and natural gas, which we've been investing in; but also, we’ve got to make sure we’re building the energy source of the future, not just thinking about next year, but 10 years from now, 20 years from now. That’s why we’ve invested in solar and wind and biofuels, energy-efficient cars….”

Energy Independence?

Romney didn’t jump on that, though he certainly could have. Instead, he hit hard on drilling for oil and gas, and digging coal in an effort to achieve “North America energy independence within eight years.” That rallying cry works great in politics, but it’s notoriously hard to achieve. Despite drilling most of our available reserves, we still import more than eight million barrels of oil a day and, like it our not, our top five trading partners still include both Saudi Arabia and Venezuela.

Given that the U.S. has only three percent of the world’s oil reserves, it would seem that our best hope for achieving gasoline dependence would be reducing demand for the stuff, but conservation doesn’t figure into Romney’s energy plan.

Comments

· · 1 year ago

Thanks for this article, Jim. Regarding so-called energy independence: this is an interesting subject that both political sides tend to over-simplify in these debates. Marketplace Radio did a feature on energy independence a few weeks back that explains it all very well. Note, about half way through the below linked transcript, the comment " . . . to escape future volatility, the trick to independence is not to get off foreign oil but oil, period." . . .

http://www.marketplace.org/topics/world/energy-independence-us-its-pipe-...

Although Obama wasn't able to satisfactory explain the volatile nature of gasoline prices addressed by the questioner last night, it was far more nuanced than the big push for more domestic drilling on public lands and the extension of the Keystone pipeline, as being espoused by Republicans. Oil is an international market and additional domestic drilling (certainly at the expense of environmental concerns) will do little to affect prices at the pumps.

· Bret (not verified) · 1 year ago

I love the finger-pointing picture. That's about how the whole debate went. There were certainly more acusations than solutions, from both candidates.

· Spec (not verified) · 1 year ago

I was surprised Romney pushed the $1.86/gallon line of attack. He knows better than that. Gas was at $4/gallon in 2007 and only dropped to sub $2/gallon for a short time in 2008 because of the world-wide financial meltdown that dried up demand. If Mitt Romney's plan is to get us cheap gas by causing another world-wide financial meltdown then please count me out.

· · 1 year ago

Spec, so you bought into the melt down line.

I love how it keeps going back to Bush, who cares. The last 4 years he had a Democratic controlled congress and senate but no one mentions that part.

· Spec (not verified) · 1 year ago

"Bought Into"? It is the truth! Do you deny oil hit $147/barrel in 2007 and gas went to $4/gallon in 2007? Do you deny there was a financial melt-down in 2008?

If you want to argue, you need to present an opposing case not just an insult.

· · 1 year ago

Here again, guys, the price of crude (and, as a result, what is paid at the pump by consumers) is something largely out of the hands of U.S. presidents. It's an international market and - to deflate the traditional Republican argument - isn't going to drastically change if we start drilling like mad and building new pipelines. All we'll end up doing then is wreck the environment that much sooner.

Here's another take on energy policy from last night's debate. The L.A. Times generally faults Romney for all of the above and Obama for not attempting to take on environmental aspects of his energy policy more forcefully . . .

http://www.latimes.com/news/opinion/opinion-la/la-ol-obama-romney-energy...

· · 1 year ago

Regarding the picture for this story, Bret, there's a certain Frank Sinatra and Sammy Davis Junior element to it . . .

http://www.youtube.com/watch?v=i-4uKgXRnpI&feature=related

Or . . . maybe they just spent the last 30 seconds scuffing their shoes against the carpet and are about to get some serious static electricity action going on between their index fingers.

:-)

· · 1 year ago

Spec, you definitely missed understood. I did not disagree with the stats I lived it like everyone else. But that was caused by out of control speculators hedging to make a buck. But to say Romney is going to create the same meltdown is pure conjecture.
The comment that the US only has 3% of the oil reserves is also a joke because it only includes reserves that have been drilled. It is a figure used to create a reaction. The truth is we do not know what the reserves are. Why because we have not been allowed to research and explore. Look it up.
Here is a fact in Virginia I was looking into an oil investment with a friend who opened an oil well and that well was starting to make money. He then wanted funding to start a second well in the same area. The government came in closed the well with no explanation. He and some others in the same area hired lawyers and sued. They cannot even get a hearing on it. He is out a bunch of money luckily it has not bankrupted him. He is paying a loan on the well and cannot even pump oil.
I like EV technology and think there is a future but when he Romney said the Obama administration has stopped drilling believe it. I have witnessed it.
However I will agree Romney made a poor example out of the oil prices.

· · 1 year ago

Oh I agree great pic of the two. I am hanging on to that one.

· · 1 year ago

I agree that it was a missed opportunity for Romney. R&D is one thing, but putting people's tax money into risky investments is irresponsible. Government hacks don't know anything about running a business. Obama has never even worked in the private sector.

· · 1 year ago

Yeah, those private sector guys are perfect. Except. of course, when nobody was watching them back in 1929 and again in 2008, when we had worldwide financial thermal meltdowns. Oh well . . .

· · 1 year ago

@Benjamin Nead:

Here again, guys, the price of crude (and, as a result, what is paid at the pump by consumers) is something largely out of the hands of U.S. presidents. It's an international market and - to deflate the traditional Republican argument - isn't going to drastically change if we start drilling like mad and building new pipelines. All we'll end up doing then is wreck the environment that much sooner.

It's actually worse than that. Currently WTI crude is about $92/bbl, but Brent is $113/bbl. That is, the "world price" is about $20/barrel higher than the US price. The main reason is pretty simple: the US is producing more crude oil than we can refine and use locally, causing a local oil glut that drives down the price here. Those new pipelines oil companies keep calling for are not intended to bring crude into the US, they're intended to push crude out, relieving the glut and driving up US prices to meet demand in the rest of the world.

There are complexities to this (it's really more about refined product than crude, Europe has plenty of gasoline but short of diesel and the US is the other way around, and so on) but the bottom line is that the push for pipelines is not so that US prices will drop, it's so that oil companies will make more money selling their oil at higher prices, causing US prices to rise.

Since I have a plug in hybrid, and drive mostly on electricity, I'm actually for this myself. :-)

· · 1 year ago

There is one huge difference between A123 an Solyndra as far as political football potential is concerned. First, Solyndra received loan guarantees and so it's bankruptcy represents a loss to tax payers. Since A123 was given a grant, the money is more of an investment in the technology and it's domestic production. With the sale to Johnson Controls, the technology and production are still domestic AND the government was able to successfully keep both out of the hands of our Chinese competitors. So, we got what we paid for and the story would run counter to Romney's dunderheaded narrative about Obama not getting tough on China.

Also, and maybe more importantly while Bain Capital is busy dismantling Sensata and shipping it and it's jobs to Chinese workers, trained by their US counterparts, all the while lowering the American flag so as not to offend the visiting Chinese, he probably needs to lay off things like Solyndra or A123. It will bite him in the ass, whatever that mental defective Michele Malkin thinks.

· · 1 year ago

LOL! just out Obama has a trust in Cayman islands just like Romney. If this is true - WOW! It is a part of his Illinoise trust but it is run out of the Cayman islands.

· · 1 year ago

@Nead, "Yeah, those private sector guys are perfect. Except. of course, when nobody was watching them back in 1929 and again in 2008, when we had worldwide financial thermal meltdowns. Oh well . . "

I have yet to see a government create wealth for its citizens, so, yes, private sector capitalism rules. Much of the 2008 meltdown was caused by the financial collapse of socialist governments.

· · 1 year ago

@TrasKY "With the sale to Johnson Controls, the technology and production are still domestic AND the government was able to successfully keep both out of the hands of our Chinese competitors. So, we got what we paid for and the story would run counter to Romney's dunderheaded narrative about Obama not getting tough on China."

Please tell me you don't really believe this. I would hardly call throwing money at a failed battery plant as sticking it to the Chinese. I guess you missed the part in the debate about the fake Apple Store selling knockoffs, currency manipulation, intellectual property ripoffs, etc.

How can you say we got our money's worth? This was suppose to be creating all these "green jobs", and it didn't. It went under, and another company bought some of the assets.

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