What is the Exit Strategy?

The media might be flush with stories about President Obama’s remarks at Camp David regarding the Afghan War exit strategy, but there is an issue back home that requires its own strategy: subsidies. Congress has a long history of awarding subsidies to politically-favored industries, but no history of ever ending those subsidies.

Among all the special interests seeking handouts in the farm bill, biofuels is somewhere near the top. Bolstered by the Obama Administration’s constant rhetoric about funding “green” energy, lobbyists for the biofuel industry are working overtime trying to ensure their subsidies.

Testifying before a House Agriculture subcommittee last week, the president of MFA Oil Co., Jerry Taylor, asked for several more years of handouts for his particular industry. Mr. Taylor’s company is running a biomass energy project which needs the grass Miscanthus giganteus to be grown. Thanks to $14.6 million in taxpayer-funded subsidies, farmers are growing the grass.

But now, Mr. Taylor wants taxpayers to fund this project until it is commercially viable, which he thinks will be a few years. As CQ reports (subs. req’d.), Congressman Reid Ribble (R-WI), asked whether a company dependent on subsidies would ever be viable (think: solar energy):

“‘Is it possible that in five years, we’ll be here again and we’ll hear, ‘Just another three years’’ until the technology develops or the project is commercially viable, Ribble asked.”

Mr. Taylor argued that cutting off the funding was not the answer and that the government needs to work with companies to end their subsidies in the future, as CQ notes:

“According to Taylor, the department should ask, ‘What’s your exit strategy from public subsidies?’”

He’s absolutely right on the need for an exit strategy, but it doesn’t help his case.

As with all government subsidies, there is never an end.

Taxpayers were only supposed to jumpstart a nascent wind energy industry; yet, two decades later, the wind industry and their supporters in Congress are once again trying to extend the subsidies. If wind isn’t viable after two decades, why should we expect it to be profitable in the next two decades? And why should taxpayers be on the hook for that risk?

The same goes for solar energy. We’ve wasted billions in subsidies to companies like Solyndra, Beacon Power and dozens more without any economic or innovational return. We’re no closer to the next “green” fuel source than we were years ago, when the subsidy free-for-all (aka stimulus) began.

Washington subsidies don’t end. Companies that receive subsidies have massive lobbying teams to ensure that taxpayer funds never dry up. His subsidy request aside, we need to be asking the same question as Mr. Taylor, “what is our exit strategy from public subsidies?”

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