Committing bad government is just too easy

Congress wanted to discourage fossil fuel consumption. So now we're paying paper companies to consume more than ever. A case study in political failure.

Published April 7, 2009 10:30AM (EDT)

The blogosphere can't get enough of Chris Hayes' story in the Nation detailing how paper companies are raking in windfall profits by abusing a tax credit designed to decrease dependence on fossil fuel.

The bottom line:

Thanks to an obscure tax provision, the United States government stands to pay out as much as $8 billion this year to the ten largest paper companies. And get this: even though the money comes from a transportation bill whose manifest intent was to reduce dependence on fossil fuel, paper mills are adding diesel fuel to a process that requires none in order to qualify for the tax credit. In other words, we are paying the industry -- handsomely -- to use more fossil fuel. "Which is," as a Goldman Sachs report archly noted, the "opposite of what lawmakers likely had in mind when the tax credit was established."

The gory details reveal a disaster pretty much any way you look at it, except for the paper companies, who are making more money off abusing the law than they can making paper! And Hayes jumps right to the natural conclusion in these Wall Street-obsessed days:

Whether or not Congress gets around to turning off the spigot, the episode is a useful reminder of the persistently ingenious ways the private sector can exploit even well-intentioned legislation. Considering that the success of the Treasury's recently announced plan to rescue the financial sector depends, in part, on the private sector not gaming the rules, the black liquor story seems particularly germane.

Granted, this is the kind of stuff that makes libertarianism look attractive. And it is doubly distressing that Congress doesn't appear eager to close the loophole in short order. Unintended consequences of legislation are inevitable -- the measure of good government is how politicians respond to them. Without the will to impose real oversight, acknowledge mistakes and fix them when they are discovered, and constantly strive to improve governance, we will be stuck with bad government. And that might be one of the most distressing results of decades of being told that government is the problem -- we hear a story like Hayes', and think despondently, you know, they were right, rather than squaring our shoulders and reapplying ourselves to the wheel.

By Andrew Leonard

Andrew Leonard is a staff writer at Salon. On Twitter, @koxinga21.

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