As budget talks remain in sclerotic repose, one notable spark this week came from Speaker of the House John Boehner, who said that cuts to the federal government's multi-billion dollar oil and gas industry subsidy are "certainly something we should be looking at." Seizing on what is no doubt a notable capitulation for a Republican Party baron, President Barack Obama quickly followed up with a letter urging Congress to take "immediate action to eliminate unwarranted tax breaks for the oil and gas industry and use the dollars to invest in clean energy."
Gas is currently near $4/gallon here in Washington, DC. According to ABC News the $4 billion per year in largesse to the gas industry could translate into "enough for 1.4 million Americans to buy a tank full of gas every week for an entire year." The president and the speaker are both keenly aware that no politics is more potent than gas-pump-politics, so there is promise for a bipartisan deal on this front.
But here's a suggestion, in simple terms. Certainly it is symbolically fitting to reapportion part of the recovered revenues to "clean energy" investments. But this could immediately resuscitate partisan divisions over where and to what specifically those funds are directed. In the stimulus era of American politics, clean energy projects are a favorite whipping boy for the president's opponents, and this opposition could easily complicate any compromise deal. It should also be expected that cutting subsidies could result in retaliatory price spikes from the industry that would hit the middle- and lower-classes of Americans. That being the case, much of the salvaged billions from the gas industry subsidy should be redirected towards a "democracy subsidy" in the form of a direct tax deduction for everyone who votes in the 2011 and 2012 federal election cycles.
If we're going to hand out money or pick favorites in the corporate world, why not also do it in the service of civic maintenance? After all, in modern American society, money talks. Unlike the controversial Poll Tax of the 19th Century, which was used as a cynical political device to disenfranchise African-American voters, a democracy subsidy would take the opposite approach by creating an incentive for civic engagement. While coercively restricting engagement is unconstitutional, encouraging it just makes sense. What's more, the United States is notorious among industrialized democracies for its low voter turnout (it usually sits around 50 percent).
Low voter turnout is not a new phenomenon here, but it nevertheless indicates a larger, abiding malaise for American democracy. As the late Tony Judt wrote last year, this matters because:
As the Greeks knew -- participation in the way you are governed not only heightens a collective sense of responsibility for the things government does, it also keeps our rulers honest and holds authoritarian excess at bay. Political demobilization... is a dangerous and slippery slope... if we feel excluded from the management of our collective affairs, we shall not bother to speak up about them. In that case, we should not be surprised to discover that no one is listening to us.
A common refrain for the past three years has centered on precisely that: our leadership is not listening. This can be attributed in part to the fact that a well-funded vocal minority out-shouts the majority and garners disproportionate media attention. It's also attributable to the unprecedented levels of special interest influence in politics (which, as it happens, gets hardly any media attention at all). Replacing greenbacks for the gas industry with greenbacks for diligent voters would address both of these distorting factors. It would show that our leadership is indeed listening; and it would subject leaders to more authentically representative accountability at the ballot box when they do not.
The silver lining for the president in this proposal is that, currently, the higher the turnout in 2012, the better his chances, as has been cogently noted here. Any member of the president's opposition is free to point this fact out in order to sabotage a compromise for partisan ends. But to do so would be to take a position against the central mechanism of any healthy, functioning democracy. Civic engagement must be above partisan considerations, as a restoration of civic trust in government and in each other is a necessary prerequisite for any meaningful reform. If a tax incentive will help us get there, then it's worth a shot.
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In fact, there is no reasonable argument against reducing energy use and decentralizing/cleaning the grid when systems are completely paid for by private citizens. All we need is the seed money (PACE loans) and fair payment based on return on investment (like Big Energy gets) for power we produce in excess of what we use. Super simple, clean, fair, affordable - so you gotta wonder why we are allowing Big Energy to call the shots...
To spend the money on things that do not speed the replacement of petroleum would be a missed opportunity to have the funds needed for an orderly transition to alternate fuels. If the money was split up into tax breaks, that would accomplish nothing.
The idea of bribing voters I don't like. I doubt it would improve the political process at all. Serious campaign finance reform, with public financing would remove the corporate sponsors and allow the representatives time to do their job instead of raising campaign funds for half their terms.
I will provide the obama administration proposed changes for you. Percentage depletion in excess of basis (which is not allowable to any of the major oil companies), is the only one of the nine which can be characterized as a tax subsidy.
Three of the "subsidies would required to capitalization of normal operating costs in lieu of current deductions for those operating costs in which would remain deductible as normal operating costs if in any other industry. Two of the so called subisdies, enhanced oil recovery credit and marginal well production deduction have long been phased out. The domestic activities deduction applies to all industries, disallowing the deduction to a specific industry, yet allowing it for all others is not only punitive but bad tax policy. The claimed foreign tax credit subsidy applies to all industries, the claim that the oil companies abuse it irresponsible.
This plan would just motivate those that are always looking for the government to give them a check.
Does anyone think, if these breaks were taken away, the oil companies (any company) would simply shrug their shoulders and say 'cost of doing business.' No, they would just add the loss on to the price of the product. The truth is, corporations don't pay taxes in the same sense an individual does. This is especially true in a business like oil. The consumer doesn't have a choice not to fill up the tank or heat the house without a substantial out of pocket expense. Its not the same as a person not liking the rising cost of beef and deciding to eat chicken or soybeans. If the tax breaks are removed, the cost of gas, heating oil, natural gas, and every product (plastic for instance) that uses oil or is shipped by truck or rail is going to go up to compensate for it.
As it stands, every price sign in front of every gas station in this country is like free advertising for the GOP. Every one of them might as well say, 'how's that hopey changey working out for you.'
Wait! Are you an American citizen?