Politicians – Why Bother?

Let’s say you’re a landlord and you own some properties in another town.  For the routine maintenance and upkeep, you contract with a firm to manage the property.  The management company sends you monthly invoices for the work they are doing and you pay them.  But, what if you never checked to see that the work you were paying for was actually being done?  Maybe the work was being done, or maybe not, but you wouldn’t know unless you monitored the situation.

According to a story in the June 11, 2020 Houston Chronicle, our politicians (Congress and the President) have made such a deal (i.e., passed a law) with the oil companies providing tax incentives for capturing and storing carbon dioxide in the ground.  Oil producers for decades had pumped carbon dioxide underground to increase output, steadily filling depleting oil reservoirs with the climate-warming gas. The legislation enacted by congress was to encourage oil companies to do more carbon capture to benefit climate change. 

The carbon storage incentive program began in 2008 and required the oil companies to monitor and report the carbon dioxide captured and provide evidence the carbon dioxide is staying underground and not leaking into the atmosphere.  Two years ago, a bipartisan group of senators initiated additional legislation that doubled the tax credits for carbon capture to further encourage oil companies to do more. 

A recent report by the Treasury Department’s inspector general indicates that while $1 billion in carbon tax credits have been claimed, almost 90 percent went to oil companies that never offered any proof they are storing the amount of carbon dioxide claimed on their tax forms.  The IRS is now reviewing the filings of 10 oil companies that account for 99 percent of all the tax claims and to date, has disallowed almost $600 million of the tax claims, due to lack of monitoring.  But the IRS has offered no explanation as to why the companies didn’t monitor their carbon storage nor did they name the companies in the report. 

Sen. Bob Menendez, D-N.J., who requested the Treasury Department to investigate the program, has called for Treasury to suspend the carbon capture tax credit for oil companies until a full investigation can be completed.  “While (Treasury) acknowledged that the IRS had conducted audits and denied credits for a portion of these claims,” Menendez wrote in a recent letter to the IRS, “hundreds of millions of improperly claimed taxpayer dollars remain unchallenged by the IRS.”

So, my question is why would our government (or any business or person) agree to pay for a product or service and not monitor whether or not they were getting the product or service.  Why pass a law providing tax incentives to do something if you’re not going to monitor the companies to ensure they are doing what they claim they are doing?  Is compliance with the law required only if someone requests an investigation?  It’s not as though we can trust oil companies – any more than my hypothetical example of a building management company.  I like what President Regan said to the Russians in negotiating arms reductions: “Trust, but verify.”  Seems like we need more watchdogs in order to get our taxpayers money’s worth.

On a related topic, new carbon-capture technologies – far different from the current practice being used by oil companies – and sometimes referred to as “carbon-sucking machines” – are being proposed as a means of reducing the amount of carbon dioxide emitted into the atmosphere.  A recent Commentary printed in the Houston Chronicle entitled “The smart policy bet for carbon neutrality” discussed the feasibility and advantages of one of these “carbon-sucking” machines. 

Advocates for these new technologies argue these new machines may enable us to continue to burn fossil fuels and still avoid the results of the additional carbon dioxide and its impacts to the climate.  However, most environmental groups argue these not-yet-developed technologies are high-risk bets offered so that the needed reductions to our fossil fuel consumption, are postponed while we wait for these “magical solutions”.  Naomi Klein’s This Changes Everything, devotes an entire section of her book to risks of “Magical Thinking” technologies.  (See Why.)   If the supporters of the fossil fuel industry are the ones offering these solutions, can we be sure they will work and we’ll get the promised results or are they at best, delaying tactics?

Returning to the effectiveness of our governmental programs, I think it’s fair to say that some deliver their intended results and some do not. When programs are successful, we should be applaud the success. When programs fail, we should seek to eliminate or fix them. We need competent government, including monitoring, for we the people to ensure that our politicians are promising and delivering on these promises. Otherwise, why bother? We should applaud Sen. Bob Menendez for getting oil companies to return hundreds of millions of taxpayer dollars they were not entitled to.

One footnote: I hope the Treasury Department’s inspector general doesn’t lose their job as a result of investigating the oil companies. It’s been known to happen in the past.