First, Kill All the Subsidies

Michael Giberson

In the Washington Monthly, Jeffrey Leonard argues that the president and Congress should join together to kill all energy subsidies. While sorting out what is and isn’t an energy subsidy can be tricky (the U.S. tax code isn’t exactly transparent in all respects), and I doubt a political majority can actually stomach the thought of pulling the plug on everything, still it is an appealing idea.

Here’s Leonard on the political moment that makes the idea at least conceivable:

So we find ourselves in a new political moment when for the first time it is possible to imagine an alliance of GOP libertarians, disaffected environmentalists, and budget hawks coming together for a grand deal that would sweep away sixty years of bad energy policy. Obama should seize the moment to bring this coalition together in support of a single objective: to eliminate all government subsidies and tax credits on production of allprimary sources of energy. Of course, he’d have to abandon his own long-held support for ethanol (the tax deal his administration brokered with the GOP in December included a twelve-month extension of the VEETC).

Yes, I’d object to several parts of the article. I’m not a fan of energy efficiency for energy efficiency’s sake – after all, it isn’t as if energy resources are the only thing to care about. But sundry points aside, the article contributes to a necessary discussion about getting the government out of the business of picking winners in the energy supply industry.

3 thoughts on “First, Kill All the Subsidies

  1. (the U.S. tax code isn’t exactly transparent in all respects)


    You are obviously a master of the art of understatement. (ROTF LMAO)

    The US tax code is so complex that dealing with it requires specialized accountants, lawyers, judges and courts. Several studies have demonstrated that even the IRS cannot give consistent interpretations of the tax code.

    I believe it is long since time to start over with a very simple tax system. I prefer the Fair Tax, though it probably removes too much power from Congress to be adopted. The flat tax would certainly be simpler as well.

    While we’re discussing eliminating subsidies, we might also consider eliminating the various subsidies for sloth, thus eliminating 50 years of bad welfare policy.

  2. Fred,

    I think the only way this works is with a declining “cap” on all government revenue, at all levels, as a percentage of GDP; and, requiring a super majority to alter either the cap or the rate of decline. Otherwise, any American would be a fool to accept any change subject to “revenue creep”. We’ve seen the “creeps” do too many things to increase revenue. 🙂

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