Want to know what America’s real priorities are? Easy; just follow the money.
Some of what we find when we examine federal spending isn’t a surprise. We’ve all watched as the Trump Administration has eviscerated the EPA, for example, so cuts and rollbacks there may infuriate but not surprise us. After all, Trump has dismissed climate change as a “Chinese hoax,” eliminated subsidies for clean energy, and slapped tariffs on solar panels.
Given this administration’s well-known bias against science, evidence and clean energy–not to mention Trump’s fondness for the dying coal industry–I shouldn’t have been surprised by the general thrust of a recent study of America’s federal subsidies for fossil fuels by the International Monetary Fund.
But I was.
Because the amount of the subsidy was staggering.
The United States has spent more subsidizing fossil fuelsin recent years than it has on defense spending, according to a new report from the International Monetary Fund.
The IMF found that direct and indirect subsidies for coal, oil and gas in the U.S. reached $649 billion in 2015. Pentagon spending that same year was $599 billion.
The study defines “subsidy” very broadly, as many economists do. It accounts for the “differences between actual consumer fuel prices and how much consumers would pay if prices fully reflected supply costs plus the taxes needed to reflect environmental costs” and other damage, including premature deaths from air pollution.
Since most observers consider the U.S. defense budget to be hopelessly bloated, the fact that fossil fuel subsidies exceed that budget is absolutely mind-blowing.
The study concluded that if fossil fuels had been fairly priced in 2015–i.e., priced without those direct and indirect subsidies by the federal government– global carbon emissions would have been reduced by 28 percent, and deaths from fossil fuel-linked air pollution would have been cut in half.
People (like me) concerned about the environment may not have recognized the enormity of the fossil fuel subsidies, but most of us were pretty sure that a lot more federal dollars go to support fossil fuels than are directed to programs incentivizing the development of clean, alternative energy. The IMF study confirmed that suspicion.
And then there’s the extent to which our financial support of fossil fuels exceeds our investment in education. Seeing those numbers was another gut punch. After all, Americans give lots of lip service to education; we’ve had “education Presidents,” and it is the rare politician who doesn’t make education a prominent part of his or her platform.
Nevertheless, according to Forbes Magazine, that same IMF study determined that the U.S. spends ten times more money propping up the fossil fuels that drive climate change than we spend on education.
Globally, fossil fuels receive 85% of all government subsidies. What if we diverted just a portion of the U.S. subsidies and used that money to improve public education?
Virtually every candidate for the Democratic Presidential nomination has expressed concern about climate change, and an intention to combat it. Voters can determine just how committed they are to the environment by asking whether the candidate plans to continue the obscene subsidies that waste our tax dollars, pad the bottom lines of immensely profitable oil and gas interests, and prevent us from effectively addressing an existential threat to the planet.
Just think what we could do if we redirected a substantial portion of the defense budget (as, interestingly, the Department of Defense itself has advocated) and entirely terminated the unnecessary, wasteful and arguably immoral subsidies for fossil fuels.
18 thoughts on “Follow The Money”
A friend who knows a lot more than me told me that the oil companies are leveraged to the hilt due to exploration and investments in fracking. Maybe that’s why their stockholders are crying out for subsidies.
That said, the fall of Rome began in earnest when they spent all their national treasure on supporting the armies of their conquests and were producing nothing domestically. If our taxes are being spent mostly on our military and the oil companies, is it any wonder that we just keep borrowing and borrowing?
It took Rome a century or two to finally collapse and let the Visigoths walk in. I don’t think it’ll take that long for our demise…at the rate we’re going.
$649 BILLION in 2015! In just that year??? Half a trillion dollars??? $649 BILLION???? Tax dollars???
It’s not as if oil companies and their executives are in financial peril – not like teachers trying to pay off student loans.
I just saw an article yesterday that the Koch brothers (petro-chemical barons) plan to focus on draining even more money from public schools to subsidize charter and voucher schools. The Kochs and their ALEC supporters (including Mike Pence) have pushed that agenda for 40 years, but now they plan to support Democratic primary candidates in addition to Republicans to advance that agenda. Apparently the charter and discriminatory voucher school scandals in state after state have taken too much of a toll for some former supporters to abide.
FYI for Hoosiers – Dr. Woody Myers, the Democrat who just announced his candidacy for Governor in Indiana, has been a supporter of charter schools and Democrats for Educaton Reform which has supported both charters and vouchers. Anyone interested in supporting him should be very sure to get direct answers from him on where he stands now and whether he’ll stay there. In his announcement he pledged major focus on raising teacher salaries and solving the teacher shortage. He didn’t mention how charter and voucher schools have drained millions from our teachers and their schools to finance charter and voucher schools. Here’s hoping Dr. Myers has seen the light because the Koch Brothers clearly have not. The Kochs want more tax breaks to build more leaky pipelines. Keep your eyes on the Koch Brothers and their money and who and what they spend campaign money on here in Indiana.
They’ll want more subsidies for the schools where politicians and wealthy donors send their own kids, but they don’t want those subsidies badly enough to pay for them, so they’ll take the money from public schools instead. They prefer school graduates be trained precisely for their oil rigs and pipeline jobs and chemical companies and that the GOVERNMENT schools pay for that rather than their own company.
Unfortunately for them, all the cuts in funds for public schools have also cut vocational programs. Now there’s less money for job training than before Indiana implemented charter and voucher schools. But just in case the Koch Brothers forgot, school’s first obligation is to teach students to be good citizens who are prepared for civic engagement to government themselves. Schools also teach students to be good parents, good neighbors, and teach parents that they are their children’s first and best teachers. Job training is also important but not as important the other instructional obligations. The Kochs should teach their OWN employees about pipeline operations.
The fossil fuel industries have no tangible assets. For example, Shell or Exxon Mobil don’t own the drill rigs used to produce their oil. They hire subcontractors for that. The only assets the firms have are the rights to drill in certain areas. So their assets are “in the ground.” Because the banks will let the firms use those assets as collateral for loans to pay their operating expenses, if the banks decided to stop that practice, the companies would be bankrupt. When an oil company says that it is confident that its resources will not be “stranded” resources, it is referring to those “underground” resources, and the likelihood that the company will be able get at them. If the government ended the subsidies, it is quite likely that the banks would look very closely at those assets and revise their policies on using them as collateral.
I, too, was shocked when I read this report awhile ago. A few years ago I also read a report on how the oil and gas industry has lobbied, and continues to lobby, Congress to get and keep crazy subsidies and tax loopholes, credits and deductions to pay either no taxes at all or to pay very little. If you google fossil fuel tax subsidies you may find more than you want to know. Anyway, the IRS regs they have achieved should win their accountants some type of award. They are extremely complicated and they may be different for each state or can lump certain states, etc together.
This entire scenario reminds me of how Epstein was able to get away with a slap on his wrist many years ago. If you have enough money to buy the lawyers who have friends in powerful places and/or are willing to play dirty by threatening those who might bring you down or stop your blatant theft then you can keep doing business as usual no matter who your victims are or how many of them there are. Just purchase the souls of the people who can give you what you want.
Consider the logic of the oil depletion allowance (a huge tax write-off for the oil companies). Oil is a finite resource. The more we take from the ground the less there is available in the ground, so we let the fuel companies have a little tax break for the fact that they’re taking from a limited resource. If we weren’t through the looking glass on that, we would be charging them to deplete a limited resource. Normally, the rarer a thing is, the more costly it is.
Why are we allowing the privatization of oil exploration when you consider the subsidies required to make it a profitable venture?
Why provide leases for drilling when the citizens could own the oil rights and the oil?
Who reaps the rewards for this scheme?
CEOs, shareholders, and politicians.
Like the healthcare industry, it’s a scam against the American people. When Bernie Sanders says the economy is rigged, this is just another example.
As for shifting the money elsewhere, no thanks. A large part of these subsidies are indirect which means pollution and public health get hit. Once we get universal health coverage, all the industries making us sick will be held accountable.
As I understand it fuel companies are able to depreciate the reserves on their books as assets which inclines make more money now regardless of the impact on all others ever towards over rather than understatement. In other words assets in the ground no matter how deep and difficult to “harvest” are already reducing current taxes at their current value.
At some point in time those will be as valuable as dirt because they will have no value. All fuel companies therefore face bankruptcy, it’s only a question of when those assets become “stranded”. Valueless.
This is a hard reality for many workers, investors, lobbyists and executives so they are existentially motivated to put it off as long as possible and that explains anthropogenic global warming climate science denial, a temporary relief to the cruel demands of reality.
Ouch. They’re like the dinosaurs when their time was up.
Here’s the big rub. As corporations they exist to regard only themselves and not us. As liberals though we are inclined by our social nature to help them in their time of need adapt to the cold cruel world of economics.
Fair? No. Necessary? Yes.
What is the cost of the pipelines; the environmental cost and the financial cost to communities and private areas they run through and across? What is the cost due to their hazardous waste and disposal dump sites? Think Karen Silkwood in Oklahoma and Kerr-McGee; think Erin Brockovich and California’s PG&E. Think Jon Schlictman and the Beatrice Foods destruction of forested areas near Boston. Do we even know who is dumping what and in how many sites in Johnson County Indiana causing the Childhood Cancer Crisis? What is the cost of their repeated ruptures and spills, environmentally, financially and the cost in human lives due to exposure?
We will never have these questions answered because of the massive national cover up by corporations and our own government.
Towing the party/lobbyist line doesn’t always begin at the federal level. Case in point: Madison Co. legislating a multi-year moratorium on any large-scale solar energy projects. That’s our “state that works”—for fossil fuel lobbyists and their shareholders, but not for the residents and taxpayers of Indiana.
I am not a fan of Private Bonespur. He is completely devoid of any positive trait. He is a waste of all natural resources. However he does not vote on the budget. He does over exercise Executive action. The shift in funding for fossil fuel subsidies could be reversed by Congress. Our Hoosier members of Congress are as inhumane and insensitive to the future as Trump….in spite of what their franked mailings portray.
My own overarching concerns were well expressed by Vernon Turner with all of the other comments very well representing the internal machinations of what is happening and will continue happen if we stay on our current course as well as rational and eminently feasible solutions to it. It is way past being moronic and corrupt and if we don’t change that current course that all of the oligarchs, including the orange-haired fool that currently leads the parade, are far too greedy, chronically shortsighted and stupid to resist we will relegate ourselves to the dustbin of history and be at the total mercy of who or what will take our place.
Just like the period that followed the fall of Rome we will very likely enter another “dark age” made even worse by our living on a dying planet, all of which we were hell bent on creating in our constant quest for the almighty dollar. The choice is, as it always has been, ours – yours and mine.
watching my income become the gold standard of corp welfare isnt easy. explaining how it affects the person im talking with,gets deep. seems no clue,still doesnt understand,and they vote. seems the answer,from them,is typical who cares,its been going on for so long,you dont notice..just to end corp welfare would be dollars in the bank again for what we need,the ones who do the work….unless the forces that be decide another route for the corps to steal our wages further. seeing small buisness compete with like buisnesses,for customers,who buy,directly,or indirectly from the same corp enity, makes the whole competition seem irrelevent.if i have no money in my pocket to spend in your buisness,you fail..big box gets another shit load for pennies. its a fact, the reasoning is, those monied intrests dont want us,the working class to have any voice,either on main street,or with any politcal hack. ive seen a bunch of so called sites now pandering for bucks to spread the same damn issues,and same damn excuses. maybe if only a few were only involved and they had a bigger voice as one,then we may be heard. i can relate that some really want to do good, others just look like a go fund me page for a salary. (and possible influence when they do good) im keeping my money to donate in my pocket.ive doused the sites,most anyway,stopped the relentless e mails,and no, i dont do surveys anymore after cambridge anylit. and i am aware of frauds. my donations will go direct to the canidate,not blue,not dscc,not any org. downsizing has its rewards,im more focused (i already know the story,issue etc,before they send it to me)on who really is going to at least,make a voice for change,the one like Bernies or Warrens. long over due, and the spoiled ones ,corps,investors,banks,etc,who think our country works for them,are wrong. its time it worked for Americans, not us working for their welafre…. focus a plan that the welfare they demand,and demand it changes. if they dont agree,tell em theres plenty of third world nations where they can move to,where they can shit in a bucket and walk a dirt path to work,,ive been on this tiraid since reagan,you?..best wishes.
one story that maybe of intrests,under my god fleasing folder,sunday 7/13 commondreams.org
the American dark money behind europes far right.
ive been following some elections and movement in euro for years. and this is not a new item.but the piece is detailed,and followed through. a good insight with avenues of research.
it seems deeper than we may not want look away. murdoch has alot on influence over in euroland,and hes visably making the right wing likes of boris johnson look good,while a near total blackout of left wing canidates,and views…
Excellent comments today. The direct and indirect subsidies of the fossil fuel industry have served the fossil fuels companies well (pun intended). There are also the externalization of these industries when they pollute our air, water and earth itself. Every step of the way, from extraction, to conversion to energy to the disposal of waste are costs, the industry seeks to avoid.
Nancy, I also read the article about Koch’s and their push to education privatization. I have read other articles here and there about the Koch Bros, seeking to to find Blue Dog Democrats to carry the water for them, so to speak. Sadly, there is no shortage of “Democrats” who are committed to education privatization. The Koch’s realize the danger they are in with the declining influence of the GOP and the upsurge of Progressive Democrats, The Squad and the new Green Deal.
Big Money will do what it has always done, seek, find and fund those politicians who will carry out their plans.
I have long complained elsewhere of the “depletion allowance” accorded to fossil fuel companies, a credit that very substantially decreases their tax exposure, and have suggested that workers as they age should have a labor depletion reserve that should be similarly credited to them on a sliding scale as individuals for tax purposes.
As for banks’ lending to such fossil fuel companies for gas and oil in the ground, such a leverage game is practiced in the non-fossil fuel world as well by merchants who borrow based on accounts receivable. No one allows an asset or claim to one to go un-leveraged, and banks are in on the kill every step of the way, packaging such deals into like kind packages and selling them on the financial market, sometimes disastrously, as demonstrated by the fraudulent sale of mortgage packages in the run up to and even during Bush’s Great Recession. (But not to worry. With the trillions in bailout, the big banks were well able to pay their fines with such taxpayer largesse and no banker went to jail.)
So our “policymakers” coddle the fossil fuel industry (all costs considered) more than our “defense” industries such as Boeing, a mammoth “defense” industry that made eleven billion in profits last year and paid NO taxes? What else is gnu?
Tom; we don’t need to go back as far as the fall of Rome or that far away, look at the “Reconstruction” period of the south after our own Civil War. Southern states are still fighting that war and currently, they are winning by supporting the deconstruction of our government, still considered the enemy, still seeking states rights over the Constitution, still seeking to operate under rules White Supremacy and of the Sovereignty Commission by denying minorities civil and voting rights. Trump’s appointment and the support of Republicans of Jeff Sessions as Attorney General was evidence of their continuing stand against democracy, Rule of Law and the Constitution.
Follow the Money from Credo Alerts:
“The governor of New York just signed a new law that gives Congress the power to request the New York state tax returns of elected officials ‒ including President Trump.
As you might have expected, the lead Democrat on the House Ways & Means Committee responded by… doing nothing.
Rep. Richard Neal spent months twiddling his fingers and delaying a court battle to get Trump’s federal tax returns. Now he’s showing little interest in using his new power to get Trump’s state tax returns.
Voters gave Democrats control of the House of Representatives in order to check Trump’s agenda and hold him accountable. But Rep. Neal ‒ with the strong support of other Democratic leaders afraid of their own shadow, like Speaker Pelosi ‒ steadfastly dragged his heels. He waited months to exercise his authority to request Trump’s federal tax returns from the Treasury Department. As expected, Treasury refused, setting up a long court battle that only began this month, nearly seven months after Democrats took office. ”
Once again it appears the Democrats or at least those in power like any backbone.
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