We find ourselves in the middle of one of the greatest wealth transfer periods of all time. Those with wealth must decide whether they want to make transfers, and if they do, they must decide how much, to whom, when and in what structure?
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Both are making record profits yet only the farmers appear ready to help save the country some money and forego subsidies for their crops.
The oil business? Not so much.
“In the current dynamic, we can’t take anything for granted,” the American Petroleum Institute’s Marty Durbin told the Houston Chronicle. “Given the strong desire for new members of Congress to want to show they are really doing something on cost-cutting and deficit reduction, you never know what could get thrown in the mix.”
That was last year, and Durbin had nothing to worry about. Efforts to kill oil subsidies got nowhere in 2011 and are unlikely to succeed in an election year. This despite soaring oil company profits.
Even more exasperating, though certainly not a bit surprising, is the fact that too many members of Congress are just fine with oil company subsidies and would apparently prefer to cut benefits to the sick or elderly than trim corporate welfare programs.
Earlier this month, the Obama administration proposed cutting billions in subsidies to the agriculture sector over the next decade. That includes $5 billion a year in direct payments to farmers that they receive regardless of need.
“In a period of severe fiscal restraint, (these) payments are no longer defensible,´ said the administration.
Not every last farmer agrees, but after farming income hit a record high in 2011, a consensus is building to end at least those direct subsidies.
“We feel like at this time, with the economy, it’s time to end it,” Nathan Weathers, a Yuma County farmer, told the Denver Post. “Times have been pretty good in agriculture, and we’ve been pretty fortunate, and this … where we can do our part to kind of help give back.”
That, fellow patriots, is the kind of attitude that made this country great.
Included in President Obama’s recent budget proposal is the end of “tax preferences” to oil and gas companies – subsidies that will cost more than $43 billion over the next decade.
House Democrats also have introduced the “Ending Big Oil Tax Subsidies Act,” which would save taxpayers another $40 billion over the next five years.
If small-government Republicans were true to their word, they’d fall in line behind the Democrats on this with little hesitation.
Is there any reason for hope? Perhaps a glimmer. Conservatives and liberals alike recently set aside their differences to kill the ethanol subsidy, a tax credit that cost taxpayers up to $6 billion a year and, not incidentally, boosted food prices.
The Congressional Research Service says killing oil industry subsidies would have no effect on gas prices and only a nominal effect on oil-company profits.
This isn’t about vilifying Big Oil. There’s no arguing these companies create jobs and help reduce our dependence on foreign oil. The point is that, regardless of your politics, it should be easy to recognize that subsidizing a profitable business simply makes no business sense.
Allen Greenberg is the editor of the Northern Colorado Business Report. He can be reached at email@example.com or 970-232-3142.