The Absurd Report

The Obama Administration today released its proposed FY 2011 budget. Not surprisingly, it contained $36.5 billion in new taxes over ten years on the oil and gas industries, while heaping new billions in taxpayer support for politically-favored energies. Such policies are never a good idea, but they are particularly destructive in the midst of a severe recession. Levying new taxes on efficient energy, and new subsidies for inefficient energy, is a recipe for higher prices and fewer jobs.

New Taxes on Oil & Gas

The White House budget request claims that, �Oil and gas subsidies are costly to the American taxpayer and do little to incentivize production or reduce energy prices.� In the first place, it is odd to hear the White House worrying about high energy prices, and also to hear it deny that tax policy gives incentive for production.

Both of these points flatly contradict the whole philosophy behind the White House�s favored cap-and-trade scheme, which is expressly designed to (a) raise the price of fossil-based energy and (b) reduce the incentives to use such energy sources. The White House can�t have it both ways: Do they want higher energy prices (cap-and-trade) or don�t they? And do they think government policies influence energy production, or don�t they? If they claim tax hikes on the oil and gas industries won�t have any incentive effects on production or jobs, then how can they claim that �green investments� will create jobs in the solar and wind industries?

The White House�s statement also euphemistically labels its tax hikes as ending �subsidies� to the oil and gas industries, but that would only be true if the IRS is considered the rightful owner of every dime earned in America. After all, in 2008 alone, the major energy producers incurred $95.6 billion in total income taxes, of which $23.2 billion went to the U.S. government at all levels (the rest being owed to foreign governments).

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