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"Wrong Answer - Commentary by Joseph C. Phillips"
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The presumptive Democratic presidential nominee Barack Obama has promised Americans a new kind of politics – “change we can believe in.” Who could’ve suspected that the change he was referring to was a reversion to the failed policies of 30 years ago?
In response to the rising price of gasoline, the senator responded, "I'll make oil companies like Exxon pay a tax on their windfall profits, and we'll use the money to help families pay for their skyrocketing energy costs and other bills."
For my middle class money, the senator gave the wrong answer to the first economic question. Go to the back of the line; no gold star for you.
In 1980, President Jimmy Carter signed into law a windfall tax on big oil profits also hoping to use the money to subsidize the cost of rising energy prices.
The policy was a failure. The Congressional Research Service found that “the tax reduced domestic oil production by 3% to 6% and increased oil imports from OPEC by 8% to 16%.” And what of all that revenue that was to pour into government coffers in order to give relief to American consumers, (who oddly enough were now burdened by higher gas prices and shortages)? It turns out that the tax was expensive to impose and equally as expensive to collect. Tax revenue dripped in rather than raining down. When the tax was finally and mercifully repealed, the New York Times summed up the policy thusly: “…when Americans waited two hours in gasoline lines and Saudi princes summered in Monaco, it seems almost quaint now."
It is remarkable how new liberals have convinced themselves that because their hearts are in the right place, the laws of economics (to say nothing of history) simply do not apply to them.
The senator’s answer does, however, reveal something about the basic tenets of new liberalism to whit: wealth is bad and always ill gotten – that is all wealth that is not their wealth. Further, they are committed to the redistribution of wealth over and above the stated goals of providing relief for the common man.
Obama, for instance, sniffs that lifting the ban on off shore drilling “is not something that's going to give consumers short-term relief, and it is not a long-term solution to our problems." If we can’t drill for oil and we can’t build nuclear energy plants, how can we achieve the independence from foreign oil that every president since Jimmy Carter has promised and failed to deliver? Of course, none of those other men promised to calm the seas and heal the world so perhaps Obama is up to a job the others were not.
In what can only be described as a truly cynical gesture the junior senator from Illinois recently voted for a farm bill that rewards corn based ethanol, which as it happens also drives up the price of everything from beef to beer.
Corn growers are reaping record profits. They have experienced a windfall if you will. The rising price of corn has also led to correspondingly high prices for wheat and barley and has sent the price of groceries soaring. Yet, there is no call for a windfall profits tax on corn growers who despite the increasing demand for corn are planting fewer acres this year than last. In fact, the senator wants to replace tax subsidies for the oil industry with tax subsidies for the ethanol producers. Most of these subsidies do not go to small family farms, but “big agriculture.”
Where is the relief for the common man? Most of us could stand to walk more and drive less, but none of us can stop eating. Of course, none of that matters so long as we punish big oil companies for making profits.
What remains unclear is what is new about demonizing “big oil” in order to earn populist points while at the same time supporting policies that hurt consumers? The answer is nothing. The new politics of Barack Obama smell an awful lot like the politics of old. And if it smells like bull, well…
Joseph C. Phillips is the author of “He Talk Like A White Boy” available wherever books are sold.