Two Senate committees will hold a joint hearing on energy prices and corporate profits today. Executives from the leading oil companies have been summoned so that senators can publicly berate them for greed, price gouging, and anything else they can think of that might provide a good television sound bite.
We have seen this many times before. When Democrats controlled Congress, such kangaroo courts were a common occurrence every time the world price of oil spiked. Congressmen and senators ranted and raved for the cameras while oil company executives were forced to sit silently and take it, with little if any opportunity to respond.
What is different now is that Republicans are doing exactly the same thing. Their purpose seems to be to prove to the American people once and for all that it makes absolutely no difference which party controls Congress; that the same utterly stupid policies are pursued under both Republican and Democratic control. And Republicans wonder why their party’s base is evaporating, with many political analysts now predicting heavy losses for the GOP in next year’s congressional elections.
The ultimate in Republican idiocy is growing support for a windfall profits tax on oil companies. Mental diminishment is even affecting those previously considered to be “conservative” — a term increasingly devoid of meaning in a Congress that spends money even faster that liberal Democrats used to do. It is worth quoting at length from one of these alleged conservatives, Sen. Judd Gregg, Republican of New Hampshire. In an Oct. 28 press release, Sen. Gregg had this to say:
Over the past few days, while the public and our national economy are suffering under the huge burden of costs of oil and gas, it is infuriating that one part of the economic sector is reporting record-breaking profits, some in the $10 billion quarterly range. With people being forced to pay $3 a gallon for gas and $2.50 for oil to heat their homes, it is apparent that the oil companies have taken advantage of the trust of the American people.
As a result of this, I believe it is time to take a serious look at reinstituting an excess profit tax on oil companies with the proceeds being put towards the low income home energy assistance program and deficit reduction. I intend to pursue options in this area over the coming weeks.
Some might call this a novel approach for me, but I cannot sit back in good conscience while those in our society struggling to heat their homes are being left in the cold by oil companies.
Of course, the oil companies have made a lot of profit lately, but so have many other businesses and industries. Although Exxon got big headlines for earning $9.92 billion in the third quarter, few analysts bothered to note that this only came to 9.8 cents per dollar of sales — well below that of many other companies. For example, Citigroup and Microsoft each made 33.2 percent profit. Among other major companies that each made at least twice as much as Exxon in percentage terms are Bank of America, Merck, Google, Eli Lilly, Coca Cola, Intel, and Yahoo.
An Internet search turned up no evidence that Sen. Gregg or any of the other dimwits calling for windfall profits taxes on the oil industry have also called for windfall profits taxes on the banking, pharmaceutical, software, or hotel industries that have earned much more per dollar than the oil and gas industry in recent periods. Nor is there any evidence that windfall profits tax advocates have ever suggested compensation to offset oil-industry losses in years when the price of oil has fallen. It’s heads I win, tails you lose.
Others may be inclined to be more charitable, chalking up ill-informed comments from the Judd Greggs of the world to rhetorical hyperbole by an overeager press secretary. Unfortunately, bad rhetoric sometimes leads to enactment of bad legislation. In 1980, Congress enacted a windfall profits tax on oil companies that even included newly discovered oil, upon which there could be no conceivable windfall. The Wall Street Journal’s lead editorial that day was entitled, “Death of Reason.” It was framed in a thick black border to indicate mourning over the loss.
Fortunately, the tax was repealed by Ronald Reagan before it could do too much damage. But given George W. Bush’s proclivity for signing every bill that comes out of Congress, no matter how misguided, I have no confidence that he will veto another windfall profits tax should it reach his desk. Some political aide may explain that it tested really well among focus groups and will add several points to his approval rating. Sadly, such arguments appear to have won him over in the past, as with the incredibly unwise Medicare drug benefit, Sarbanes-Oxley bill, and campaign-finance legislation.