Obamanomics: A case studyEDITORIAL
December 13. 2012 11:49PM
The Chinese are about to buy a Massachusetts battery-maker, and the American taxpayers might have doubly subsidized the deal.
On Tuesday a federal bankruptcy judge gave the OK for auto-parts maker Wanxiang America Corp., a subsidiary of China's Wanxiang Group, to buy A123 Systems, a Waltham, Mass., maker of batteries for electric cars. Wanxiang is to pay $256.6 million if the deal is approved by federal officials. But that is not where the taxpayers come in.
The taxpayers are already in the deal. They got in via a $249 million Department of Energy grant in 2010. It was part of the federal "stimulus" bill. A123 has received $133 million of the grant.
As with Solyndra, the solar-panel maker that was approved for more than half-a-billion dollars in federal financing before it went bankrupt, Obama administration officials approved hundreds of millions of dollars to a "green energy" company not based on its financial prospects, but on Obama's personal preference for alternative energy.
These "investments" are financed by U.S. debt, much of which is bought by Chinese investors. The Chinese own $1.4 trillion in U.S. treasury bonds (that's after selling some in the past year).
If the sale is approved, Wanxiang will walk away with a steal. It will get a battery maker the Chinese thought was worth $450 million, and it will pay just $7.6 million more than A123's 2010 federal grant. A bust for taxpayers becomes a boon for Chinese investors.
But that is not all. China is awash in interest payments we taxpayers are making on federal treasury bonds. If some of the Chinese profit from those payments was invested in Wanxiang, then taxpayers have subsidized both ends of this deal via interest payments on debt used to finance A123 in 2010 and to finance its purchase in 2012.
This, in a nutshell, is Obamanomics. Enjoy; we're getting four more years of it.