Green stimulus crony government mooch profiteer Musk comes under IRS scrutiny
Green stimulus crony government mooch profiteer Musk comes under IRS scrutiny
Vice President Biden snickered during last week's debate at the suggestion there was waste, inefficiency or cronyism in the 2009 stimulus bill.
If he can stop cackling for long enough, Biden, the self-proclaimed "stimulus sheriff" should sit down with the IRS officials and the federal inspector general who are investigating a solar company owned by leading Obama donor and subsidy recipient Elon Musk.
Musk, as he cashes in on his solar investment by taking his company SolarCity public this month, had to make an awkward admission in his financial filings with the Securities and Exchange Commission.
The Internal Revenue Service is auditing SolarCity, the SEC filings reveal, and at the same time the Treasury Department's inspector general is investigating the company. The question at hand: Did President Obama's Treasury Department inappropriately give stimulus money to Musk's company.
Obama's stimulus transformed a long-standing tax credit for renewable energy investment into a direct grant from Treasury, worth 30 percent of a company's investment in a renewable project. Musk's company has applied for approximately $325 million in these stimulus grants, according to the SEC filing.
Treasury found that SolarCity repeatedly overstated the value of its investments, the SEC filings indicate. In those cases, Treasury awarded smaller grants than SolarCity had tried to claim. Now the department's IG and the IRS are doing a broader audit of the projects for which SolarCity and other large solar companies got stimulus cash. Investigators want to know if the companies regularly overstated the value of their investments and thus got overly generous taxpayer grants.
While no government body has accused SolarCity of wrongdoing, the company disclosed: "[I]f at the conclusion of the investigation the Inspector General concludes that misrepresentations were made, the Department of Justice could decide to bring a civil action to recover amounts it believes were improperly paid to us."
The Obama administration's possible mismanagement of the grant program is one issue here. Musk's intimate ties to politics are another.
Musk is the paradigmatic political entrepreneur, launching businesses that seek to capitalize on government favors and lobbying clout rather than provide goods or services that consumers demand.
Musk is CEO of and the biggest investor in Tesla Motors, an electric car company that depends on stimulus money and other subsidies. He also founded Space Exploration Technologies, or SpaceX, whose primary customer is the federal government.
Musk has personally given more than $100,000 to Obama's re-election campaign, including two gifts of more than $30,000 each to the Obama Victory Fund, which divides the money between the maximum allowable donations to the Democratic National Committee and the maximum to the Obama campaign. (Musk has also given generously to Republicans.)
Keep those max gifts in mind when Obama says he rejects donations from lobbyists. Musk is not a registered lobbyist, but he lobbies. Hard. In early 2010, auto industry news site Autoblog described his lobbying on Tesla's behalf: "Musk flew to Washington D.C. at least a dozen times since early 2009 to help make the case to the Department of Energy for nearly half a billion dollars in low interest loans as part of the Advanced Technology Vehicle Manufacturing program."
Tesla got that $465 million loan from Obama's DOE in order to produce the Model S, an all-electric plug-in car, which will also benefit from other stimulus goodies. This summer, Tesla began delivering the taxpayer-subsidized cars at $50,000 a pop.
Musk touts SpaceX as the cutting edge of free-enterprise space exploration, but so far the company's revenue seems to come mostly from Uncle Sam. My Washington
Examiner colleague Richard Pollock reported that NASA has given $824 million to SpaceX through a special program known as the Space Act Agreements, which circumvents much of the oversight in other federal spending. Most notably, SpaceX just delivered freight to the International Space Station.
Musk's Obama ties go beyond his maximum donations.
One of Tesla's major investors is the Westly Group, founded by Steve Westly, who also sat on Tesla's board of directors. Westly is a top-tier Obama bundler, having raised more than $1.5 million for Obama over his two elections, according to the New York Times.
Obama put Westly on an energy policy advisory board, which was charged with giving recommendations on modifying federal subsidies to buyers of electric cars.
Musk has also recruited some of K Street's best-connected Democratic lobbyists. In the weeks after Obama's election in 2008, SolarCity and Tesla both hired McBee Strategic, the lobbying firm at the center of the green-energy subsidy universe. SolarCity and Tesla also retain the Podesta Group, founded by Obama confidant and transition director John Podesta.
Joe Biden might find this all funny, but taxpayers, if they knew, wouldn't likely be entertained
DETROIT, MI - Elon Musk, co-founder and CEO of Tesla Motors, speaks at the 2015 Automotive News World Congress January 13, 2015 in Detroit, Michigan. (Photo by Bill Pugliano/Getty Images)
Congress Just Gave More Tax Subsidies To Elon Musk’s Solar Company via Crooked John Podesta
Congress’ tax bill extends tax credits for companies installing solar panels for another five years, which is good financial news for one particular client of Democratic operative John Podesta.
Billionaire, environmentalist Elon Musk.
Congress is poised to pass the “Protecting Americans from Tax Hikes Act,” which extends a federal tax credit for installing solar power for another five years. Extending solar subsidies is a huge boon to SolarCity, which has spent $540,000 this year lobbying Congress on energy issues, including solar tax credits.
“This would materially benefit SolarCity (SCTY), as well as all other distributed and utility-scale solar developers,” according to a report from market analysts at AllianceBernstein emailed to The Daily Caller News Foundation.
In fact, Musk made more than $670 million in one day after stock prices for SolarCity and his electric car company, Tesla, shot up on the news Republicans and Democrats agreed to extend solar tax credits. AllianceBernstein claims solar subsidies make up a sizable piece of SolarCity’s stock price.
“We had not expected an extension of this length,” AllianceBernstein reported. “We had previously estimated that a two-year 30% ITC extension would be worth ~$20 per share for SCTY on top of our $32 target price”
Musk is SolarCity’s chairman and a proponent of green energy subsidies and taxes on carbon dioxide emissions. Musk has said “none of the [solar] incentives are necessary, but they are all helpful.” It seems SolarCity disagree, and spent hundreds of thousands of dollars on lobbyists to make sure they kept their subsidies.
Musk’s solar company also happens to have former White House adviser John Podesta on speed-dial. SolarCity paid Podesta’s lobbying firm $150,000 this year to lobby on energy issues before Congress, according to the Center for Responsive Politics. Podesta’s lobbying activities included pressing Congress to extend solar tax credits.
Podesta had stints in the White House under Democratic Presidents Barack Obama and Bill Clinton. The liberal politico now supports Democratic candidate Hillary Clinton’s bid for president in 2016.
Coincidentally, Clinton’s green energy plan includes building half a billion solar panels by the end of her first term in office. Clinton wants Americans to get 33 percent of their energy from green sources, like wind and solar, but 2027.
“I may not be a scientist, but I’m a grandmother with two eyes and a brain,” Clinton said in a June campaign email. “That’s all it takes to know that we must immediately address climate change, one of the defining challenges of our time.”
The House passed a $700 billion tax bill Thursday, which included extended subsidies for wind and solar power. Republicans allowed extended green subsidies in the tax bill as part of a deal for Democrat support of lifting the ban on oil exports.
Conservative groups have come out against the deal, saying ending the oil export ban in exchange for corporate welfare was not a very good trade.
“This tax extenders deal is another example of the worst of Washington politics,” Tom Pyle, president of the free market American Energy Alliance wrote in a recent blog post. “It’s no wonder Congress’ approval rating is at an all time low.”
Republican leadership, however, praised the tax deal. They argued it would provide relief to millions of Americans who depend on these credits and write-offs.
“Today we’ve acted to help millions of Americans keep more of their hard earned money and have more certainty when they do their taxes,” Texas Rep. Kevin Brady, who chairs the House ways and means committee, said in a statement. “By solving these decades-old problems now, we have even more momentum to pass pro-growth tax reform that will boost our economy, help create more jobs and fix our broken tax code.”
OBAMA GAVE NASA TO ELON MUSK AS A CRONY PAYOFF TO MUSK FOR CAMPAIGN CONTRIBUTIONS
By Bruce Fein - -
Section 1615 of the pending National Defense Authorization Act smuggled in by Sen. John McCain, Arizona Republican, to repay political benefactor Elon Musk proves philosopher Samuel Johnson’s adage: “Patriotism is the last refuge of a scoundrel.” Thereby hangs a sordid tale of crony capitalism fueled by hysteria over alleged Russian interference with the 2016 presidential election and the specter of another Cuban Missile Crisis.
Space launch services are a cornerstone of national security. The stimulus of competition as opposed to the narcotic of monopoly is necessary to keep launch systems at the cutting edge of science and technology at competitive prices. Thus, Congress required in 10 U.S.C. 2273, “the availability of at least two space launch vehicles (or family of space launch vehicles) capable of delivering into space any payload designated by the Secretary of Defense or the Director of National Intelligence as a national security payload.”
At present, there are but two competitive launch systems for the Pentagon’s patronage: the Falcon 9, produced by Space X owned by billionaire Mr. Musk; and, the Atlas V, which uses Russian rocket engines (RD-180) on the first stage of launch. Delta IV is an alternative launch system, but it is scheduled to phase out because of antiquation and expense.
Recognizing the national security risk of reliance on a Russian engine, Congress enacted a launch system ban beginning in 2022. The interim is thought necessary to develop a new launch system with no Russian elements at a competitive price and saving hundreds of millions of dollars in Pentagon expenditures is Space X enjoyed a monopoly. The Department of Defense explained before the Senate Armed Services Committee in 2016:
“Assured access to space requires end-to-end space launch services and not just a rocket engine [because] any effort to simply replace the RD-180 with a substitute engine would require extensive design and engineering changes, as well as significant dynamic and acoustic testing, and would ultimately result in a new launch system, which would require recertification.”
Moreover, a monopoly provider of space launch services would charge monopolistic prices and would stunt innovation to avoid stranding its own investment.
Yet that is what Sen. McCain and Mr. Musk’s Space X are seeking through section 1615. It would prohibit the Air Force from seeking to develop new launch systems to compete with Space X’s Falcon 9. New rocket engines and modifications to existing launch vehicles is all that would be permitted under section 1615.
But last April, 20 members of the House of Representatives sent a letter to Secretary of Defense James Mattis urging the Air Force to continue planning and funding the development of new launch vehicles. They elaborated: “Investing in the entire launch system through government and industry cost-share partnerships—rather than a specific component—is the fastest, safest, and most affordable way for the taxpayer to achieve these objectives.”
What explains Sen. McCain’s enthusiasm for giving Space X a virtual monopoly on space launch systems or vehicles? Follow the money!
Elon Musk has donated handsome sums to the McCain Institute. The billionaire has also donated to the senator’s political campaigns. It seems more than serendipitous that Sen. McCain has labored tirelessly to introduce amendments, earmarks, and sister provisions of law to shield Mr. Musk’s government-subsidized empire from competition.
Last year, the senator introduced an amendment to the NDAA that would have prohibited the use of Russian rocket engines to launch satellites into space. If it had passed, Space X would have been one of the tiny few of remaining providers.
The Air Force has been emphatic. Until competing engines are fully developed, the RD-180 will remain indispensable until fiscal 2020 because 56 percent of Evolved Expendable Launch Vehicle (EELV) launches until then are relying on its use. Much to Sen. McCain’s chagrin, Congress has retained funding for the RD-180 until 2022. He still has not surrendered. A few months ago, Sen. McCain attempted to stick a ban on the Russian engine in Russia sanctions legislation, but failed.
President Donald Trump should veto any NDAA that includes section 1615. National security is too important to be left to crony capitalism.
Stop Elon Musk's Tax Money Gravy Train
Musk’s SolarCity has become an albatross of waste, fraud, and abuse of taxpayer dollars.
rom Enron to Bernie Madoff, at the end of every great American financial scandal, the totality of the perpetrators’ greed seems to be matched only by the public’s incredulity at how such a thing could be allowed to happen.
And thanks to Elon Musk, there’s a good chance we may all be asking this question again soon.
The Senate Finance Committee and the House Ways and Means Committee have launched a probe into tax incentives paid to solar companies, according to the Wall Street Journal. The committee probes, led by their respective Republican chairmen, Rep. Kevin Brady of Texas and Sen. Orrin Hatch of Utah, have found an appropriate and disturbing target to begin this work.
SolarCity, a solar installation company set to be purchased by Tesla Motors Inc., is one of the seven companies named in the initial investigation.
Renewable Crony Capitalism
Already grossly subsidized, Musk’s SolarCity has become an albatross of waste, fraud, and abuse of taxpayer dollars. As legitimate earnings and cash become even scarcer for SolarCity, its entanglement in the Tesla empire suggests that a drastic reckoning is not only imminent but emboldening Musk to become more outlandish and reckless.SolarCity has been doubling down on the failed model of taxpayer support.
Notably, SolarCity is run by Musk’s cousins, Lyndon and Peter Rive. During his chairmanship at SolarCity, Musk’s family enterprise has taken in billions of taxpayer dollars in subsidies from both the federal and local governments. But the subsidies and sweetheart deals were not enough, as losses and missed projections continued to mount.
Ultimately, rather than endure the embarrassment of collapse and further damage to the public image of Musk and Tesla, the cousins conspired to have Tesla simply purchase SolarCity this year. The conditions of the deal screamed foul play.
To say nothing of what sense it might make for an automaker to purchase a solar installation company, Tesla stockholders were being forced to absorb a failing, cash-burning company and pay top dollar to do so.
While cost-cutting and corporate restructuring should have been the priority for a company swimming in debt and burning through available cash, SolarCity, in fact, has been doubling down on the failed model of taxpayer support. The desperate thirst for handouts has manifested itself in some of the murkiest political waters imaginable.
Thanks to Musk’s cozy relationship with New York Gov. Andrew Cuomo, a Democrat, the state has granted at least $750 million of its taxpayers’ money to SolarCity, building the company a factory and charging it only $1 per year in rent.
It would be hard to imagine such an operation would not be lucrative for its shareholders. And yet, somehow, SolarCity has never made a profit.
How Extensive Is This Problem?
It’s not just in New York. In this year’s race for Arizona Corporation Commission, the state’s public utilities overseers, only one outside group funneled cash into the contest. SolarCity has never been able to survive without serious help from government subsidies and grants.
- All of the $3 million donated by that group, Energy Choice for America, came from SolarCity. The beneficiaries are candidates who have signaled their willingness to be part of the “green machine” that greases the skids for lucrative government subsidies.
Burning through taxpayer dollars, buying elections, and expanding a network of crony capitalism has become so inherent to the SolarCity model that $3 million to a public commissioner’s race, brazen though it may be, is only a drop in the bucket for Musk and SolarCity.
In 2013 alone, SolarCity received $127.4 million in federal grants. The following year, in which it received only $342,000 from the same stimulus package, total revenue was just $176 million and the company posted a net loss of $375 million.
Despite an expansion of operations and claims to be the leader in the industry, SolarCity has never been able to survive without serious help from government subsidies and grants. The failure to responsibly turn taxpayer dollars into a profitable renewable energy provider has led to SolarCity’s collapse into the welcoming arms of Tesla.
And with Tesla, SolarCity, in fact, will be right at home, compounding a disastrous shell game that Elon Musk is playing with government resources.
You're Paying to Keep Musk's Lights On
It has been widely reported that among SolarCity, Tesla, and the rocket company SpaceX, Elon Musk’s confederacy of interests has gotten at least $4.9 billion in taxpayer support over the past 10 years.
This is almost half of Musk’s supposed net worth – taken from the pockets of American citizens and put into companies that can survive only by cannibalizing each other, spending without end, and promising that success is always just beyond the horizon and yet never arrives.
The American people are being taken on a ride by SolarCity, Tesla, and Musk. The ride is fueled by a cult of personality in Musk. And it costs billions of taxpayer dollars as he promises us not only the moon but to harness the power of the sun and send us all to Mars.
In the cases of Enron and Bernie Madoff, in the end, the cheated victims wished to have woken up sooner to the hubris that enabled such a downfall – or at least that regulators had pulled their heads out of the sand before the full impact of the collapse was realized.
We’ve seen this story before and we know how it ends.
The congressional investigations underway are not only necessary but a signal that more must be done, and soon. We may not be able to help Elon Musk stop himself from failing again, but we certainly shouldn’t be the ones to pay for it.
It’s past time for the American people to stand up to Musk and demand that our legislators and other elected officials bring him back to earth before spending one more dollar of our money. He’s wasted enough of it already.
Gotta admit it, Elon Musk can make me feel the Bern.
I’m with Bernie on the billionaires. Some of them are ruining the country. It’s not those who use their own noggins to come up with ways to make money, whether by starting companies or investing wisely.
The ones who bug me are the ones who are rich off my tax dollars.
Elon Musk has made a ton of money on his own – and continues to. He founded X.com, an online payment company, with profits he made off the sale of Zip2, the first online version of the Yellow Pages. X.com eventually merged with Confinity and became PayPal.
Now, he’s worth $14.3 billion and he’s into space travel, solar panels and electric cars. His partners in these cutting-edge — but not-yet-profitable — industries are the taxpayers. None of these businesses profit, and none would exist without massive government subsidies.
Tesla, which makes electric cars, struck a deal with Nevada in 2014 to build a battery factory in Reno. The state gave Tesla $1.3 billion in special incentives, including an exemption from paying property taxes for 20 years and $195 million in transferable tax credits Tesla could sell for cash. That’s 15 times the size of any previous package of incentives offered by Nevada and one of the largest giveaways in American history.
Gov. Brian Sandoval says the factory and the 6,000 jobs will “change the trajectory of this state, perhaps forever.” But was he bidding against himself? Where else would Musk have built it? Reno is easily accessible by rail and highway to Fremont, and Nevada has the only active lithium mines in the United States.
As for those tax credits, laws in 10 states require car companies operating in those states to sell a certain number of “zero emissions” vehicles. Since only electric cars qualify as “zero emissions” vehicles, and these companies don’t, in general, make electric cars, they buy these tax credits from Musk. So far, Musk has made $517 million in profit at taxpayer expense.
In addition, Tesla gets a 30 percent federal tax credit, which can applied to any tax liability the company may incur. Thanks to tax credits and carry-forward losses, the company already hasn’t paid any federal income tax since 2008. In 2014, it paid $2.5 million in corporate taxes — $178,000 to the states, $2.35 million to foreign governments and a big fat zippy to Uncle Sam.
Since Tesla will be connected to the grid, it can sell any excess renewable power in its battery facility to the Nevada electric utility for 50 percent higher than wholesale. In fact, not only can Tesla sell excess electricity at a premium, it buys it at discounts of 10 percent to 30 percent pursuant to its agreement with Nevada. Taxpayers pick up the cost of that discount by having $1.84 added to their annual electricity bills.
In all, according to a 2015 story in the Los Angeles Times, Musk has raked in $4.3 billion in government money. SolarCity, the solar panel firm that operates out of office space abandoned by Solyndra, the poster child for crony capitalism in the Obama era, got $300 million in federal grants and tax incentives. SpaceX, the space travel firm, received $5.5 billion in government contracts.
And then there’s Tom Steyer, another Californian who has learned to work the levers of power to his benefit but not ours.
He fashions himself the new Al Gore. He assails the Koch brothers as purveyors of evil for profit. But he has become America’s largest political donor – he gave $75 million to supposed green candidates in the non-presidential 2014 election and plans to give more this year. He gives so much money, in fact, that, according to the Wall Street Journal, Democrats would rather lose control of the U.S. Senate than cross him. And he’s used that influence to do a number of things that benefited his bottom line.
He pushed through a measure to force California to use half renewable energy by 2050 – a boon for his green energy companies.
He supports President Obama and his move to crack down on consumer lending, but he engages in similar practices through Kilowatt Financial, LLC, a company that finances solar panels at predatory rates. Even Democrats in Congress are asking how this differs from the practices that led to the subprime lending crisis.
He made much of his $1.6 billion in estimated net worth from the sale of fossil fuels but now finds them irredeemably evil. He fought the Keystone XL pipeline, which would have carried tar sands from Alberta in western Canada to oil refineries on the Gulf Coast. But he so happened to own stock in a firm with a pipeline from the tar sands to the Pacific coast.
He haughtily promised his Farallon venture capital group would divest in fossil fuels – but kept those outside North America. Those he not only kept but sought to grow. He’s had a long and prosperous relationship with Russian energy firms facilitated by his friends in the Obama administration.
He’s up to his neck in the scandal that led to the resignation of Oregon Gov. John Kitzhaber, making payments to the governor’s fiancee, Cylvia Hayes, a green energy advocate. And, despite his admonitions that others cut energy use to save the planet, he owns six huge homes and travels the globe constantly in Trumpian luxury.
Bernie is right that these guys are growing rich by making government’s priorities their priorities rather than ours. He’s right games are being played that average people can’t take part in. He’s right that corporate cronyism is a huge problem in this country.
And his enemies in this — the folks most guilty — are closer than he probably thinks.