December 6 2012
Bankrupt: A123 Maneuvers Today's Auction After Receiving Millions from Taxpayers
An electric car battery manufacturer that received $1 million in taxpayer money the Same day it filed for bankruptcy is to be auctioned today.
A123, the battery company, has received a total of $133 million in taxpayer grant funding. Since A123’s founding in 2001, the company has lost a whopping $690 million. A123’s economic woes should have signaled that it was too risky an investment for taxpayer money.
Companies like A123 and Solyndra, the solar panel manufacturer that went bankrupt after receiving around a half billion dollars in taxpayer-backed loans, are clear indications of why taxpayer money should never be treated like a venture capital fund. In the days of trillion dollar deficits, taxpayer money should not be thrown around at unpromising but politically correct business ventures.
What’s just as bad is that the auction could result in a threat to our national security: Wanxiang Group Corp, a Chinese corporation, intends to bid on A123. A123 holds several defense contracts, and many in Washington fear a Chinese purchase would hand contracts to China. Due to these concerns, the Obama administration must approve the purchaser of the company. Such federal involvement could arguably impact the amount for which A123 is sold. Either way, the taxpayer loses.
Instead of complicating markets, picking winners and losers, putting our national security at risk, and distorting bankruptcy proceedings, the Energy Department would do well to stand back and let markets develop energy solutions for tomorrow.