Frequent readers of this space understand that I am hardly in favor of the government providing any advantage to one group over another when it comes to the business of business. As a result, I am in favor of doing away with any and all subsidies. I’m sad to see that Senator Thune is still defending the subsidies he likes:
South Dakota congressman John Thune was correct when he spoke for Republicans in arguing that repealing this tax break for oil companies won’t lower gasoline prices to consumers. But it would remove an egregious government intervention in free markets that misallocates resources and makes society as a whole poorer than it would be otherwise. That is an action Republicans claim to favor.
Though some see government subsidies delivered via tax breaks as somehow morally different from subsidies delivered by writing checks, economists are united in scoffing at this, and the more conservative economists are generally the greater their scorn. So to economists, a special tax break for oil works out in almost exactly the same way as a direct subsidy to a crop producer. [emphasis added]
Indeed, the only difference between these is that a politician can make them out to be different things. Practically, however, both approaches are tilting the table.
Our illustrious Senate just made back-to-back bad decisions on oil, with our own senators canceling out each other’s votes:
The bill to end the tax breaks died, 52-48, with South Dakota Democrat Tim Johnson voting for the bill and Republican John Thune opposing it.
The bill to expand oil exploration failed 42-57, with Thune in favor and Johnson opposed.
The particularly sad thing here? Johnson voted against the tax breaks and against exploration because he seems to believe that big corporations are evil and manipulative–all the things which government is not. Thune voted for the tax breaks because he’s fine with the status quo and he voted for drilling because more oil production makes sense in terms of increasing supply to lower prices.
We might just as well have stamped CANCELED on the possibility of our at-the-pump energy costs dropping into the reasonable zone any time soon.