I was struck by the seeming incongruity between two news announcements this week. On Thursday the president of the European Central Bank, Mario Draghi, announced that the ECB was not yet ready to implement aggressive stimulus intended to nudge interest rates higher in Europe to avoid deflation.  Meanwhile, here in the U.S., our Congress is working hard this week to hustle a $42 billion package of tax breaks through the House before heading home for the holiday recess.

In the overall scheme of things the American tax breaks may add up to peanuts compared to the potential consequences of European monetary policy, but it does illustrate the extent to which the fortunes of the two continents have diverged since both were mired in “The Great Recession” not that long ago. However, it would be naïve to think that the two economies have become disconnected. The U.S. needs Europe to get healthy, as it is a major trading partner and is the manifestation of western influence on the other side of the ocean.

The Europeans have gone so far as to introduce a negative interest rate on money held by commercial banks overnight at the central bank in hopes of inducing them to lend that money out to businesses that will in turn invest it in new infrastructure and hire more employees. If there are any doubts about the efficacy of supply side economics, those questions will soon be answered.

And if there was any question about our elected officials being able to resist the temptation to extend tax breaks to a wide variety of constituents and special interest groups, well, I guess that never really was a question to begin with. It is estimated that approximately one in every six U.S. taxpayers will in some way benefit from these tax breaks, so hopefully you will be one of the lucky 17%. If not, then you will be one of the unlucky 83% that is indirectly subsidizing a miasma of federal assistance for the movie industry, racetrack owners (both cars and horses), and liquor producers, among other things.

To be sure, there are some worthwhile beneficiaries included in this effort. I’m okay with tax credits that encourage research and development since that should eventually result in a higher GDP for our country. But I’m having trouble ginning up much enthusiasm for an exemption that allows banks and brokerage firms to avoid paying taxes on foreign profits, even though just about everyone else has to.

I also don’t object to giving a tax break to teachers who use their personal savings to buy classroom supplies for their students, since that can also be viewed as an investment in America’s future financial security. But I’m less sanguine about tax breaks for wind farms and other highly inefficient sources of renewable energy. Recently the price of oil has dropped below $70/barrel after topping out above $100 less than six months ago, so what’s the hurry?

When governing bodies step in to introduce tax breaks or inject artificially cheap money, it has the effect of skewing the workings of the free market in ways we cannot predict. For all we know the solution to the “energy crisis” – to the extent there really is one – is something other than wind, biofuels, or solar. In fact, it may not be a direct source of fuel at all; it could be better technologies that decrease the need for energy altogether, or something else entirely that is presently unforeseeable.

What I do know is that if you distort the true supply and demand relationship of something by throwing enough of other people’s money at it, you can temporarily create the illusion of financial justification. In the long run that is the greater folly than not subsidizing it at all, as wasting time and money going down a blind alley while a competitor is pursuing the correct economic solution is the surest way to gradually slide down the global pecking order.

At first glance all of this may appear to be nothing more than a case of one governing body exercising discipline in the face of mounting adversity, while another governing body lacks the discipline to discontinue tax breaks that, for the most part, are no longer necessary to stimulate an already reinvigorated economy. And if that’s all this really is, then at least I have the comfort of knowing that some of my hard earned money is going to support rum manufacturers in the Caribbean. C’est la vie.