Obama Abandons Windfall Profits Tax on Oil Companies; Liberals Smell a Corporate Rat

Dec 3, 2008 2:47pm

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."

But not so fast.

The American Small Business League recently noticed that President-elect Obama’s reference to a windfall profits tax  — which was once posted on the Obama Transition Team website after Mr. Obama’s election victory — is no longer there, having been removed in what the group called "an unceremonious and abrupt manner."

The Houston Chronicle first reported the story today.

"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?"

– jpt

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