September 15, 2008
Urgent: Drilling and Taxes
By James Wilson

Quote of the Day:
"Solar cells generate at least ten times more power when attached to the concentrator."
-- MIT researcher, Marc Baldo, inventor of a new technique to make solar power cheaper

Subject: Should we trade increased drilling for increased taxes?

Congress may vote this week to allow expanded offshore drilling. But if they do so the bill is likely to include increased taxes for oil exploration companies.

The Democrats don't want increased drilling. The issue is killing them in the polls. It could cost them both the White House and, amazingly, the House of Representatives. Recent polls show the public leaning back in the direction of the Republicans for Congressional races. Democratic opposition to drilling seems to be one of the main reasons. Congressional Democrats are trying to remove this issue from the elections by allowing for expanded offshore drilling, but at a price . . .

The Democrats desperately want to increase taxes on the oil companies. So they're willing to expand offshore drilling in return for eliminating tax credits for oil exploration. This is the bill (there is no bill number available yet) that's likely to come to a vote this week. Meanwhile, the Republicans are playing their own games with taxes and energy . . .

The Republicans, and some Democrats who want to reduce the deficit by raising taxes, have been blocking the renewal of tax credits for alternative energy sources (green energy), since long before offshore drilling became a campaign issue.

It's fairly easy to see what's happening here. The Democrats are acting on behalf of their green constituency, while the Republicans are acting on behalf of their supporters in the fossil fuel industry. But is either party acting on behalf of the general interest? ...of either the consumers or the environment? We think not.

As an organization, is neither for drilling nor against it (hang on, keep reading). Likewise, we are neither for any particular form of alternative energy nor against it. Neither are we especially fond of tax credits, as they are often just another means for politicians to engage in top-down social engineering that usually ends up favoring one group at the expense of others. Instead . . .

We are for free competition between all forms of energy.

We would prefer low uniform taxes, without complicated tax credits or subsidies.

We would also prefer that the government stop running deficits so that businesses would no longer have to compete with the government to acquire capital.

We think market prices and consumer preferences are the best way to create the optimum mix of energy sources to foster economic growth and environmental protections, AT THE SAME TIME.

Experience has demonstrated that politicians are NOT competent to engineer any aspect of the economy, either through tax credits or subsidies, or through regulations and prohibitions. We believe . . .

* Businesses are going to create clean and efficient energy sources because future price increases for fossil fuels are creating a profit opportunity for such innovations, and because many consumers want green alternatives
* Most consumers will increasingly prefer clean energy sources as innovation makes them cheaper, and many will want to pay premiums prices for clean energy even BEFORE it becomes cheaper
* Many of the innovations we need will come from places that cannot be anticipated, and therefore cannot be "encouraged" by central planning political schemes with tax credits and/or subsidies

How can we make these claims? We believe they're consisent with both history and the weight of the evidence . . .

Exhibit A in the argument against social engineering by Congress would be the impact of tax credits and subsidies for ethanol in particular and agriculture in general.

As for energy innovation, our blog is full of examples:

* Like the car that gets 50 mpg, or
* The tires that don't require air, or
* The supercool, two-seater car that gets 300 mpg.

And the innovations just keep coming, faster than we can publish them on our Downsize DC Foundation Human Progress blog. The latest is a system for concentrating solar power developed by researchers at MIT that may come to market in as little as three years!

Downsize DC is about direction, not destination. Realistically, we're going to need to be much larger to impose our views on Congress. And that day comes faster with your financial support.

Therefore, if we can't have low uniform taxes with a balanced budget achieved through spending cuts, it would be better to have tax credits, especially if they don't favor one form of energy production over another. Toward that end . . .

We need to ask Congress to vote on offshore drilling as a stand-alone issue, uncomplicated by any provisions about taxes. You can use our "One Subject at a Time" campaign for this purpose. Use your personal comments to tell Congress to vote on offshore drilling without addressing the issue of tax credits for oil exploration. You can send that message with our easy-to-use Educate the Powerful System.

Then, send a second message about the tax credit issue. We've created a new campaign that we will use to argue for tax cuts, and we can use it in this case to ask Congress to preserve the existing tax credits for energy creation. Use your personal comments to ask Congress to preserve tax credits for oil exploration AND to renew the tax credits for alternative energy. You can send that message using our free Educate the Powerful System.

Congress may vote this week, so please take action now!

Please also consider making a contribution or starting a monthly pledge to further our work. Monthly credit card pledgers really make our work possible. You can make an impact here.

Thank you for being a part of the growing Downsize DC army.

Jim Babka
President, Inc.

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