PrintMay 3, 2011
Will Conservatives Embrace Paul Ryan's Call to End Corporate Welfare?
Wind, solar, geothermal, and biomass power. Corn ethanol, embryonic stem cell research, electric and hybrid vehicle development, and "green" technology in general. Education. All are enterprises with highly-criticized government subsidies. And the vast majority of the criticism comes from conservatives
But what of oil, gas, and nuclear power subsidies? What of grants that go to companies or technologies which conservatives like?
At a recent town hall meeting, Representative Paul Ryan (R, Wisconsin), said,
We're talking about reforming the safety net, the welfare system; we also want to get rid of corporate welfare. And corporate welfare goes to agribusiness companies, energy companies, financial services companies, so we propose to repeal all that.
Ryan spoke an unthinkable truth. And yet reducing federal subsidies of all kinds, whether awarded to personal or corporate recipients, is an idea whose time has come. Repealing corporate welfare and allowing markets to function free of government interference is but one of the tough actions which must be taken if America is to crawl out of the $14.3 trillion debt ditch into which we've dug ourselves.
Ryan's office issued a release stressing that the House-passed budget resolution "clearly states that as part of an overall corporate tax reform, tax loopholes and deductions for all corporations should be scaled back or eliminated entirely. That obviously includes oil companies."
But scaling back or eliminating oil subsidies would cause gasoline prices to rise. It's important to understand that the resulting lower demand for federal revenues would render future tax increases unnecessary and perhaps tax reductions possible. In other words, in the long term, consumers would benefit. But it's the short-term petrol price that's going to be painful.
Right now, with inflation rising, most people aren't in any mood to tolerate additional hits to the wallet. So will conservatives stand on principle? Or will they keep on blasting green energy subsidies while calling for continued tax breaks and subsidies for favored industries.
One prominent conservative has already weighed in. Republican House Speaker John Boehner's office made it clear that Boehner has no intention of going after oil companies' tax breaks. Indeed, the Speaker is caught between an oil slick and hostile "journalists." The liberal media would feast on the voter anger that higher gasoline prices would rain down on Republicans.
So then, a fundamental question is whether or not conservatives generally, and Republicans specifically, will prove themselves free market advocates or reveal themselves as unabashed market manipulators? Will Republicans play to the emotional reactions of voters just like Democrats do? In order to behave in a purely principled manner, conservatives would have to admit that reducing favored companies' costs with taxpayer money is a bad thing. To behave in a brutally honest manner, conservatives must acknowledge that allowing government to pick marketplace winners and losers in any market segment is a losing economic game plan in the end.
Here's hoping that conservatives follow free-market principles. Having a strong, rational, conservative Republican party to counterbalance the strong, irrational, liberal Democrat party is a must for America's wellbeing.
A writer, physicist, and former high tech executive, Chuck Rogér invites you to sign up to receive his "Clear Thinking" blog posts by email at http://www.chuckroger.com/. Contact Chuck at swampcactus@chuckroger.com
