So much for a “different kind of politics”. Barack Obama is just like every other politician, he ain’t new or fresh. In fact, his ideas are as old and musty as Jimmy Carter’s sweaters. As Hub Blog noted today, Obama is pushing “phony populism economics”. I’ll add that he is completely ignoring, or simply does not understand, the root cause of the current energy crisis.
Obama says he would impose oil windfall profits tax
RALEIGH, North Carolina (Reuters) – Democratic presidential candidate Barack Obama said on Monday he would impose a windfall profits tax on U.S. oil companies as he sought political gain from Americans’ pain over high gasoline prices.
Launching a two-week focus on the economy after clinching the Democratic presidential nomination, Obama drew a sharp contrast between his economic policies and those of John McCain, his Republican rival in the November election.
“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,” the Illinois senator said.
A few inconvenient truth’s for Barack Obama panderomics proposal,
For starters, Big Oil profit margins are less than 10%. CNN Money’s Paul LaMonica puts these “windfall profits” in context,
The average net profit margin for the S&P Energy sector, according to figures from Thomson Baseline, is 9.7%. The average for the S&P 500 is 8.5%. So yes, energy companies are more profitable than many others…but not by an inordinate amount. Google, for example, reported a net profit margin of 25% in its most recent quarter. Should we have an online advertising windfall profit tax?
Government, in fact, makes SIX TIMES what Big Oil makes off a gallon of gas!
Big oil profits and taxes are already in a photo finish, without Barack Obama’s “windfall profit tax”
Exxon Mobil is the equivilent of a mom and pop store in the global oil market
With 94% of the world’s oil supply locked up by foreign governments, most of which are hostile to the United States, the relatively puny American oil companies do not have access to enough crude oil to significantly affect the market and help bring prices down. Thus, Exxon Mobil, a small oil company, buys 90% of the crude oil that it refines for the U.S. market from the big players, i.e, mostly-hostile foreign governments. The price at the U.S. pump is rising because the price the big oil companies charge Exxon Mobil and the other small American companies for crude oil is going up.
When you add this all up it is clear, either Barack Obama doesn’t understand the economics of the global energy markets, or he doesn’t care because he can score cheap points trying to fool the public. That is the old kind of politics that he claims to detest. This guy is just another shameless politician. There is nothing new or fresh about him, just more of the same.
For more on Barack Obama’s foolish, insulting, old politics, click here.
UPDATE: Powerline wonders about a windfall profit tax on authors, heh,
Think about it: it takes as much work to write a 300-page book that sells 1,000 copies as to write one that sells 1,000,000. Yet the former author is paid almost nothing, while the author who happens to write a best-seller gets rich. Where is the fairness in that? Besides, the oil companies need their profits to make huge capital investments in oil drilling equipment, ocean platforms, pipelines, and so on. What capital investment does an author need his windfall profits in order to make? A new pencil? An author could easily pay extra taxes on his windfall profits and have plenty of capital left over for his next book.
A windfall profits tax on authors seems like a no-brainer. Coincidentally, Barack Obama’s 2007 income of around $4.2 million came almost entirely from book royalties. Now, that’s what I call a windfall! If authors’ windfall profits are taxed at 90%, Obama can write a check to the Treasury for around $3.2 million. What do you say, Barack? Why not a windfall profits tax on authors?