However, one aspect of low oil prices has not received much attention. Barack Obama plans to spend hundreds of billions of dollars if elected President on a wide range of government initiatives. He claims to have the resources to spend that money responsibly, in part by imposing windfall-profits taxes on Big Oil:
- Enact a Windfall Profits Tax to Provide a $1,000 Emergency Energy Rebate to American Families:Barack Obama and Joe Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.
- Provide $50 billion to Jumpstart the Economy and Prevent 1 Million Americans from Losing Their Jobs: This relief would include a $25 billion State Growth Fund to prevent state and local cuts in health, education, housing, and heating assistance or counterproductive increases in property taxes, tolls or fees. The Obama-Biden relief plan will also include $25 billion in a Jobs and Growth Fund to prevent cutbacks in road and bridge maintenance and fund school repair – all to save more than 1 million jobs in danger of being cut.
That option seems off the table now. The “windfall profits” tax – always a bit of a misnomer, since the average margin for American oil companies has been around a modest 8% – can’t get applied when the supposed windfall disappears. Obama can’t redistribute wealth that doesn’t exist.
So now how does Obama pay for all of these programs, if elected President? Taxing the rich won’t generate the kind of money he envisions in his ambitious, big-government spending spree. Even if a capital-gains tax-rate hike actually produced more revenue, one would have to have capital gains in order to pay the tax. After the debacle this year on the markets and in the real-estate industry, Obama won’t be seeing those kinds of revenues for years.