This post was co-authored by Matthew Stepp, Clean Energy Policy Analyst at the Information Technology and Innovation Foundation (ITIF), and Teryn Norris, President of Americans for Energy Leadership
In the aftermath of the debt ceiling crisis and as the Joint Committee on Deficit Reduction seeks a second budget deal, many public interest groups are working hard to ensure that even while Congress cuts wasteful spending, it preserves vital public programs and expands smart investments in the nation’s future. In the energy and climate policy community, a broad range of groups are fighting to defend clean technology investment programs – such as the Advanced Research Projects Agency for Energy (ARPA-E) – that have taken years to establish and offer a glimmer of hope amidst a largely bleak political and policy landscape.
Other organizations are taking a different approach. This week, two progressive groups – the environmental Friends of the Earth and consumer advocacy group Public Citizen – drew attention when they joined the libertarian Heartland Institute and deficit-hawk Taxpayers for Common Sense in releasing a spending cut plan. In a report called “Green Scissors 2011,” the groups call for $380 billion in spending they identify as “wasteful government subsidies” and “environmentally damaging.”
These types of collaborations are rare, and the report marked a unique opportunity for traditionally opposed organizations to take a leadership role and break the gridlock on budget, energy, climate, and environmental policy. Unfortunately, the report not only fails to realize this opportunity, but makes fundamentally misguided choices that would be counterproductive to reducing the budget deficit and could potentially exacerbate America’s climate and energy challenges.
At the heart of “Green Scissors” is a collection of $380 billion in “wasteful [federal] government subsidies that are damaging to the environment and harming taxpayers,” which the groups believe should be targeted for cuts or elimination. The proposed cuts include:
- Eliminating $61.275 billion in conventional fossil fuel subsidies and tax incentives.
- Eliminating $49.615 billion in nuclear energy programs for R&D, loan guarantees, environmental cleanup, and nuclear waste liability funds.
- Eliminating $95.817 billion invested in renewable energy loan guarantees, corn ethanol subsidies, R&D, the FutureGen carbon capture demonstration project, and fuel technologies development among others. The report also targets the elimination of the Advanced Research Projects Agency for Energy (ARPA-E).
- Eliminating $56.655 billion in agriculture subsidies.
- Cutting over $106 billion in selected transportation programs and projects including transfer payments to the Highway Trust Fund.
- Eliminating $15.290 billion in selected land and water subsidies and programs.
At first glance, the proposal correctly identifies some unproductive spending that should indeed be eliminated. For example, corn ethanol subsidies do little more than prop up an uncompetitive alternative fuel that offers little to no carbon emission reductions (its initial intended goal) and doesn’t represent a future, robust economic growth opportunity. In this way, the proposal appears to open a more nuanced budget debate that the United States desperately needs. Instead of across the board slash-and-burn budget politics, policymakers should be examining the entire federal budget with a fine-tooth comb and differentiate between vital public investments – such as programs aimed at solving our key economic, energy, climate, and environmental challenges – from government spending on unproductive programs. Like Time Magazine’s Michael Grunwald lamented, “Here’s a crazy thought: Maybe we should spend more on good things and less on dumb things.”
But this potential is never fully realized, and the report ends up making several factually incorrect statements, misguided recommendations, and errors of omission. These recommendations are often supported by ideologically-driven economic myths and backed by shallow analysis and evaluative criteria. In particular, the report makes three major errors:
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