A quarter-mile long largely state-owned factory stands in Buffalo as a monument to Hope and Change. While Democrats today try to make this failure into a story about “egotistical billionaires” (Elon Musk) or a disgraced former governor (Andrew Cuomo), this is really a brick-and-mortar memorial to the failures of the Democratic Party’s Obama-era industrial policy.
The Wall Street Journal’s new in-depth report on the failures of this government-owned Tesla/Solar City plant rightly pins the blame on Cuomo, who as governor inked the deal with Elon Musk’s companies in the early 2010s. Cuomo even gushed that the massive subsidized factory — leased to Musk’s companies for $1 a year — was akin to the Buffalo Bills winning the Super Bowl.
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But we should be careful not to ignore the role that Musk and his companies played in the broader political landscape of the recent past, specifically the industrial policy of Barack Obama.
It’s easy to forget now that Musk has become a villain for Democrats and a hero for some of the online Right, but in the early Obama years, Musk was perhaps the face of Obamanomics. He represented the “Hope and Change” Obama ran on and articulated a dream of how to “remake America,” as Obama promised at his inauguration.
Musk embodied the industry-government cooperation at the heart of Obama’s economic policy. Musk, like Obama, was all about subsidies, more mandates, lots of talk about the future, and stopping the rise of the oceans.
Musk appeared as one of the best and the brightest, and his taxpayer-backed innovations were going to help everyone own solar panels and plug-in cars that used no gasoline. He got federal contracts to launch rockets and got federal subsidies to launch satellites.
Musk was a maximum Obama donor in 2008, cutting a $35,800 check to the Obama Victory Fund, which was a bundle of the maximum individual donation ($2,900) to Obama’s primary election, his general election, and the Democratic National Committee. Over time, he personally gave more than $100,000 to Obama’s election efforts.
The Obama administration trotted Musk out in public as the totem of its industrial policy. In 2014, Musk was the star at the annual conference of the Export-Import Bank of the United States, a federal subsidy agency that was at the time under attack from congressional conservatives and to which Obama was dearly attached. Obama had asked the business lobby in 2012 to “join the fight over the U.S. Export-Import Bank."
Musk answered the call. In 2014 he took the stage at the annual conference and used the spotlight to join in Obama’s lobbying effort to reauthorize and expand Ex-Im. Musk said the U.S. Export-Import Bank needed to ramp up its subsidies for his companies “because the French have this thing called Coface, which is very aggressive in providing low-cost funding.”
This followed perfectly with Obama’s 2012 reelection theme of “New Economic Patriotism”: Modern, smart, government-industry collaboration for the good of everyone (incidentally including max Obama donors).
Musk was a prime beneficiary of Obama’s signature economic measure, the 2009 stimulus bill. Section 1603 of that bill created massive tax credits for solar panels.
Tesla benefited from Obama’s green spending spree, too. "Musk flew to Washington D.C. at least a dozen times since early 2009,” reported the automotive industry publication AutoBlog, “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.”
Sure enough, Obama’s DOE forked over that cheap financing to Tesla.
Musk played ball with all of the Obama-era players. Solar City and Tesla both hired the lobbying firm McBee Strategic. This firm, run by former Democratic congressional staffers and Obama donors, was K Street’s major player in winning stimulus funds. Solar City and Tesla also both hired the Podesta Group, the lobbying firm founded by Obama’s chief of staff John Podesta, and which had intimate ties to all corners of the Obama administration.
Musk’s companies were also cozy with the powerful Democrats of the day. Lyndon Rive, the CEO of Solar City (and Musk’s cousin), gave tens of thousands to Cuomo, according to the New York Times, and he gave thousands to Obama’s 2008 election (donating both to Obama’s campaign and to the DNC) according to data from the Center for Responsive Politics.
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As I wrote in 2012: “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….”
Obama named Westly to a White House advisory board on energy policy.