“In Texas, we understand that high-tech companies don’t just happen overnight but are a product of forethought, sound vision and planning, and strategic investments by both the public and private sectors. Through our Emerging Technology Fund, we are bringing the best scientists and researchers to Texas, attracting high-tech jobs and helping start-up companies get off the ground faster.” –Gov. Rick Perry
The Obama Administration is taking well-deserved heat for its clumsy dabbling in the venture capital business. The failure of a prominent solar tech company partially funded with federally guaranteed loans is drawing attention to the flaws of direct government investment in private firms.
The Republicans have been quick to pounce on the company’s failure. They accuse the Obama Administration of pushing the Energy Department to fund Solyndra so they could use it as a stimulus-plan success story on the campaign trail. But one ordinarily mouthy Republican Presidential candidate has been slow to throw stones. Why isn’t Rick Perry taking shots at Obama over Solyndra?
Because everything is bigger in Texas.
As Governor, Rick Perry presides over a fund that has doled out over $200m in grants to private firms. While Obama is in trouble because his aides might have begged the Energy Department accelerate lending to one promising solar panel maker, Perry is laughing his boots off.
The Texas Emerging Technology Fund (ETF) is practically Perry’s own, personal multi-million dollar fundraising machine. When it comes to doling out money to private firms he doesn’t have to beg anyone for anything.
The fund, signed into law largely by and for Perry in 2005, is controlled by his office and operates largely in secret. Many states have similar investment programs, but the concentration of power in the Governor’s office under Perry’s program is unique.
From the Dallas Morning News, “Under the law, companies that receive tech fund money must have approval from the governor, the lieutenant governor and the House speaker. However, the speaker and lieutenant governor don’t act until Perry decides to back an applicant or gives them detailed information prepared by his staff about the recommended firms, aides said.”
Here’s a successful Texas investment strategy. Put a $1000 of your own money into a business. Invest $75,000 in the Governor’s campaigns. Then fund the rest of your business with a $4.5m taxpayer funded grant from the Governor’s ETF. That’s not a loan like Solyndra received, that’s cash on the barrelhead, delivered from the state and never to be repaid.
What might you do with a pile of free taxpayer money and a ton of political influence? Perhaps you could get your hands on patents developed by the University of Texas.
Another Perry contributor cashed in his chits for a $1.5m investment from the Texas ETF. Charles Tate is a major Perry donor who had managed to get himself put in charge of a board that “vetted” candidates for the ETF. He recommended the ETF give money to Thrombovision, and then invested in the company himself.
He and his partners accepted that state grant in 2007. The company failed to submit annual reports and finally sought bankruptcy protection in 2010. Since the taxpayers under Perry’s program are doling out grants instead of loans and taking no equity interest in the companies to which they give money, the state gets nothing from the bankrupt entity, unlike the Solyndra case. The folks who got the state grant just walk away. And Perry doesn’t have to give back the campaign contributions.
That’s how you do business in Rick Perry’s Texas.
Perry is a guy who has had every bit as much private sector experience as Obama. In other words, none. Like Obama, he’s become a millionaire as a government employee. Like Obama, he is using taxpayers’ money and his deep well of business acumen to fund private business ventures that he thinks are a good idea. Like Obama, some of Perry’s investments have been stinking failures.
But unlike Obama, Perry has a personally tailored fund at his disposal with no meaningful oversight. Unlike Obama, he’s doling out taxpayer money in the form of grants, not loans to his campaign contributors. And most importantly of all, unlike Obama Perry’s getting away with it in broad daylight. The way Perry has been able to skate past scrutiny while Obama constantly stumbles has less to do with policy differences than political talent.
If Obama knew how to put on a decent camp meeting he might not have to worry about trivial embarrassments like Solyndra.
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