If there’s one thing that Democrats (including President Barack Obama) and at least some Republicans (including House Budget Committee Chairman Paul Ryan) seem to agree on, it’s the need to wipe out federal subsidies for oil companies.
Big Oil, of course, is a particularly juicy target these days because prices at the gasoline pump have climbed past $4 and the world’s six biggest publicly traded petroleum producers raked in a combined $38 billion in first-quarter profits. In light of all this, do any of these corporations really need $4 billion in tax breaks?
For Peter Drucker, though, questions about subsidies wouldn’t have stopped with the oil industry. Even the best-intentioned government support programs, he believed, tend to continue long after they have outlived their usefulness.
“Governmental agencies should . . . be required to abandon one program or one activity before a new one can be started,” Drucker wrote, suggesting that many social welfare and farm programs began with good results but then became outmoded. “Most of our housing subsidies probably belong in the same category,” he added.
[EXPAND More] The oil companies, not surprisingly, defend all the tax deductions and loopholes they receive, maintaining that they’re necessary to help ensure financial health. “The simple truth is that these are legitimate tax provisions to keep U.S. industry internationally competitive — to keep jobs from being exported to other countries,” said Ken Cohen, an ExxonMobil vice president.
But Drucker believed strongly that no company should rely on subsidies — “bribes,” he called them — to do anything that it wouldn’t and couldn’t do otherwise. For any company looking to expand, Drucker wrote, “the first question has to be: ‘If we didn’t get this bribe, would we do this as part of our business strategy?’ If the answer is ‘no,’ don’t do it however tempting the bribe. It will be a costly failure.”
What do you think: What government subsidies would you cut? Which, if any, would you keep — and why?