Oil Prices, Heating and Taxes II

At yesterday’s Senate energy hearings, one oil company executive gave the stiff, corporate managerialist answer when asked about the possibility of oil companies directly funding a winter heating assistance program…

The chairman and chief executive of ConocoPhillips, James J. Mulva, said he opposed a provision that would require oil companies to finance winter fuel assistance because it would create "a bad precedent" of a private company paying for a government program.

If a private company paying for a government program is bad, then aren’t government payments to private companies equally as bad? According to Clay Risen, writing in the New Republic, the oil industry receives $7,400,000,000 in tax-breaks and subsidies each year. As Matt Yglesias points out…

How much sense does it make to take a heavily-subsidized industry and then slap a special excess profits tax on it? Wouldn't it be better to just eliminate the subsidies?

Jonah Goldberg concurs…

I agree with Matt Yglesias, though I'm surely more hostile to a windfall profits tax, I think he's absolutely right that a better policy would be to simply cut government subsidies to the oil industry.

The fact that the idea of a straightforward spending cut never crossed the mind of our elected officials provides a key insight into what is wrong with the whole big-government concept. Congress didn’t fund home heating assistance by cutting subsidies because achieving the immediate policy outcome -- making sure households have enough money for heat over the winter -- would have come at the expense of reducing the influence bought by oil subsidies. Congress was unwilling to take direct, effective action that would have reduced its long-term influence in the private sector.