Obama is a lame duck president. His only major domestic “achievement” was the passage of the Affordable Care Act in his first term. It is more commonly known as Obamacare. He was only able to get this through because of a Democratic Congress.
Obama’s achievement led to a Republican majority in Congress. It also led to much higher health insurance premiums. It turned out to be the Unaffordable Care Act.
Obama is desperate to leave some kind of legacy for his so-called progressive base. Whether it is related to the environment or redistributing wealth, he wants to leave a lasting mark.
Obama has decided to combine his ambitions of redistribution and environmental controls. He has proposed “clean transportation investments”, which he wants to pay for with a $10 per barrel tax on oil. We still don’t know all of the details about the proposal.
You can hold on to your wallet as soon as you hear a politician talk about making an “investment”. When you hear that word from a politician’s mouth, it means that it will be an investment for the politicians and bureaucrats, and their cronies. It means that you will be forced to pay for it.
If something truly were an investment, then the government wouldn’t have to come in and force you to pay for it. If you see a stock or a piece of real estate that you think is a good investment, then you can just voluntarily put up your own money and invest in it.
This is not so with a political investment. This requires politicians to use your money. If Obama just wanted to take his personal portfolio and put it into so-called clean energy investments, then there would be no problem.
When we talk about the redistribution of wealth, some people automatically assume that it is a transfer of wealth from rich to poor. This is what leftists would like you to believe. But in reality, wealth is often distributed from the poor and middle classes to the rich. And when I say rich, I mean the politically connected rich.
There is a reason that Al Gore is worth tens of millions of dollars. There are other people worth millions of dollars whom you have never heard of.
This proposal by Obama isn’t going to use the money to buy electric cars for poor people to drive around in. It is going to subsidize companies that engage in activities approved by the bureaucrats.
Think about these electric cars that are heavily subsidized by the government. There aren’t many of them sold, but it is mostly upper middle class and wealthy people who are the buyers. They are the only ones who can afford them. And if it weren’t for the subsidies, it would unprofitable in many cases for the car companies to produce and sell them at all.
The Regressive Oil Tax
The good news is that I don’t think Obama’s proposal is going anywhere. The Republican Congress probably won’t approve it. Even more so, I think many Americans will see through this proposal.
Going to the gas pump is the one little bit of relief that middle class America is enjoying right now. Virtually every other basic need – housing, medical care, food – is up in prices. Real wages are simply not keeping up with the cost of living.
But with the drop in oil prices, gasoline is relatively cheap compared to what it has been over the last decade. It is a small bit of relief for the struggling middle class, and even some poor people who own cars. It makes a difference to these people when they can pay $20 to fill up their car, when it used to cost them $30. If you fill up your car three times per month, you might be saving $30 or more per month from when gas was over $3 per gallon or more. This doesn’t mean much to a rich person, but it means something to a family on a tight budget.
Now here comes Obama with his $10 tax on oil. He wants to stick it to the big oil companies, or so he implies. The problem is, we know that this tax is just going to get passed on to the consumer. This is why gas prices are so highly correlated with oil prices.
Oil is trading for about $30 per barrel right now. If Obama’s proposal were in effect, then it would be basically the same thing as pushing the price to $40 per barrel.
We already pay taxes – both federal and state – on every gallon of gasoline. It is built into the price. Adding a major tax on oil will just add to the price of gasoline, which will disproportionately harm the poor and middle class, the very people that Obama supposedly wants to help.
It may or may not hurt the big oil companies. They are already hurting anyway because of the steep decline in oil prices.
We have already seen a recession in terms of oil prices. Or perhaps a better way to put it is that the oil bubble has burst. This has hurt oil producers. Some of the shale oil production is on the verge of going bankrupt. With the major investments up to this point in shale oil, even the variable costs are getting close to exceeding the price of oil. There will be bankruptcies. There will be creditors who lose their investments.
But while this has been bad for the energy industry, it has been welcome relief by consumers. Now Obama wants to ruin this. Obama would rather see poor people pay higher prices at the gas pump and to see his friends in the clean energy business get a big payday. The clean energy business as described by Obama is not about producing clean energy any more than subsidizing ethanol and adding it to gasoline is about clean energy. It is cronyism, pure and simple.
Again, I don’t think this proposal is going anywhere. But for me, it does add to Obama’s legacy. It is a legacy of cronyism, debt, and harming the poor and middle class.