By Ken Silverstein Harper's Magazine December 3, 2008
That was fast.
“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,” Obama said a few months ago when he was running against John McCain.
Now president-elect Obama has “shelved a proposal to slap oil and natural gas companies with a new windfall profits tax,” according to a story in the Houston Chronicle. The Obama-Biden transition project didn’t announce the shift. It was acknowledged after the American Small Business League released a press statement noting that Obama’s promise to implement such a tax had been removed from change.gov, the transition’s web site.
“The promise was displayed prominently at the top of the ‘economy’ section of Obama’s campaign website,” said the statement. “That same information was transferred to Obama’s transition website, www.change.gov, when it was launched on Thursday, November 6th. However, the language regarding the windfall profits tax was removed on Saturday, November 8th in an unceremonious and abrupt manner.”
I’ve heard reasonable people argue for and against the windfall profits tax, and gasoline prices are way down over the past few months. Still, it’s curious that Obama has already dropped the idea given how prominently it featured in his campaign rhetoric. And just over a month ago, Exxon Mobil reported a $14.83 billion profit for the third quarter, a record for a U.S. company.
By Keith Johnson Wall Street Journal December 3, 2008
Political theorists have long worried about the “tyranny of rising expectations.” What about the tyranny of dashed expectations?
President-elect Obama already riled up many supporters with his early picks for the administration, such as Iraq hawk Hillary Clinton for Secretary of State. The choice of Marine Gen. Jim Jones for national security adviser spurred others to fret about a “catastrophe” for the administration’s energy and climate policy.
So what happens now that Mr. Obama has erased the idea of a windfall profits tax from his energy plan?
Apparently, the transition team quietly rubbed out the proposal to slap U.S. oil companies with a windfall profits tax a few days after the election. While it wasn’t exactly the centerpiece of Mr. Obama’s energy proposals, it sold well at a time of $140 oil (and it would have been earmarked for household energy “rebates,” not clean-energy invesment, like we believed.)
But the price of crude oil has tumbled, losing about $100 a barrel since July. That’s why the windfall tax is now off the table, Obama advisers told the Houston Chronicle. Windfall taxes were always a controversial idea—having been tried in the 1980s—but make less sense when oil companies are struggling more to finance future investment.
That’s got some people furious. Lloyd Chapman, the head of the American Small Business League who noticed the change, wonders if the nixed windfall tax is “a further indication that large corporations are already demonstrating their ability to influence the Obama administration.” Big Oil, on the other hand, is predictably giddy. Reason Online cried “hooray for economic sanity.”
The bigger question is what this portends for future energy policy in the Obama administration. The president-elect is still an outspoken advocate of new climate-change legislation, but congressional leaders warn that is unlikely in the short run. The gloomy economy—and the need to fix that first—threatens to push other big promises like a clean-energy revolution onto the back burner in the short run.
The Obama team has often talked of hitting the ground running come Inauguration Day; will it find itself running into headwinds from its own supporters?
Obama Backs Down from Promise to Institute Windfall Profits Tax
Petaluma, Calif. -- President-elect Barack Obama has removed any reference of his promise to implement a windfall profits tax on the oil and gas industry from the Obama-Biden Transition Team website, www.change.gov.
During the course of the 2008 presidential election, the Obama campaign called for a windfall profits tax on the oil industry as a means of subsidizing a $1,000 "emergency" rebate for consumers struggling with surging gas prices. However www.change.gov, which houses the Obama-Biden transition agenda, was recently cleansed of any mention of such a tax.
The promise was displayed prominently at the top of the "economy" section of Obama's campaign website. That same information was transferred to Obama's transition website, www.change.gov, when it was launched on Thursday, November 6th. However, the language regarding the windfall profits tax was removed on Saturday, November 8th in an unceremonious and abrupt manner. (Pre-change,here; post-change, here.)
While on the campaign trail, Obama made provocative statements regarding the cost of energy and its respective negative impact on American families. On May 6, 2008, Obama stated, "It isn't right that oil companies are making record profits at a time when ordinary Americans are going into debt trying to pay rising energy costs. That's why we'll put a windfall profits tax on oil companies and use it to help Indiana families pay their heating and cooling bills and reduce energy costs."
With the election behind him, President-elect Obama has failed to justify the removal of the windfall profits tax from his tax plan. The subtle and unexplained elimination of this issue from the Obama-Biden agenda should concern Americans from every background. The American Small Business League (ASBL) questions whether the sudden elimination of this issue is a further indication that large corporations are already demonstrating their ability to influence the Obama Administration.
"This is not the only campaign promise the Obama-Biden Transition Team has removed from change.gov; I believe that President-elect Obama owes the American people an explanation as to why these campaign promises have been pulled from his agenda." American Small Business League President Lloyd Chapman said. "With that in mind, someone from the mainstream media needs to ask President-elect Obama why these policies have been dropped."
Obama And Oil Companies: Did The President-Elect Just Break His First Campaign Promise?
By Nick Baumann Huffington Post December 3, 2008
Mother Jones
On the campaign trail, Obama railed against big oil companies. He often criticized John McCain for backing tax cuts that would reward ExxonMobil and other top oil manufacturers. But now Obama's proposal to apply a windfall tax on big oil has vanished... at least from his transition website. The President-elect's transition team hasn't explicitly announced it will drop the windfall tax plan, but a transition aide, commenting on the condition he not be identified, backed off the promise in an email. "President-elect Obama announced the [windfall profits tax] policy during the campaign because oil prices were above $80 per barrel," he said. "They are currently below that now and expected to stay below that."
The windfall profits proposal was deleted from the transition website almost three weeks before the eagle-eyed American Small Business League (ASBL), an advocacy group for small businesses, noticed the change and protested in a press release Tuesday. The plan was mentioned in a version (PDF) of the site that existed after Obama's election win. But when the transition website relaunched on November 8, references to a excess profits tax on the oil and gas industry were gone.
Obama talked about a windfall profits tax as early as April. As crude oil prices topped $110 a barrel, Obama promised to "put a windfall profits tax on oil companies and use it to help ... families pay their heating and cooling bills and reduce energy costs." And in August, the Democratic nominee issued a campaign ad that promised "a windfall profits tax on big oil to give families a thousand dollar rebate." The windfall profits tax was a key point of contention between President-elect Obama and McCain in June, when McCain criticized Obama for the plan, calling it "dangerous".
ASBL president and founder Lloyd Chapman says he was "disappointed" and "surprised" that Obama dropped the windfall tax plan. He maintains that a reduction in the price of oil does not justify the policy shift. "There's not always a correlation between the price of a barrel of oil and what we're paying at the pump," Chapman said. "The oil and gas companies are clearly making excessive profits. They've taken advantage of the fact that there's no regulation of that industry and overcharged at the pump and hurt our economy. The excessive profits tax is based on the excessive profits they've made in the last eight years. The tax was to get some of that money back for the American people."
James Galbraith, an economist at the University of Texas and a frequent Mother Jonescontributor, says that Obama's change of course "makes sense" given the dramatically reduced amount of money a windfall profits tax would bring in now. "You could still pass the tax but the revenue from it would be much less," Galbraith wrote in an email Tuesday.
Cathy Landry, a spokeswoman for the American Petroleum Institute, which lobbies for the oil and gas industry, says that her organization hadn't heard any details of the Obama team's change in plans, but that the oil and gas lobby was happy to hear about it. "[API] is pleased that President-elect Obama is reevaluating his position, particularly considering the economic situation," Landry said. "The oil and gas industry has been one of the bright spots in the economy, and this would be a bad time to snuff out bright spots in the economy."
By the way, on October 30, ExxonMobil reported its quarterly earnings. It netted $14.83 billion, setting a national record for quarterly profits. Bright spot, indeed.
Obama Abandons Windfall Profits Tax on Oil Companies; Liberals Smell a Corporate Rat
By Jake Tapper ABC News: Political Punch December 3, 2008
Shortly after clinching the Democratic presidential nomination in June, Sen. Barack Obama, D-Ill., told voters "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."
"With the election behind him, President-elect Obama has failed to justify the removal of the windfall profits tax from his tax plan," says American Small Business League President Lloyd Chapman in a press release. "The subtle and unexplained elimination of this issue from the Obama-Biden agenda should concern Americans from every background. The American Small Business League questions whether the sudden elimination of this issue is a further indication that large corporations are already demonstrating their ability to influence the Obama Administration... President-elect Obama owes the American people an explanation as to why these campaign promises have been pulled from his agenda."
An aide to the Obama Transition Team tells ABC News, "President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel. They are below that now and expected to stay below that."
The Obama windfall profits tax was devised as the price of oil approached its July 3 high of $145.29 per barrel.
While Mr. Obama never specified just what exactly constituted a "windfall profit," the tax was supposed to provide a $500 per person “emergency energy rebate.”
Obama allies argue that Mr. Obama backed off the proposal when energy prices began going down; they point out that when Mr. Obama rolled out his middle class rescue plan in mid-October it did not include revenue from a windfall profit tax because of the price change.
But David Sirota, an outspoken liberal columnist, today writes that "Between this move and the move to wait to repeal the Bush tax cuts for the wealthy, it seems like the Obama team is buying into the right-wing frame that raising any taxes - even those on the richest citizens and wealthiest corporations -- is bad for the economy." Sirota asks, "if oil prices are down and oil industry profits are truly down, what's the harm in passing a windfall profits tax? Even if you buy the right-wing nonsense about a windfall profits tax 'hurting the industry' or 'hurting the economy' when it is applied, if there really are no windfall profits to tax, then it won't be applied. That's what a windfall profits tax really is -- a safety valve regulation against profiteering, and one that can raise needed revenues when profiteering occurs. If there is supposedly no profiteering occurring, then what's the supposed harm?"
And at the liberal Mother Jones blog, a writer asks, "Did Barack Obama just break his first campaign promise?"
