Wednesday, May 11, 2011

Stop Subsidizing Stupidity

At the end of April, Speaker John Boehner told ABC News that he would be open to reevaluating billions of dollars of subsidies received by the largest oil companies.  "It's certainly something we should be looking at," he said. "We're in a time when the federal government's short on revenues…  They ought to be paying their fair share."

President Obama and many in Congress seized on his remarks and renewed calls to end subsidies for big oil (see statements by Minority Leader Nancy Pelosi and Majority Leader Harry Reid as examples).  For many, ending these subsidies does not just make economic sense, it also makes sense from an environmental perspective.  While Speaker Boehner has since tried to distance himself from his comments, in the days following his statement, some in Congress used the political attention created by his words to rally around a proposal that President Obama has had on the table for some time:  cut oil subsidies and divert that funding to promote renewable energy and other policies that would reduce the United States’ reliance on fossil fuels.

Yesterday, a number of Senators made another push to reduce oil subsidies by proposing to repeal $21 billion in tax incentives over 10 years for the five biggest oil and gas companies (ExxonMobil, Shell, BP, ConocoPhillips and Chevron Texaco).  Unlike the President's idea to divert money from oil to clean energy, the Senators’ proposal would use the saving to reduce the federal deficit. 

While the proposal to cut oil subsidies is by no means new, the tack of using the money to reduce the deficit has promise given the day’s broader political discussion focused on the debt and the deficit.  Oil subsidies, however, represent just one of many sorts of subsidies that deserve rethinking; the government subsidizes all sorts of things that exacerbate environmental problems.  In terms of political feasibility, perhaps current political pressures will provide avenues to make environmental progress by ridding ourselves of some of these harmful subsidies, particularly those that go to thriving corporate giants.  Given that the debt and the environment both deserve our attention, in my opinion this sort politics in Washington is long overdue. 

-- Brigham Daniels

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Comments

I think the issue of subsidizing home ownership is a bit more tricky. Perhaps it could be more targeted. However, if I were to identify subsidies that lead to sprawl, highway subsidies would make it to the top of my list.

Posted by: Brigham | May 16, 2011 10:21:50 AM

How about the subsidization of (primarily single-family) home ownership, which causes sprawl?

Posted by: Matt Festa | May 15, 2011 9:25:30 AM

I totally agree. Politically, it is tough to do a lot about ethanol as a whole. However, there might be possibilities if the cuts were targeted at corporate farming rather than ma and pa corn growers.

Posted by: Brigham | May 13, 2011 11:39:06 AM

Great to see some progress being made on ending wasteful subsidies. The same should be done for corn and ethanol. It causes artificial market prices and other wasteful practices, all of which have further detrimental effects on our economy. People who complain about the high cost of renewable energy always seem to forget the incredible amount of money the fossil fuel industry gets.
When you factor in the externalities of fossil fuels (billions of dollars in health effects, pollution effects, etc.) it really makes no sense not to begin actively promoting renewable technology. That said, there's a lot of money being thrown around to make sure these dinosaurs stay at the top of the heap...

Posted by: LVP | May 13, 2011 9:29:11 AM

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