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Brooks Wilson's Economics Blog: A Candid Moment From Al Gore

Tuesday, November 30, 2010

A Candid Moment From Al Gore

Too often Americans assume that candidates for elected office run on policy platforms that they believe promote the public interest.  More common is the candidate who adopts a platform designed to garner the most votes within her regardless of the cost to the economy as a whole.  Subsidies of ethanol production and mandates for its use are examples of policies with few benefits and high costs.  In a candid moment, former Vice President and current environmental activist Al Gore acknowledges the policies’ deficiencies as his own reasons for supporting them (“Al Gore's Ethanol Epiphany”).

One of the reasons I made that mistake [of supporting ethanol subsidies] is that I paid particular attention to the farmers in my home state of Tennessee, and I had a certain fondness for the farmers in the state of Iowa because I was about to run for President.

Politicians will give the electorate what they want and special interest groups will have more knowledge of what they receive than the average taxpayer or consumers do of what they pay.  Politicians double down on these policies by concentrating a program’s benefits in their district while spreading the cost through the nation.  A good Congressman or Senator, one who brings home the bacon, will bring more federal funds into his district than extracted from the district through taxes.  The result will be unnecessary, inefficient programs that bloat the government budget. 

As a partial remedy, the income tax code could be calibrated so that the funds a district receives equals the taxes it pays.  Districts that receive more than they pay would be subject to higher tax rates than districts that receive less than they pay.  The tax rates should be calibrated so that the funds a district receives equals the taxes it pays.  It is not a perfect solution.  The beneficiaries of the tax benefits are still likely to be more aware of the benefits than the taxpayers in the districts but a Congressman or Senator will need to justify higher tax rates to voters due to programs favoring special interests to remain in office. 

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