Subsidies (in Debates)

Someone who I respect greatly in CB CMd me saying that the governments policy towards Big Oil is in fact a subsidy.

Now here is the question.

When the government takes less taxes is that really a subsidy?

Because what the government is doing with Big Oil is just giving them tax breaks. It is not giving them money, just taking less taxes.

I would say that is not a subsidy. If the government lowers my tax rate, is that really a subsidy to me? no, it is less of my money I am giving to the government. It is my money to start with that the government is taking.

As I have read, the government is not giving Big Oil any money as it does in other sectors, such as farms where it actually pays farms not to grow crops. That is a subsidy.

In my view they are both subsidies, you are getting money that you otherwise wouldn't be under normal circumstances.

It is by definition, actually.

http://en.wikipedia.org/wiki/Subsidy#Indirect_subsidies

The section on exports talks about taxes, too. The section on infrastructure talks about subsidizing oil by buying it through defense policy.

Also, this:
"Subsidy may also be used to refer to government actions which limit competition or raise the prices at which producers could sell their products, for example, by means of tariff protection."

And:
"Examples of industries or sectors where subsidies are often found include ... gasoline in the United States ..."

How is that not a subsidy? It's for all intents and purposes equivalent to saying "For every $x of revenue you make, we'll give you an extra $y."

The question I guess is that if the government takes less taxes away, is that a subsidy?

My thinking is that a subsidy is when the government gives you money. Like they do with farmers not growing stuff.

Just taking less taxes is, in my thinking, not a subsidy. Just the government taking less.

You say potato, I say spud....they all make fries

Farmers no longer receive that subsidy...it's moved on to ethanol in the form of tax breaks.

Oil companies may not receive subsidies, as you define them, but tax breaks amount to the same thing because their competition doesn't receive the same breaks...oh wait they have no real competition - which is why we pay so much for fuel.

What competition are you typing about?

Every corporation receives the same tax breaks as Big Oil except for 1 of 4 tax breaks.

In fact, Big Oil does not get 530M from the USG and blow it like "green" companies such as Solyndra.

ask this question, does the policy of the government confer an advantage which is not universally available? if the answer is yes then the policy is a form of subsidy.

Financially speaking, the net effect of a subsidy or a tax break are very similar for BOTH the business AND the government.
The end result in both cases is more money for the business and less money for the government.
And that's the only thing that really matters.

So, yes, for most practical intents and purposes, tax breaks are A SPECIFIC SUB-FORM of subsidy.
No matter what industry or business you're talking about.

Everything else is just demagoguery.

To address this point:

There are 4 tax breaks Big Oil gets:

Domestic manufacturing deduction - 1.7B
Percentage depletion allowance - 1B
Foreign tax credit - 850M
Intangible drilling costs - 780M

The first 3 are available to every business, whether energy related or not.

The 4th is defined as:
Intangible Drilling Costs (IDC): When an oil or gas well is drilled, several expenses may be deducted immediately. These expenses are deductible because they offer no salvage value whether or not the well is subsequently declared to be dry. Examples of these types of expenses would be labor, drilling rig time, drilling fluids etc. IDCs usually represent 60 to 80% of the well cost. Investors usually put up the drilling portion of their investment before drilling operations commence, and the investorﾒs portion of the intangible drilling costs is generally taken as a deduction in the tax year in which the intangible costs occurred. The accounting method adopted however could affect the deduction period.

I guess this is almost the same as R&D costs which all businesses get to deduct in some way.

So again, it is really a subsidy as all businesses get these same deductions.

Then your question is not whether it's a subsidy or not (because by its very definition IT IS a form of subsidy), but whether it's a preferential//unfair//unwarranted subsidy.

Well when people read the word "subsidy" it carries a different meaning than the words preferential treatment. But yes, I think you are correct in your statement.

However, again, it is really a subsidy when everyone gets the same treatment?

Yes, and they're all stupid.

can competition from other countries get them?

If they do business in the US, yes.

I should have said universally available and applicable. I don't know the details of the US system but the words tax break imply that it is not universally available and applicable otherwise it should not be called a tax break.

Some tax breaks are universal in the US.

They include mortgage interest deduction, depreciation, foreign tax credits etc...

It is true that if you do not have a house you do not get the MID, but everyone who pays interest on a mortgage gets to take it off on taxes.

Taxes, and taking breaks from paying them, aren't universal.

You certainly are correct Bast.

47% of the US fail to be universal in paying any federal income tax for instance.

And, if we each make $100k per year, you get more of your money back because the U.S. Federal Government prefers that we all own houses and penalize me for not buying one.

We each make $100k per year.
On the same day, we each sign for a $500k house.
My mortgage is at 3%.
Your mortgage is at 4.5%.
We each get our "mortgage interest" tax deduction.

The bank gets its money, I get my tax deduction for "what I paid on my 3% of $500k this year", you get your tax deduction for "what you paid on your 4.5% of $500k this year". You get more money back than me AND the bank gets to keep its money.

You didn't buy a more valuable house, you just agreed to pay more for the same house. The difference is going to the bank. The bank is the beneficiary of the subsidy in this case.

I've still yet to hear anybody argue why any of these subsidies are good?

Actually we both paid 500k for that house. You are paying more for the loan, not the house.

The loan, however, is at different rates due to various factors. Including credit rating, ability to shop around, and perhaps the bank you use and your negotiating skills to get a lower loan. Other factors include the willingness to pay points to lower the rate. The rate can also change depending on the time of the loan as 15 year loans are cheaper than 30-40 year loans. If you get an ARM, the rate will be cheaper than a conventional loan. A jumbo loan will be a higher rate than a conventional loan.


The bank gets its money no matter what percentage you pay. The money you can save will of course depend on your rate, which in turn is determined by a number of factors discussed above.


At least not in CB. And most of us have been quite consistent about all tax breaks being poor.

Actually there was another thread I created in where I discussed a flat tax.

In it there were a couple of points about subsidies/tax breaks.

The chief one was it can help the government steer policy to what it thinks is needed. Like the subsidies "Green Energy" gets.

The thread is : http://www.carnageblender.com/bboard/q-and-a-fetch-msg.tcl?msg_id=003H1C

Same difference. =/ The methods to giving money have been adapted for different names yet same results.
Bonk. They made a bad bet with that money. They also lobbied much like the drillers in question to get that money. Must I link more?
Far as I'm concerned that was biz being biz and you are being all too red fringe formal with repeated agenda rhetoric.
Considering your annual 4 billion in breaks Big Oil gets that mess seems like a dime drop in the top hat.
You are not a global corporate installation last we heard. Since we brought up farmers vs. oil you should reflect on the absurd difference in stature between the two. Not for argument, just an Occupy exercise to annoy with. ;p
Very soon I'm going to write a show tune entitled "Pathological" and dedicate it to you.

And how much did Exxon alone play in taxes last year, over 8B.

And the 4B in tax breaks are available to every corporation, big bad oil gets nothing special.


Bad bet??? It was criminal given the pro forma was extremely poor to begin with.


Just make sure to call it by its true name "Pathologically correct". As all my points are based in fact. Yours on the other hand, are just conjecture and projection.

Don't worry, I'm sure in his show tune, as in everything else he says, will just be a bunch of thrown together words he looked up that actually says nothing together as a whole.

Not attacking Big Oil. Not supporting Solyndra. 8B is something special. Guessing you didn't read the links before. If you spoke in facts we wouldn't have 200+ posts in 1 vs. 5 sessions. This is the conjecture I pose as the last post lacked the attempts at fact finding needed to be awarded such slander.
Titan's words hold some truth though. If I may take from the kettle. Pretty sure he's jealous of my mad dictionary skills. ;)

Frankly I found these new assertions above to be deeply ironic for both parties.

btw I didn't read this until just now, notice this liberal said bad bet too ;)
http://finance.fortune.cnn.com/2011/08/31/what-went-wrong-at-solyndra/

It was a bet that should not have been made. It was a bet on a 100 to 1 shot made with public money on a dream.

And it was over 500M, which is not "mess seems like a dime drop in the top hat."


I fell out of my chair laughing. Thanks!

While agreeing the money should not have exchanged hands. You are grossly exaggerating, which is my job, and your failure to take in any new information is as consistent as ever.

What am I exaggerating?

What "new" information am I not taking in?

I know more about the whole Solyndra deal than that one article. I know they first came to the Bush administration looking for a government loan and were sent away due to it being a very bad investment. One that the current administration could not wait to throw money at for their photo stimulus op.

So what new information do I not take in?

Replace 'know' with 'think' and that comment is fine.

The thing people have to remember is that the majority of the civil servants who run these projects don't change after the elections. The guaranteed loan program in the DOE was a republican project signed in by Bush. They were voted out of office before anything was actually approved for loans, so we can't say what they would or would not have given money too.

DoE timeline:
http://energy.gov/sites/prod/files/Solar%20Background%20Document%201.pdf

Exaggerating.

Hear that echo? No, it's not Loch being mimed.
http://mediamatters.org/research/201109190020
Me, fairness thread, link, fairness thread. I had to go fish in that long thread to find more that you ignored. I fell sorry for Sox again!

Time for more of the same crap flung in that fairness thread. Does the Solyndra buzz button near your hamster brain wheel need to be pressed every three days? Sure both are of energy investments. Sure both had* lobbyists. Let me fetch some BP oil beaches in turn. Oh, is BP not relevant? Well neither are those Solarmadeoff accountants that probed the orifices of every american with sun heated tubes. That was a very different case from what YOU are talking about now AND that was one back-flipping company's ego-check where this has progressed to the country's entire drilling industry!

For Piss Christ's sake you railed on against meager art hand outs there yet we're on to asking IIIFFFF big evil forever oil gets subsidies?!
If you want to link about the art funds, fine, it works here, it's part of the field, and by all means give that paintbucket another shot. Just grrr I know it helps me each time you shoot your own foot by saying another S word of the teabag cliche, but all that has come is knowing how little you know of that in which you accuse. That little tid bit of knowledge about the Bush era door slam might be the most information you've said on the subject other than it was a blight on the land for uncertain reasons beyond half a billion lost to developing a future. Don't pretend you knew more because this post wouldn't have been fueled without your fact based flub.

Read the wikipedia article I posted. Nobody else did :(

Actually Loch it is a known fact the Bush administration declined the Solyndra loan.

I will stick with my know and not your think, thank you very much.

Fine, throw up a link (other than Fox News) that says that Bush's office turned away Solyndra. I've looked and other than referring it through for further due diligence in the DoE credit committee I can't find anything.

http://campaign2012.washingtonexaminer.com/blogs/beltway-confidential/bush-admin-declined-approve-solyndra-loan

Between the time the Bush administration declined to proceed on the loan and the time the Obama administration approved it, nothing changed in their pro forma and application.

http://www.humanevents.com/article.php?id=46217

Yes a conservative site, but the facts are the facts.

From the DoE timeline on Solyndra:

From your first link:

Ok, all consistent here, project doesn't cross the 't's and dot the 'i's, needs to be looked at further.

And your second link:

Yep, actually that's consistent too. They referred it on for more analysis, as stated in the DoE timeline.


Further from the DoE http://energy.gov/articles/solyndra-facts-vs-fiction-more-credit-committee

"the entire chain clear shows that the credit committee wasn't pulling the plug on the application at all"

Two things stand out here:
1) The project was not killed outright at any point.
2) Bush doesn't appear to have been directly involved at all.

Therefore I reject your 'fact' that Bush voted against Solyndra.

And one last link:
http://energy.gov/articles/solyndra-facts-vs-fiction-credit-committee

The DoE also makes available a lot of emails and the Jan 9th 2009 committee memo on the project. None of these indicate project rejection or Bush involvement... just the work of career civil servants.

Did I ever say they killed it? No, I stated they were sent away given it was a bad investment, which time showed to be true.

They declined to give Solyndra any money based upon their pro forma which was a poor investment.

If Solyndra came back with new information, I have little doubt they would have had a relook by the Bush administration.

However, the Obama administration could not wait to throw stimulus money to green energy and companies like Solyndra that went belly up.


It was never completely killed, yes. But it was never approved by the Bush administration even thought the application was reviewed by Bush's administration and rejected for money.

Bush himself likely was not, but his administration did their due diligence and did not give them money. Unlike the current administration that wasted over 500M of tax payers money on a pipe dream.

If you want to get very technical, Bush himself did not put his stamp of disapproval on Solyndra, but the people in his administration certainly did.

I guess I have to be really really really specific in my verbiage in the CB forums as you like to really play the "gotya" game.

However, key points:

1. the Energy Department's credit committee made a unanimous decision not to offer a loan commitment to Solyndra.

2. On January 13, the head of the credit committee sent the program staff a note saying he had canvassed the credit committee members, and that they had decided to instruct the program staff "not to engage in further discussions with Solyndra.

The application did not change subsequent to these actions. The views of the administration in the WH certainly did. Free stimulus money to those who supported him. The those in the US paid for.

So I should instead respond to what you mean and not what you say?
Riiight. You said Bush voted against Solyndra and it was a fact, I argued against that. I'm sorry, that was clearly wrong of me.

Oh, and the five committee members that referred the project for further review under Bush were the same five committee members who passed it through months later once Obama became president.

Yeah, I just don't get you Ranger, I really don't. I can respect having different opinions but this has been one of the most ridiculously painful exchanges I have ever been a part of. You don't debate, you browbeat.

Solyndra didn't get money under Bush and Solyndra did get money under Obama. This is all true. The evidence suggests neither president had much to do with actual review and passing of the project though the DoE (as per DoE records). I cannot see a logical leap to 'Bush rejected it'/'Obama threw money at it'. I'm sorry, it just isn't there.




You said it, and I dispute it. Since neither of us seem inclined to reconsider our position this conversation is, for all intents and purposes, over. Thank god.

Loch,

Read this:

http://www.iwatchnews.org/2011/09/14/6465/obama-administration-agreed-solyndra-loan-days-after-insiders-foresaw-firms-failure

A study done not by Fox, but by ABC.

The Obama administration rushed through the Solyndra deal as part of the stimulus money. Yes, the same members were involved in the committee, however, it went much higher than that committee for approval.

Chu, the energy secretary rushed the approval as a photo op for Obama and the green energy lobby.

You can refuse to believe the facts in evidence, I see them clearly.

From the good old DoE timeline:



Seems like the timeline was established before Obama's administration came in to power.

I'm not saying it was a good investment. I'm not saying that the approval system didn't prove deficient.
I am saying there is no proof that the republicans would not have passed Solyndra had they won the 2008 election and there is no proof that Solyndra got money purely because Obama did win.

I cannot say what McCain would or would not have done. He is too much of a RINO to predict what he would do.

However, I think the evidence is clearly there that the Obama administration and Chu fast tracked the Solyndra loan. Disregarding the Bush administrations rejection of their loan application. And without doing their due diligence on the pro forma despite the numerous warnings.

It followed a time table set before the Obama admin took power. One can argue that the passing of Sec. 1705 Loan Guarantee Program created by the American Recovery and Reinvestment Act (ARRA) sped up the proceedings as it created additional funds, but that bill was passed after Solyndra had been remanded for further review and temporarily pegged for approval in early March.


Again, this did not happen. It wasn't past the DoE committee by the time Bush left office.


The DoE had a 3rd party review as per policy before recommending to Secretary Chu. You can argue that their due diligence work was incompetent, but it was done by the DoE committee not the Obama administration.

Is there one other than this link NS?

Awww Ranger is stuck in a corner again. How cute! Here's some cheese.
/me drinks some whine
Stop exaggerating. The article you posted also exaggerated(with sophistication) and assaulted much like myself so don't go saying facts are facts just yet. Did enjoy the continued pun.
Here's a better article you should have used Ranger. Noticed two things when reading his articles. One already known, the donations, and the 2011 time stamp on his writings. Seems no reporter anywhere cared this guarantee happened until failure struck. Vultures. =/ btw heard months ago the greater scandal(s) were had within the DOE rather than the WH from somewhere and was content with that claim as it made the most sense. Still am. :P
http://www.iwatchnews.org/2011/05/24/4710/skipping-safeguards-officials-rushed-benefit-politically-connected-energy-company
Within this Obama bashing we forgot to throw in an authentic conspiracy theory.
Big Oil did it with a face pipe!

Now for a personal thought. As if I'd have those. ;)
Solly went bankrupt in Sept. the same month as two other solar companies which is why I favor american wind and nuke so much at present. Think the solar R&D and product of other countries can be assimilated with the years. Won't see me talk about geotherm any as that should go in case by case basis for buildings and held with uncertain caution...unless we plan to make boreholes like in Alpha Centauri. That would be the best tourist trap ever! If we finally took to CCS development all the better. Another idea to fly out there, cascading solar rods on windmills. :P
This concludes the best thread jacking of the year.