Hoping to capitalize on a statement from House Speaker John Boehner (R., Ohio) suggesting that he is willing to “take a look” at tax subsidies for oil and gas companies, President Obama fired off a letter to congressional leaders Tuesday urging them “to take immediate action to eliminate unwarranted tax breaks for the oil and gas industry.”
Boehner’s office later played down his remarks, saying: “The speaker wants to increase the supply of American energy and reduce our dependence on foreign oil, and he is only interested in reforms that actually lower energy costs and create American jobs . . . Unfortunately, what the president has suggested so far would simply raise taxes and increase the price at the pump.”
That didn’t stop White House press secretary Jay Carney from trying to make hay of Boehner’s comments in order to advance the president’s agenda to end the subsidies. At a Tuesday press briefing, Carney proved incapable of answering the simple question of why doing this — at a time when gas prices are approaching record highs — would be a good idea. When asked by reporters to explain why oil companies, if faced with a higher tax burden in the absence of those subsidies, would not simply pass that on to the consumer in the form of higher prices at the pump, Carney could not muster a coherent response. But not to worry, he assured them. The president has “analyzed” the problem and determined it is “the right thing to do.”
Video here.
From the transcript (beginning 36:00):
Q: No concerns from you guys that the oil companies are going to pass this through? I’m not saying whether or not it’s credible –
MR. CARNEY: What I’m saying is that on balance overwhelmingly the right thing to do is eliminate these subsidies and — because the American taxpayer should not be subsidizing companies that don’t need subsidies by any stretch of the imagination.
Q: But you don’t know that they won’t pass it on, do you? Is there any –
MR. CARNEY: I think I’ve addressed this. I’ve addressed this. What I’ve said is on balance, knowing what we know and looking — and analyzing what we know, that this is overwhelmingly the right thing to do.
Q: Even though prices may go up in the short term.
MR. CARNEY: I’ve just addressed it. Based on what we know –
Q: They’re passing the higher price of oil onto consumers now. Why wouldn’t they pass a higher tax burden onto consumers?
MR. CARNEY: Well, based on what we know — you have companies making billions of dollars in profit, $100 million a day in profit — that’s great, okay? That’s good. That’s fine. We should not be taxed. We — the American taxpayers should not be subsidizing that profit, okay? I mean, that’s just in and of itself, we believe, the right policy.
In fact, President Obama’s letter admits that eliminating oil subsidies will have essentially no positive impact on rising gas prices in the near term. This is about “winning the future,” he writes:
While there is no silver bullet to address rising gas prices in the short term, there are steps we can take to ensure the American people don’t fall victim to skyrocketing gas prices over the long term. One of those steps is to eliminate unwarranted tax breaks to the oil and gas industry and invest that revenue into clean energy to reduce our dependence on foreign oil. [emphasis added]
What about our massive deficit? Obama’s all over it:
As we work together to reduce our deficits, we simply can’t afford these wasteful subsidies, and that is why I proposed to eliminate them in my FY11 and FY12 budgets.
Awfully sweet of him to say, but disingenuous nonetheless. Some reporters were understandably confused as to whether the administration planned to use the money reclaimed from subsidies for “investment” or deficit reduction, and once again Carney proved useless at clearing up what ought to be a pretty straightforward point.
Video here.
From the transcript (beginning 28:53):
Q: Given that you have said that there’s no real short-term impact from these — closing these loopholes, is this primarily a proposal to address gas prices, or primarily a deficit-control proposal?
MR. CARNEY: Well, what the President called for in his letter was that this money be used to invest in — let me get the exact language.
Q: But putting aside how the money is used — I understand you want to use the money for this — but those are really two separate proposals that you’re putting together. You’re proposing to raise taxes on gas companies, which you support in it of itself.
MR. CARNEY: No, we’re proposing to eliminate subsidies that –
Q: Well, it’s the same thing at the bottom line.
MR. CARNEY: — basically give — for you and me and everybody in this room who pays taxes –and I’m counting on the fact that most of you do — that you’re paying these major oil companies, you’re paying them, and yet this week they’re going to report billions and billions of dollars in profits — $100 million a day by one measure. Okay? That’s great. We are for companies making a profit.
Q: But — I get it.
MR. CARNEY: We do not think that you need to subsidize that profit.
Q: Right. So is the reason to do that, the reason to close these unwarranted loopholes, as you say, is the reason to control gas prices or is the reason to address the deficit, primarily?
MR. CARNEY: The reason is to — we live in a time of limited resources, where we have to tighten our belts, and we need that — here’s a way to look at it, okay? In the House Republican budget proposal, those $4 billion a year in subsidies are maintained. In order to pay for and maintain those subsidies, and in order to provide the other tax cuts for wealthy Americans that are contained in that proposal, and still somehow reduce the deficit by $4 trillion over 10 years, you have to slash and eliminate Medicare as we know it, you have to basically eliminate Medicare — Medicaid as we know it, and you have to cut investment in clean energy by 70 percent. I mean, that is so shortsighted, in our view, at a time when we see the consequences of not having a long-term energy policy. [emphasis added]
I suppose Republicans should expect to hear this a lot going forward. Every little policy change Obama wants will inevitably be billed as a choice between “doing the right thing” and “ending Medicare as we know it.” Here’s another way to look at it, okay? Having a long-term energy policy is fine, but ultimately irrelevant in the absence of a long-term fiscal policy beyond: “Let’s raise taxes now and worry about the rest when I get reelected.”
At this point, it’s no surprise that the administration would rather talk about birth certificates.
Full video here: