Wednesday, August 06, 2008

BARACK OBAMA

The Post: Now Obama 'Has Two Gimmicks of His Own' on Energy

The editors of The Washington Post greet Barack Obama this morning by ripping apart his windfall profits tax proposal with simple logic.

Making Exxon surrender money that is now falling into its lap would not necessarily affect its longer-term plans or incentives. Indeed, some of Big Oil's "windfall" already will go to the government: The more profit the companies earn, the more corporate income tax they pay. But to add a five-year tax increase on top of that to pay for a one-year gift to voters would, indeed, increase the cost of doing business. That cost would be passed along in forgone investment in new production, lower dividends for pension funds and other shareholders, and higher prices at the pump — thus socking it to the consumers whom the plan is supposed to help. If oil prices fall, there might be no windfall profits to tax. Then the Obama rebate would have to be paid for through spending cuts, taxes on something else or borrowing.

When his presumptive Republican opponent, Sen. John McCain (R-Ariz.), proposed a gas tax holiday as a way to reduce the high cost of driving, Mr. Obama showed political courage and intellectual honesty by refusing to sign on to that obvious gimmick. "It's an idea to get them through an election," Mr. Obama said. Now he has two such gimmicks of his own.

The other gimmick they deride is Obama's proposal to swap more-expensive light crude held in the Strategic Petroleum Reserve for cheaper heavy crude "with the goal of bringing down prices at the pump." They note previous moves by Clinton (pre-election) and Bush (post-Katrina) "led to drops in the spot price of crude but not the sort of relief at the pump that Mr. Obama promises. Even if they had, any relief from Mr. Obama's plan would be temporary while compromising a reserve intended to protect against disruptions in supply caused by wars, boycotts and the like."

Not the first time the Post editors have slammed Obama this hard in this cycle; recall they declared that he was acting "indifferent" to the outcome of the Iraq War. Once again, it's almost impossible to picture the Post endorsing McCain, but Obama is making it tough on them.

08/06 07:45 AMShare