Tuesday, December 06, 2011


Government Subsidies

Regarding outflow of revenue by the government, I make a distinction between revenue foregone (tax breaks) and direct payment (actual check from the government). I'm almost always for revenue foregone because I'd almost always rather people keep and spend their own money instead of sending it to the government to spend it, sometimes wastefully, indeed often wastefully. These two are very different things vis a vis actual outflow of revenue. For example, by static analysis, a cut in the tax rates would seem to "cost" the government the revenue it would have received were the tax rates left where they had been. People and economies are not static, however, and react to stimuli with different behavior. As such, most tax rate cuts (by Coolidge, Kennedy, Reagan and Bush (son), for example) have actually resulted in more revenue to the government, not less.

So I discount talk of a tax break being a cost to the government. Maybe it is, but maybe it isn't. I also think that clearly it is not spending. Writing a check from the treasury is spending. Not collecting taxes one theoretically might receive is not spending. We generally create a tax break to encourage behavior the majority feels creates a civic good.

Sorry for the preamble.

Here is a Boston Globe editorial from yesterday entitled: Clean-energy policies create jobs, and Congress should take note. (Yeah, they help the bankruptcy attorneys expand their staffs).

Most of the stimulus money spent on "green" energy has been a total waste. Solar and wind energy are worthless. But that's not what the editors of Boston's moribund daily paper think. They think we should send more.

And here is one of the things they use to justify it. Fossil fuel, they claim, is subsidized too. They write:

Between 2002 and 2008, the Environmental Law Institute has estimated, the US government spent $70 billion to subsidize traditional energy sources and $17 billion to subsidize corn ethanol.
Actually the Environmental Law Institute says it's $70.2 Billion to coal, oil and gas, $16.8 Billion to ethanol, and $12.2 Billion to "green" energy. I'll stipulate ethanol from corn for fuel is a big waste and we should stop that nonsense; but let's look closer at the numbers in this report from the ELI.

Forget the tax breaks. I'm only interested in the direct spending, the checks from the government.

For the "green" energy, they really don't account for the numbers they use in the website's graphic, but we know, independently, about the direct payments, the loan guarantees and the like, that have been expended (and, starting recently, that have been lost, wasted). Think Solyndra, Evergreen Energy and the dozens to come.

Here's what the ELI ilk call direct payments to the big oil, coal and gas, which they say totals over $18 Billion:

1) The Low Income Home Energy Assistance Program (which accounts for over a third of the so called direct payments--over $6 Billion). What? They admit that: "The purpose of LIHEAP is to prevent home energy shut-offs, rather than to intervene in energy markets." Let me translate that. This government program is not a direct payment to big oil, coal and gas but direct payments to state governments who in turn give it to poor people who can't pay the heat bill during winter and might well freeze to death without this help. This is charity to poor people, not a direct payment to big oil, coal and gas. Without these charity payments, the utilities would either cut off the deadbeats (and risk hypothermia for those in the cold household) or eat the deadbeats' unpaid bills and spread the loss around as much as they could to the paying customers. Under no rational structure of thought could this be called support for energy producers by the government, like the direct payments to wind and solar, etc. They must think we're morons.

2) The Strategic Petroleum Reserve (which accounts for another third, again more than $6 Billion). What? The idea is to have enough oil on hand to weather a cut off by the Middle East producers like what happened in the 70s. This is not support of big oil. It's just what it says it is, a storage of oil for a "rainy day."It is worse than a childlike pretending to say this storage of reserves is the same as the direct payment to Solyndra, etc. to keep the "green" producer in business. It gets worse.

3) The Black Lung Disability Trust Fund ($1. Billion). Oh, come on now. This is a fund for miners who have developed a disability; it is not in any way a payment to big coal. It is like the fund for asbestos related illnesses and is really just a specialized workers' compensation program. Only if the workers' compensation programs, which are mainly funded by the employers, are counted as a subsidy for each employer's field of endeavor, which no one ever does, could you count this as a subsidy for big coal. The miners got an extra largess from the feds for the disability above and beyond the state workers' compensation benefits, but it is again just charity from the government and there is no way the miners could have sued their employers successfully for their black lung (I'm from Appalachia and you'd be surprised by the number of people who have never been down a mine yet who claim to be suffering from black lung--but that's a different posting). The government is not paying off the sick miners as a way of shielding the coal companies from having to do so. The coal companies don't have to do so beyond getting workers' compensation insurance.

And then it just gets silly.

Not a single one of these so-called subsidies was even remotely a government payoff to the big oil, coal or gas companies. They are government programs to do other than pay money to big oil, coal or gas. At best, this is a through the looking glass sort of delusion to compare them to the $ Billions in direct payments to "green" energy. At worst, it is a knowing lie.

So there appears to be even less a reason to spend taxpayer and borrowed money of worthless wind turbines and solar panels because the actual energy producers in this country don't get a dime from the feds, not a dime!

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It's only $12.2 billion, what's the big deal? That's a drop in the bucket.
Every bucket full of water is made up of individual drops. Even you Nadarites hate waste, right?
You agree then that my comment was stupid, obnoxious and missed the point?
NO, it was a good comment.
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