The Corner

Obama’s Gimmicky Energy Plan

This Washington Post editorial is yet more evidence McCain should keep hammering Obama on the energy issue:

Mr. Obama wants a surtax on net oil company profits above a “reasonable” level. The tax would be set high enough to raise $65 billion over the next five years, and the revenue would fund a one-shot tax rebate that Mr. Obama would like to give to families and individuals this year.

Making Exxon surrender money that is now falling into its lap would not necessarily affect its longer-term plans or incentives. Indeed, some of Big Oil’s “windfall” already will go to the government: The more profit the companies earn, the more corporate income tax they pay. But to add a five-year tax increase on top of that to pay for a one-year gift to voters would, indeed, increase the cost of doing business. That cost would be passed along in forgone investment in new production, lower dividends for pension funds and other shareholders, and higher prices at the pump — thus socking it to the consumers whom the plan is supposed to help. If oil prices fall, there might be no windfall profits to tax. Then the Obama rebate would have to be paid for through spending cuts, taxes on something else or borrowing.

When his presumptive Republican opponent, Sen. John McCain (R-Ariz.), proposed a gas tax holiday as a way to reduce the high cost of driving, Mr. Obama showed political courage and intellectual honesty by refusing to sign on to that obvious gimmick. “It’s an idea to get them through an election,” Mr. Obama said. Now he has two such gimmicks of his own. 

Ouch. 

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