Barack Obama issued an "emergency economic plan" recently, followed by a big speech outlining an energy plan. For somebody identified as the "change" candidate, he served up some pretty familiar stuff.
Obama would whack big oil with a windfall-profits tax and use the money to cut $1,000 checks for married couples and $500 for individuals.
He would create a $25 billion State Growth Fund to prevent state officials from cutting health, education and housing assistance and the like; and a $25 billion Jobs and Growth Fund to repair schools and prevent cuts in road and bridge construction funding.
He wants to release 70 million barrels of oil from the strategic reserve to lower fuel prices — a position he opposed during the primaries.
He proposed money for development of new hybrid cars. He wants to spend $150 billion to encourage renewable technologies. He says his program would do away with the need to import any oil from Venezuela and the Middle East within 10 years.
He wants to hand out $4 billion to car makers so they can redo their factories to produce hybrids. He offered a $7,000 tax credit for those who buy the resulting cars. (John McCain has also backed tax credits for purchasers of low-emission cars.)
The total effect of all this is less like a campaign platform than an infomercial. Wait! That's not all! Call now and we'll throw in another tax credit!
What it reveals is an old-line, conventional, big-government liberal whose instincts seem mainly oriented toward throwing money. He speaks of leveraging private capital to create a new energy economy, but seen through his plans, private enterprise is barely visible. It's almost all government, government, government.
Obama's idea for a windfall-profits tax would be especially damaging. Taxing companies for marketing a commodity essential to our modern economy would be pernicious; whatever you tax, you get less of.
The Congressional Research Service studied the last time we tried a windfall profits tax 30 years ago, and concluded it resulted in higher foreign imports and lower domestic production.
Over the last year, the oil and gas industry's return on investment was 8.3 percent, hardly an eye-popping rate. Many other industries post returns much higher, including drug makers, agriculture chemical producers, railroads, semiconductor makers and entertainment companies, to name a few. Should they be candidates for a windfall-profits tax?
McCain has played his own scattershot game on energy, offering inconsistent proposals and positions. He recently endorsed drilling on the outer continental shelf — which Obama has also done in a more lukewarm and grudging way. Both he and Obama favor the misguided cap-and-trade idea. McCain has complained about the "obscene" profits of big oil, and his proposal for a gas-tax holiday was poorly thought out.
I'm all for alternative energy sources, but we're going to need conventional sources for a long time. Instead of talking about taxing companies for delivering what we need, we should get started tapping more of our own domestic supply.
ABOUT THE WRITER
E. Thomas McClanahan is a member of the Kansas City Star editorial board. Readers may write to him at: Kansas City Star, 1729 Grand Blvd., Kansas City, Mo. 64108-1413, or by e-mail at mcclanahan@kcstar.com.
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