How Times Have Changed

Back in the late 1970s, when gasoline prices zoomed and oil companies were making money hand over fist, our government enacted a windfall profit tax to return some of those unjustified gains to the public that was paying for them. Today, as gasoline prices have again skyrocketed, the federal government's reaction is exactly the opposite: add to the excess profits of energy companies with new tax concessions, paid for by ordinary American taxpayers.

Back in April, in a rare moment of economic sanity, President Bush noted the obvious fact that “with $55 oil, we don't need incentives to oil and gas companies.” By August, however, Bush had reverted to form, signing a 1,725-page energy bill premised on the notion that the free market doesn't work so well after all. Apparently, $55 per barrel of oil was the magic number. At $64 a barrel, energy subsidies are once again needed.

The Energy Policy Act of 2005 includes billions of dollars in tax breaks and grants to oil, ethanol, coal, nuclear, and (to a much lesser degree) renewable-energy interests. Its enactment reflects classic pork-barrel politics in the worst sense. In both the House and Senate, the vote was not so much party line as regional -- reflecting where the pork was doled out.

To illustrate, nearly half of the Republican “no” votes in the House came from one state, Florida, both of whose senators, one Republican and one Democrat, also opposed the bill. It seems that Florida got stiffed on subsidies -- as did Massachusetts, whose 10 representatives and two senators (all Democrats) voted unanimously against the measure.

In contrast, all of the Democratic senators in 15 states voted for the bill, including those in six states -- Arkansas, Hawaii, Illinois, Michigan, North Dakota and West Virginia -- where the Democrats hold both seats. These votes reflected handouts for things like coal, ethanol, chicken poop, or, in the case of Michigan, lack of action on vehicle mileage standards.

Ethanol, by the way, is already subsidized at 50 cents to $1 per gallon, but still can't compete without governmental assistance. Generating electricity from wind, garbage, and chicken waste has been subsidized since the Carter administration, yet these “infant industries” never seem to grow up enough to stop sucking on the public teat. Environmentalists are always telling us that their favored alternative-energy sources will be able to stand on their own feet once fossil-fuel prices get high enough. When will we ever see that day?

House Energy and Commerce Chairman Joe Barton offered the most Orwellian defense of the package, arguing that “this bill is based on the premise that we believe in private free-market capitalism to develop the resources of this land in a cost-efficient fashion.” In an almost equally weird assessment, Senator Kay Bailey Hutchison claimed, “We need to make domestic-oil and gas-exploration projects cost-competitive.”

Other senators and representatives unabashedly praised the bill's subsidies for their local interests. For instance, Senator Max Baucus joined his state's Democratic governor, Brian Schweitzer, in touting an otherwise uneconomic coal process. “Developing this state-of-the-art technology will usher in … hundreds of new high-paying jobs for Montanans,” Baucus said.

A spokesman for the American Petroleum Institute summed up the anti-market spirit of the bill: “If you don't provide the relief, nothing will happen,” he said. It's reminiscent of an old Doonesbury cartoon in which an oilman's wife tells him it's time to go to work. “I just don't have any incentive,” he whines. “I don't even have enough incentive to get out of bed.”

Officially, the energy bill's giveaways are supposed to cost $14.6 billion over the next 10 years, offset in part by $3.1 billion in higher gasoline taxes on consumers. But that doesn't include the bill's $70 billion in authorized but unfunded subsidies, for which cash will have to be appropriated later. One of those, for example, would fund oil exploration in Georges Bank, the enormous (and already struggling) fishing area off the coast of Nantucket. A spokesman for Bush's Mineral Management Service dismissed environ- mental concerns about this item, telling The Boston Globe that “we're being asked to do something, but we're not provided any money to do it with.” Not yet, that is.

At bottom, the energy bill proves the iron rule of politics as it's practiced these days: Those with the most money are first on the list to be given still more.

It stinks.

Robert S. McIntyre is the director of Citizens for Tax Justice.

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