Paper and Politics: Unraveling the Black Liquor Boondoggle

Loyalty goes where money flows, both into and out of Washington. And that, according to Dead Tree Editions, is the reason why the U.S. paper industry is now waving the red GOP flag and breaking up with the Democratic administration.

It all comes down to the “black liquor” boondoggle that provided controversial subsidies to the industry to the tune of $25 billion dollars in recent years.

As the author notes, he’s neither a fan of the left or the right himself, saying “I believe in both the laws of science and the laws of economics, which these days means I’m neither a Republican or a Democrat. So don’t try to read any political bias into the following article; it is intended to be equally offensive to liberals and to conservatives.”

The science he refers to centers around climate change, with Democrats seeking to take the issue on with unmanageable and expensive direct solutions and heavy-handed business regulations, while the Republican side of the aisle continues to publicly deny there really is a problem. All the while, many are privately investing in companies that stand to make real money a climate-altered world.

The economics revolve around the questionable “eco-incentives” that paper companies were able to collect by simply continuing to burn a pulp byproduct called “black liquor” as a fuel source. So the American taxpayer foots the bill for paying companies to basically continue doing what they were already doing, because it made good business sense to do so.

To add insult to that financial debacle, the IRS chose to stand down when many of those same companies declared that those subsidies were non-taxable.

While the black liquor money flowed, the paper industry came down in support of the Obama administration. Now that this hose of largess has dried up, the American Forest & Paper Association is changing dance partners.

“The bureaucracy that causes delay after delay and regulations that fail to balance benefits with costs have created an atmosphere of uncertainty in the business community, making it difficult to plan for future investment when the rules change faster than they can be implemented,” said Donna Harman, president and CEO of the American Forest & Paper Association.

According to the author, Harman specifically singled out environmental regulations. Interestingly, one of the largest players in the industry – Georgia Pacific – is owned by the Koch brothers, and I think we all know where their loyalties lie.

Clearly political solutions for American businesses are not the ultimate answer. Businesses will continue to support and lobby for those policies that improve their bottom line. It’s time for a major overhaul of our corporate welfare system, and time to put business back into the hands of business owners and take it off the table in Washington.

Radical? Not really. We believe that any thinking person can see the problems with the arguments coming from both sides of the aisle. And it’s all about the money. As usual.