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Energy should be top priority during second term

BY MARGO THORNING Published: December 15, 2012

It's also time to eliminate wasteful government spending on hopeless “green” projects. Today, more than 75 percent of all tax subsidies go to renewables. The government also provides billions in direct support to the industry. These benefits are so lavish that the average solar company's effective tax rate is actually a negative 245 percent! Wind energy's effective tax rate is a negative 164 percent.

Public engineering of the energy market might be appealing in theory. In practice, though, the government has proved to be bad at picking good investments. Solyndra isn't the only flop. Several government-backed battery factories have also closed. The most recent example is the electric car battery maker A123 Systems, which took in over $249 million in federal grants before declaring bankruptcy in October.

The government may have a role to play in financing the earliest stages of energy research and development. But that's it. Passing an expansive energy bill geared at increasing domestic production while cutting wasteful green subsidies would create jobs, boost the economy and reduce the deficit. This must be President Obama's top priority come January.

Thorning is senior vice president and chief economist for The American Council for Capital Formation.