This post reports on the recently released Green Scissors report that argues that the massive subsidies, mostly in the form of tax breaks, which the oil companies have long been getting are distorting our economy and causing it long term harm. By giving all these special subsidies and protections for the fossil fuel industry we hurt innovation here at home and our country’s long term global competitiveness.
$380 Billion in new Green Scissors 2011 Report
Millions of Americans are demanding common sense fixes to our broken economy. Wasteful spending needs to be cut, free giveaways of our natural resource stopped, and tax dodging corporations to start paying the same rates as middle-class taxpayers.
Senator Dirksen is attributed with the famous quip, “A billion here, a billion there, and pretty soon you’re talking real money?”
$380 billion of wasteful government spending, subsidies, and loopholes is detailed in the new Green Scissors report. The amount is for 2012 to 2016. I’m not sure which is most surprising, the common sense distilled to 32-pages or the fact that the report is sponsored by both conservative and environmental groups. Green Scissors 2011 is published by four organizations: progressive environmental group Friends of the Earth, deficit hawk Taxpayers for Common Sense, consumer watchdog Public Citizen and free-market think tank The Heartland Institute.
The report does not pretend to solve everything. It focuses on wasteful spending and subsidies that both harm the economy and the environment. The sponsoring groups make it very clear that they do not agree on all issues. They agree on the analysis and recommendations in Green Scissors. The report is balanced in pinpointing specific waste in subsidizing oil drilling and hybrid car buying, dirty coal and dangerous nukes, giving away land and giving away gold.
The report is likely to be popular with citizens who want to shrink the deficit, protect our global competitiveness, and not subsidize the destruction of our future. It will not be popular will oil executives whose companies pay no income tax, mining companies that extract gold from public lands for free, and farmers paid to use massive energy to make ethanol that contains less energy. These powerful companies will ask that we protect their jobs and their profits, yet the more that we do, the more the United States as a whole suffers lost jobs and profits.
Related post: “The Catastrophic Downside Risk of Nuclear, Oil, Gas, and Coal“, examines the catastrophic downside risk of nuclear and fossil energy and questions why the taxpayers and the public must bear the burdens in order to protect these industry’s profits.
$61 Billion in Subsidies to Oil and Related Fossil Fuel Giants
Green Scissors 2011 states, “For nearly 100 years we have given generous government subsidies to the incredibly lucrative fossil fuels industry. The lion’s share of these subsidies comes in the form of tax breaks that cost the government tens of billions of dollars annually. This tax spending is particularly advantageous for the industry because most of it is permanent law and does not require regular review from Congress. Thus, it can be counted on year after year.” The report identifies specific oil and other fossil fuel subsidies that, unless eliminated, will cost taxpayers over $61 billion. Here are some specific examples:
- Last In, First Out Accounting 29,661,000,000
- Domestic Manufacturing Tax Deduction for Oil and Gas Companies 6,679,000,000
- Intangible Drilling Costs 6,268,000,000
- Percentage Depletion Allowance for Oil and Gas Wells 4,657,000,000
- Oil Royalty Relief 4,033,000,000
- Deductions for Foreign Tax — Dual Capacity 3,896,000,000
This focused report identifies many more specifics. The report tries to focus on what is politically feasible, ignoring the even bigger costs of offshore drilling damage, such as the $40 billion BP Gulf Oil damage. Ignored are externalities like the damage of pollution to health and the damage of draughts, wildfires, and crop failures that correlate with global warming.
The U.S. is now paying more to borrow due to our credit rating being downgraded to AA+ by Standard and Poor’s and to A by Dagong, Asia’s largest credit agency. We owe trillions to people and governments who experienced the recent threat of not getting repaid and the reality of getting repaid with cheaper dollars. The government shutdown threat was lead by extremists who want to “starve the beast of government” and stop new revenue in any form. This approach is keeping fossil fuel giants on welfare, thereby funding their damage to our health and polluting our future.
Quotable Conservatives and Environmentalists
Former Representative Robert Inglis (R-SC) pointed out that protecting the fossil fuel industry hurts innovation and global competitiveness. Protecting aging industry hurts our future revenue and jobs from the innovative leaders of tomorrow.
“At a time when working families are expected to belt-tighten, so too must wasteful public investments in mature, polluting technologies,” said Tyson Slocum, director of Public Citizen’s Energy Program. “For too long lobbyists kept these undeserving programs and tax preferences for the fossil fuel and nuclear industry funded.”
“The Green Scissors report documents the breadth and depth of damage that government spending does to our environment,” said Heartland Institute Vice President Eli Lehrer. “Cutting government in the right places can make for a cleaner, healthier environment.”
“We can go a long way toward solving our nation’s budget problems by cutting spending that harms the environment, and this report provides the Super Committee with a road map,” said Friends of the Earth climate and energy tax analyst Ben Schreiber. “At a time of great polarization, Super Committee members can and should find common ground by ending wasteful polluter giveaways.”
“These common sense cuts represent the lowest of the low hanging budgetary fruit,” said Taxpayers for Common Sense President Ryan Alexander. “Lawmakers across the political spectrum should be scrambling to eliminate these examples of wasteful spending and unnecessary tax breaks that are squandering our precious tax dollars while the nation is staring into a chasm of debt.”
Our related post: “Energy Issues Could Help Define the 2012 Republican Primary“, argues that energy and environmental issues, and the candidate stances on them, will play a large role in the 2012 presidential election.
© 2011, John Addison. All rights reserved. Do not republish.