With our country facing enormous budget deficits, it is more important than ever that Congress and President Obama take stock of our nation's budget priorities and use taxpayer money wisely. One big opportunity is to stop federal subsidies that undermine our policy priorities. That way we spend less and government works better.
But even with the yawning budget deficit, this won't be easy. Tough spending cuts require taking on some of the richest and most powerful corporations in the country. These politically difficult decisions must be made if we are going to return to fiscal sanity.
Last February, President Obama took a stand against one of the most entrenched special interest groups in Washington when he took on the oil companies by calling for the elimination of over $33 billion in giveaways to oil and gas companies in his budget. At an international summit in September, Mr. Obama went even further, calling for an end to all subsidies for fossil fuels. In his State of the Union address, President Obama reiterated this commitment. With our nation in financial crisis, now is the time to make good on this promise.
This isn't about expanding government power through regulation, and it isn't about punishing oil and gas companies. It is simply time for the fossil fuel industry to play by the same rules as the rest of American business.
While eliminating these oil and gas subsidies would be an important first step, it must only be the beginning. There are countless wasteful and environmentally harmful projects being funded with our tax dollars. Subsidies for the biofuels industry are a perfect example. We lavish generous tax credits on this industry without paying any consideration to the environmental and social liabilities that biofuels can have. The subsidies drive widespread production of monoculture crops, such as corn for ethanol, requiring massive fertilizer and other agrochemical inputs, which result in further environmental and financial costs.
Ethanol production has been subsidized for more than 30 years, and the cost to taxpayers is sharply growing. Over the next five years, biofuels businessmen could line their pockets with nearly $40 billion from U.S. taxpayers. The industry doesn't need these tax credits. Federal regulations have handed the companies a guaranteed market due to consumption. If these businesses can't make a profit on their own, maybe they shouldn't be in business.
There are more ways to cut. The Department of Energy (DOE), for instance, is considering betting upwards of $50 billion on risky projects with a history of failure, such as nuclear reactors and liquid coal facilities, through its loan guarantee program. DOE already has a history of losing billions on loan guarantees back in the 1980s. Mr. Obama should not gamble billions of taxpayer dollars on projects that might not work out.
With the U.S. staring into a fiscal abyss, it is time for the president and Congress to get tough with the special interest groups that are raiding our treasury and jeopardizing our valuable natural resources. We know it isn't going to be easy. We need real leadership now more than ever.
Erich Pica is president of Friends of the Earth. Ryan Alexander is president of Taxpayers for Common Sense, a nonpartisan budget watchdog organization.