And Why Taxpayers Shouldn’t Stand for It Any More
Cross-posted with TomDispatch.com
Along with “fivedollaragallongas,” the energy watchword for the next few months is: “subsidies.” Last week, for instance, New Jersey Senator Robert Menendez proposed ending some of the billions of dollars in handouts enjoyed by the fossil-fuel industry with a “Repeal Big Oil Tax Subsidies Act.” It was, in truth, nothing to write home about -- a curiously skimpy bill that only targeted oil companies, and just the five richest of them at that. Left out were coal and natural gas, and you won’t be surprised to learn that even then it didn’t pass.
Still, President Obama is now calling for an end to oil subsidies at every stop on his early presidential-campaign-plus-fundraising blitz -- even at those stops where he’s also promising to “drill everywhere.” And later this month Vermont Senator Bernie Sanders will introduce a much more comprehensive bill that tackles all fossil fuels and their purveyors (and has no chance whatsoever of passing this Congress).
Whether or not the bill passes, those subsidies are worth focusing on. After all, we’re talking at least $10 billion in freebies and, depending on what you count, possibly as much as $40 billion annually in freebie cash for an energy industry already making historic profits. If attacking them is a convenient way for the White House to deflect public anger over rising gas prices, it is also a perfect fit for the new worldview the Occupy movement has been teaching Americans. (Not to mention, if you think about it, the Tea Party focus on deficits.) So count on one thing: we’ll be hearing a lot more about them this year.
But there’s a problem: the very word “subsidies” makes American eyes glaze over. It sounds so boring, like something that has everything to do with finance and taxes and accounting, and nothing to do with you. Which is just the reaction that the energy giants are relying on: that it’s a subject profitable enough for them and dull enough for us that no one will really bother to challenge their perks, many of which date back decades.
By some estimates, getting rid of all the planet’s fossil-fuel subsidies could get us halfway to ending the threat of climate change. Many of those subsidies, however, take the form of cheap, subsidized gas in petro-states, often with impoverished populations -- as in Nigeria, where popular protests forced the government to back down on a decision to cut such subsidies earlier this year. In the U.S., though, they’re simply straightforward presents to rich companies, gifts from the 99% to the 1%.
If due attention is to be paid, we have to figure out a language in which to talk about them that will make it clear just how loony our policy is.
Start this way: you subsidize something you want to encourage, something that might not happen if you didn’t support it financially. Think of something we heavily subsidize -- education. We build schools, and give government loans and grants to college kids; for those of us who are parents, tuition will often be the last big subsidy we give the children we’ve raised. The theory is: young people don’t know enough yet. We need to give them a hand when it comes to further learning, so they’ll be a help to society in the future. From that analogy, here are five rules of the road that should be applied to the fossil-fuel industry.
1. Don’t subsidize those who already have plenty of cash on hand. No one would propose a government program of low-interest loans to send the richest kids in the country to college. (It’s true that schools may let them in more easily on the theory that their dads will build gymnasiums, but that’s a different story.) We assume that the wealthy will pay full freight. Similarly, we should assume that the fossil-fuel business, the most profitable industry on Earth, should pay its way, too. What possible reason is there for giving Exxon the odd billion in extra breaks? Year after year the company sets record for money-making -- last year it managed to rake in a mere $41 billion in profit, just failing to break its own 2008 all-time mark of $45 billion.
2. Don’t subsidize people forever. If students need government loans to help them get bachelor’s degrees, that’s sound policy. But if they want loans to get their 11th BA, they should pay themselves. We learned how to burn coal 300 years ago. A subsidized fossil-fuel industry is the equivalent of a 19-year-old repeating third grade yet again.
3. Sometimes you’ll subsidize something for a sensible reason and it won’t work out. The government gave some of our money to a solar power company called Solyndra. Though it was small potatoes compared to what we hand over to the fossil-fuel industry, it still stung when they lost it. But since we’re in the process of figuring out how to perfect solar power and drive down its cost, it makes sense to subsidize it. Think of it as the equivalent of giving a high-school senior a scholarship to go to college. Most of the time that works out. But since I live in a college town, I can tell you that 20% of kids spend four years drinking: they’re human Solyndras. It’s not exactly a satisfying thing to see happen, but we don’t shut down the college as a result.
4. Don’t subsidize something you want less of. At this point, the greatest human challenge is to get off of fossil fuels. If we don’t do it soon, the climatologists tell us, our prospects as a civilization are grim indeed. So lending a significant helping hand to companies intent on driving us towards disaster is perverse. It’s like giving a fellowship to a graduate student who wants to pursue a thesis on “Strategies for Stimulating Donut Consumption Among Diabetics.”
5. Don’t give subsidies to people who have given you cash. Most of the men and women who vote in Congress each year to continue subsidies have taken campaign donations from big energy companies. In essence, they’ve been given small gifts by outfits to whom they then return large presents, using our money, not theirs. It’s a good strategy, if you’re an energy company -- or maybe even a congressional representative eager to fund a reelection campaign. Oil Change International estimates that fossil-fuel companies get $59 back for every dollar they spend on donations and lobbying, a return on investment that makes Bernie Madoff look shabby. It’s no different from sending a college financial aid officer a hundred-dollar bill in the expectation that he’ll give your daughter a scholarship worth tens of thousands of dollars. Bribery is what it is. And there’s no chance it will yield the best energy policy or the best student body.
These five rules seem simple and straightforward to me, even if they don’t get at the biggest subsidy we give the fossil-fuel business: the right -- alone among industries -- to pour their waste into the atmosphere for free. And then there’s the small matter of the money we sink into the military might we must employ to guard the various places they suck oil from.
Simply getting rid of these direct payoffs would, however, be a start, a blow struck for, if nothing else, the idea that we’re not just being played for suckers and saps. This is the richest industry on Earth, a planet they’re helping wreck, and we’re paying them a bonus to do it.
In most schools outside of K Street, that’s an answer that would get a failing grade and we’d start calling subsidies by another name. Handouts, maybe. Freebies. Baksheesh. Payola. Or to use the president's formulation, "all of the above."
Bill McKibben is Schumann Distinguished Scholar at Middlebury College, founder of the global climate campaign 350.org, a TomDispatch regular, and the author, most recently, of Eaarth: Making a Life on a Tough New Planet.
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Al Quinlan and Andrew Baumann: Voters Support New EPA Rules on Carbon Emissions
The GOP was thretening to shut down the govt. over 30 billion dollars not that long ago....well I see where Congress can cut 40 billion immediately. But they won't because they've been bought off.
Astounding, an average profit of $59 to 1 dollar investment (donation to campaigns and lobbying) for the oil companies. It's legal---AS YET (with Citizens United). Agree with: "These five rules seem simple and straightforward to me, even if they don’t get at the biggest subsidy we give the fossil-fuel business: the right -- alone among industries -- to pour their waste into the atmosphere for free. And then there’s the small matter of the money we sink into the military might we must employ to guard the various places they suck oil from."
Publicly finance all elections.
"When economic power became concentratÂÂÂed in a few hands, then political power flowed to those possessors and away from the citizens, ultimately resulting in an oligarchy or tyranny." John Adams
"As riches increase and accumulate in few hands . . . the tendency of things will be to depart from the republican standard." Alexander Hamilton
Thomas Jefferson, "I hope we shall crush ... in its birth the aristocracÂy of our moneyed corporatioÂns, which dare already to challenge our government to a trial of strength and bid defiance to the laws of our country".Â
Most members of Congress seem to be for "crony capitalism"--the ugly corrupted kind of capitalism. This is not just the GOP--though their subsidies are more for the rich--since I am not in the 1%, this seems more vile than subsidizing something almost everyone can appreciate (such as milk for schoolchildren).
The Dems aren't lacking for their own "sacrad cows" either.
Especially Rule #5 very clever insight.
Now, who'da thought? I have'nt seen it on here or the MSM yet. Why are'nt they shouting it from the roof tops?
In other words, you'll hear the same argument from others and this is the reason things are so screwed up. The subsidies benefit the smaller groups of people far more than their distributed costs to the individuals who are not part of those groups. People have more incentive to protect subsidies or tariffs or regulations or any other kind of protectionism that the government is engaged in than anyone has to repeal anything.
It's the reason the state is running us off a cliff and it won't get better until people understand that it's not the state's job to reallocate spending from market chosen ends to political ends. Ultimately, the difference between these is that the market chosen ends are the results of voluntary trade, while political ends are the result of coercion.
Specific businesses may employ violence, and to the degree that they do they are no better than the state. However, in our current corporatist economy, the state employs the violence on behalf of corporations through compulsory taxation and corporate welfare schemes, the biggest of which is the Federal Reserve.
The US subsidizes its oil industry to the tune of $40B, with little control over what those firms will charge come the next economic or political disruption in supplies. We treat oil as a way for rich men to get richer.
Guess which nation will survive the coming oil wars?
The whole cabinet of the last admin were head honchos in the international oil cabal and our resources , military , citizens , and future were used as pawns in a chess game to enhance the power and profits of the petroleum industries . We now have enemies we never heard of before in places we never heard of before .
Selecting international investors to manage a nation with the worlds most power military and international influence borders on total idiocy . And as they proved , their interests were paramount over the welfare of the nation they were managing .
As companies go bust, Europe rethinks solar power subsidies.
http://online.wsj.com/article/SB10001424052702303302504577323514124004048.html
A Commerce Department investigation found that Chinese government-subsidized solar panels were dumped in the US market, harming US manufacturers.
http://www.csmonitor.com/USA/2012/0320/China-subsidized-solar-panels-US-finds.-Are-tariffs-the-right-response
"Chinese companies have already played a leading role in pushing down the price of solar panels by almost half over the last year. Shi Zhengrong, the chief executive and founder of China’s biggest solar panel manufacturer, Suntech Power Holdings, said in an interview here that Suntech, to build market share, is selling solar panels on the American market for less than the cost of the materials, assembly and shipping.
Backed by lavish government support, the Chinese are preparing to build plants to assemble their products in the United States to bypass protectionist legislation. As Japanese automakers did decades ago, Chinese solar companies are encouraging their United States executives to join industry trade groups to tamp down anti-Chinese sentiment before it takes root."
http://www.nytimes.com/2009/08/25/business/energy-environment/25solar.html?_r=1&ref=solarenergy
Thanks to republicans, Americans will soon be able to buy cheap environmentally friendly cost effective solar panels from Chinese companies, but that's not important as long as they have an issue to use against Obama.
People don't mind subsidies if it's something they want, but they don't like the subsidies for other people's pet projects/industries.
People with integrity would like to see all government subsidies ended, even for stuff they support.
www.fairtax.org or nothing changes
In any case, we're not talking about raising their costs. We're cutting their breaks.
Surely they can stand on their own feet by now.
YOU DECIDE or better yet - go talk to someone in business you trust and or respect. see what they tell you......