Obama Backs Off Promise to Pass Windfall Profits Tax on Big Oil

Posted by David Sirota, Blog for Our Future at 4:14 PM on December 3, 2008.

Good news and bad news in the last day. The good news: Barack Obama has appointed a NAFTA critic, Rep. Xavier Becerra, as the next U.S. Trade Representative (more on that here). The bad news is this just off the Reuters wire:

CHICAGO/WASHINGTON (Reuters) -- President-elect Barack Obama is not planning to implement a windfall profit tax on oil companies because prices have dropped below $80 a barrel, an aide said on Tuesday...

Obama, who signaled early in his campaign for the White House that he would take an active approach to oil markets as president, had planned to use the revenue from a windfall profits tax to fund a tax rebate for low- and middle-income families struggling with high energy prices.

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. Of course, that frame is debunked by history. And while sure, it's OK to rack up deficits so as to spend our way out of the economic crisis, it's sorta silly to ignore the tax moves that could be implemented to limit those deficits where possible.

Oh, and one last thing -- 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? There is none even if you ignore history and believe taxing the wealthy/big corporations automatically hurts an economy. That is, unless you are ready to go down another right-wing rathole and argue that a windfall profits tax will somehow prevent energy companies from more energy exploration. But, then, if you are that far out on the fringe, then I guess your not interested in any facts whatsoever...

Tagged as: obama, big oil, taxes, president-elect, windfall profits