According to the Cato Institute, federal subsidy programs topped the 2,000 mark for the first time last week. Almost half of those have been created in the last 20 years: the number of federal subsidy programs soared 21 percent during the 1990s and 40 percent during the 2000s.
As Chris Edwards, Cato’s director of tax policy, rather depressingly puts it, “There is a federal subsidy program for every year that has passed since Emperor Augustus held sway in Rome. We’ve gone from bread and circuses to food stamps, the National Endowment for the Arts, and 1,999 other hand-out programs from the imperial city on the Potomac.”
Of course, Washington isn’t alone in the subsidy game. Texas does pretty well too. In addition to the standard economic development programs, Texas is tops in the nation when it comes to renewable energy subsidies. By 2020, Texas consumers could be paying as much $1.3 billion a year to support wind energy—that is in addition to the $300 million or so the Feds are contributing to Texas wind producers. The solar folks are also lining up—the cost of proposed solar subsidies last session ran as high as $220 million. And they’ll all be back in 2011.
It would be nice in this one instance if we could topple Texas from its number one ranking.
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After looking into solar energy, I learned that the utility companies artificially mask the irregularity of the demand (i.e. spikes in the afternoon, dips at night). This means we’re all paying too little during peaks (day) and too much during the valleys (night). Ironically, this approach removes the true incentive for a technology like solar since the output of any new solar system is forced to compete with these artificially low prices instead of competing directly with power plants production costs. My painful epiphany was that we are not paying out cash to subsidize solar, we’re paying it to subsidize the behavior of the utilities themselves.