Republicans believe in the free market so much that they want the government to subsidize it. At least that's the message sent by congressional Republicans' energy platform.
Celebrating the recent death of a Democratic energy bill loaded with pork, subsidies, carbon boondoggles and onerous regulations, Republicans back in their districts this month are proudly contrasting their energy policy with the Democrats'. While those policy differences are real, this much is the same between the two parties' approach to energy: Both want a bigger government role in the industry, and both would transfer wealth from regular Americans to well-connected special interests.
While Democratic corruption, overspending and overtaxing will carry Republican House candidates pretty far, the GOP suspects it also needs a positive agenda — and this election year, that includes the American Energy Act. But in this year of Tea Parties, this plan shows that they still don't really believe that government is the problem. In this arena among others, Republicans are more pro-business than pro-market.
In the 153-page measure, only one provision really reduces the government's role in the energy industry: a section barring the Environmental Protection Agency from using the Clean Air Act to regulate CO2 — the stuff plants need in order to live — as a pollutant. The rest of the bill isn't all bad, and it isn't all big-government stuff: Much of it is about tweaking rules to promote oil and gas drilling on federal land. But when Republicans say their energy policy is “all of the above,” they apparently mean “subsidize everything.”
The GOP energy bill would provide, through the EPA, a program of “financial assistance” to companies looking to open refineries. The subsidies are supposed to help companies deal with the permitting process. So rather than simplify a regulatory morass, subsidize the lobbyists and lawyers trying to navigate it.
On the “green side” of things, Republicans would ramp up our current policies of picking winners and losers. The GOP bill perpetuates and expands special tax credits for alternative-fuel vehicles, hydrogen refueling stations and plug-in electric cars. It also extends tax credits for energy-efficient appliances, “energy efficient properties,” home energy audits, renewable-energy production, microturbine properties and biodiesel.
Not everyone on the Right agrees that tax credits count as subsidies — they are, after all, respites from the taxman. But tax credits distort the market and take investment capital away from products or technologies that are more productive. Every microturbine investment driven by a tax credit means one other business — one not as politically favored — didn't get the loan or equity it would have gotten in a free market.
It's not only tax credits, though. Republicans would create an “American Renewable and Alternative Energy Trust Fund” that would hand out subsidies to favored technologies. In fact, the bill specifies the precise percentage of Trust Fund money to go to which fuels.
For instance, biomass gets 3 percent, “clean coal” gets 7 percent, while “marine and hydrokinetic renewable energy technologies” get 2.5 percent. That whole free-market notion about the free market providing the optimal allocation of resources seems so barbaric when you can have some Republican congressmen determine which technologies are most promising.
What might a free-market energy policy look like? It would stimulate smarter investment in technology by eliminating all the tax credits that distort the market and replacing them with across-the-board tax cuts — this also includes abolishing the long-lasting subsidies for fossil fuels.
Also, eliminate government policies that drive up energy consumption, such as subsidized shipping and subsidized highways. On the local level, zoning laws could be fixed so that people don't all have to drive to get the store.
But in this year of the Tea Party, it still looks like Republicans haven't gotten the message.
Timothy P. Carney is The Washington Examiner's Lobbying Editor. His K Street column appears on Wednesdays.