A tariff on an import is not different than a tax on the consumer. It is a distinction without difference.
Bob can be forced to pay $100 to the U.S. to hand over to ACME Refrigerators so he can pay $100 for a $200 refrigerator (which really costs him $200 include the tax subsidy), OR Bob can pay $200 for a $100 foreign refrigerator that has a $100 tariff added to its price. Bob is paying more either way.
Now purchasing domestic oil at a price just above the break-even fracking price takes money out of Bob’s pocket for sure, but let’s look what Bob will get out of it.
- First, the the money purchased a nonperishable product that will retain value.
- Second, Bob is protected from the reestablishment of a monopoly that has but one wish, which is to crush the competition, so that they can gouge the hell out of Bob going forward.
- Third, besides holding the price down longer for Bob, the defeat of the bid for monopoly will result in the oil Bob purchased being worth more in the future, thus decreasing Bob’s future taxes.
Mind you, I’d purchase the dirt-cheap, market dumping oil from the Saudis for as long as they’d pump it, while stockpiling our own oil. Bob would be a lot better off at every stage of the endeavor.
Could it be done privately? Theoretically yes, if I had a trillion dollars I could start purchasing fracked oil at $40 a barrel, knowing that doing so would defeat the Saudi bid for reestablishing a monopoly. Then oil would pop back up and I’d make a hell of a profit. Of course, the private industry has already been doing this, which is why most every tank and tanker in the world is chock full.
Look, I am no fan of subsidies and I’m on board with everything you are saying that removing hurdles, regulation expense, and undue taxation should be the first steps. But that said, when a foreign power acts outside of free market principles to pursue the destruction of a U.S. industry as a matter of its own foreign policy, then it is the responsibility of the U.S. Government to act to protect U.S. citizens, even if those citizens own large corporations.
A tax on the product is paid by the user of the product.
Requiring the government to buy at above market prices takes tax dollars from all to give to private companies.
Both are bad ideas, but only one is a subsidy.