The Spectacle Blog

Government Shouldn’t Pick Winners and Losers

By on 5.24.11 | 3:52PM

Over on the main page today Roger Pol argues that a government subsidy and taxation scheme to create incentives for use of natural gas in vehicles -- a la "The Pickens Plan" -- should be the nation's new "True Energy Policy," and he ponders why President Obama hasn't endorsed the NAT GAS Act, which has the endorsement of "a bipartisan group of more than 150 members of Congress" (as though that is a reason to do anything). He writes:

The NAT GAS Act provides incentives for using natural gas in vehicles, purchasing natural gas vehicles, installing natural gas refueling stations, and producing natural gas vehicles in America.

Today James Valvo of Americans for Prosperity explains in The Washington Times why NAT GAS is another loser effort by both major political parties to pick economic winners and losers:

The bill provides tax credits between $7,000 and $64,000 for vehicle purchasers and $10,000 for vehicle producers; extends the 50-cent-per-gallon credit for natural-gas producers and allows tax benefits for infrastructure installation. All in all, it's an astonishingly comprehensive effort by government to pick a favored energy source and prop it up....

Instead of trying to subsidize fossil fuels in an arms race to match the wide array of subsidies for renewables, it's time for Washington to get out of the energy-subsidy business. The energy industry, like the rest of the economy, should have a tax code with a low rate, flat structure and few exemptions. Ethanol, natural gas, solar, wind and, yes, oil should all have to play by the same rules. Ethanol's $6 billion-a-year tax credit has got to go. The NAT GAS Act should be rejected out of hand. Wind and solar energy should lose their option of a 30 percent investment tax credit or a 2.2-cent-per-kilowatt-hour production tax credit. Oil subsidies - principally the Enhanced Oil Recovery Tax Credit and the Marginal Well Production Credit - also should be eliminated. Providing a level playing field where the market can choose which type of energy makes the most sense for the American economy is a key element of our economic recovery and reordering our disastrous federal finances.

I'm surprised no one among the AmSpec commenters (so far) identified the flaws in Pol's piece. I'm glad Valvo wrote an excellent piece today to expose it for what it is.

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