We all know that each president has his own unique pet projects. He talks about them during the campaign, and we expect him to act on them once in office. Even the first ladies have their favorite causes which influence policy.
We should not be surprised then that President Obama has directed billions of dollars to green-energy projects, such as Solyndra, and that he continues to push though measures that punish petroleum—believing he can make winners and losers.
But directing policy based on waves of popularity—rather than fact, makes as much sense as taxing or providing federal funding to Barbie Dolls.
Remember a decade or so ago, there was public attention drawn to eating disorders such as bulimia and anorexia? Specialty clinics sprang up to treat the young women who were engaged in unhealthy habits. Barbie dolls got criticized because it was said the unnatural body shapes contributed to young girls’ unrealistic expectations regarding how they should look.
Barbie fell from favor—though she still sells. Along came Cabbage Patch Dolls with their chubby cheeks and fat fingers. Bulimia and anorexia may still be a problem—but we do not hear much about them anymore. Today, the First Lady’s cause is obesity.
Using the President’s model of punishing one energy source while showering the other with funding—perhaps we need to offer stimulus to Mattel so they can make more Barbies, lower their price, and use advertising to sway public opinion toward Barbie again. Meanwhile, we should heap penalties on their sales of Cabbage Patch Dolls. It would presumably save money in healthcare, because we’d make being thin desirable again.
Obviously a Cabbage Patch tax or a Barbie stimulus is silly. But so is what President Obama is doing with America’s energy.
On the very same week that the Obama administration is rushing to send stimulus out the door for questionable renewable energy projects that must be funded by the end of the month, he is also trying to sell Congress on singling out the oil-and-gas industry—penalizing them just because he doesn’t like them.
If we put a penalty on Cabbage Patch Dolls and mandated that people buy Barbie it would be silly—but that is all. When we subsidize expensive renewables and add costs to the lower-priced oil and gas—we punish all Americans, as everyone needs transportation. Plus, higher energy costs impact the price of everything else.
Just as Barbie and Cabbage Patch doll sales will be determined by the free market, the same should be true for our energy sources. If consumers want to pay more for renewable energy, that should be their choice. But it should have to compete fair and square. Both renewable energy and the traditional oil and gas should receive the same deductions for business expenses and, especially in this economy, neither should be getting federal funding like the $7 billion a year in ethanol subsidies.
With Solyndra and the stimulus-fund-disbursement deadline in the news, we all know about renewable energy’s favored status. But hidden in the talk of taxing billionaires is punishment for the energy that fuels America—just because President Obama doesn’t like it.
Americans for Tax Reform has assembled a quick summary of all 14 tax hikes in the so-called “jobs plan.” More than 70 percent of them target the oil and gas industry. Even if you think that, for example, a company should not be able to deduct costs associated with drilling in the year the expense occurred—as is the case now; even if you think that energy companies should be singled out to have the manufacturer-tax deduction taken away while other industries keep it; and even if you think oil and gas companies should have to pay US taxes on money that has already been taxed in other countries, you know it will increase the costs to the energy companies.
As Kathy Ozanne, in a comment on the ATR page, said, “econ 101…Corporations never pay taxes, their customers do.” The cost increases brought on by President Obama’s “jobs plan” will serve as a tax on everyone and ultimately kill jobs in the one industry consistently creating jobs. He plan is to raise more than $40 billion in new taxes from the oil-and-gas industry—which you and I will pay.
The facts show that the President’s tax plans, which disproportionately punish oil and gas will have a net negative impact on revenues and result in more job losses. A recent study by nationally-renowned economist Dr. Joseph R. Mason evaluates the impact of just two (Dual Capacity and Section 199) of the 10 oil and gas industry-targeted tax changes the President has planned. Mason found that the revenue loss will be greater than the additional funds the tax code changes will bring in and that 155,000 jobs will be lost.
Mason says: “A far more meaningful approach would be reforming federal tax and business policies that encourage economic growth. Expansion of oil and gas exploration and production on the Outer Continental Shelf, for example, would generate an estimated $11 billion annually in Federal tax revenue in the short run, and $55 billion annually in Federal tax revenue in the long run.”
Petroleum may not be “popular,” but it still sells.
The president’s rationale for picking the oil and gas industry for punishment is the large dollar figure he can quote regarding their profits—yet their profit percentage is smaller than most industries (about one-third that of the beverage industry and one-quarter the profit percentage of the computer industry). In support of the President’s approach, people often say, “But I do not have to buy a Starbuck’s coffee. I have to buy gas”—as if that means the companies should not make a profit. But now people do not have to buy gas. They can get a government subsidy to buy an electric car. But, wait! The President’s policies are shutting down the coal-fueled power plants that make comparatively cheap electricity and are propping up the expensive solar industry.
It makes about as much sense as subsidizing Barbie Dolls and taxing Cabbage Patch Dolls to save on healthcare costs.
The President’s plans are silly—or are they sinister?