Mission Accomplished

Yesterday, Obama did interviews around the country, one of them with Detroit’s WXYZ. There he explained that he is addressing the gas price increases by “investing” in alternative energy and arguing that we should stop the government subsides of Big Oil. Jake Tapper.

“Right now we give about $4 billion in subsidies to oil companies thru the tax code,” Obama said to WXYZ. “Well that makes no sense. Even their CEO’s have admitted that when prices are like they are now they don’t need any more incentive to pump for more oil. So we’ve got to make sure that we take those $4 billion and reinvest it in things like alternative energy vehicles.”

*scratches head.

Someone explain to me how cutting $4 billion in subsidies tax breaks to oil companies is going to lower prices at the pump.

The president said that there are a few things that have been done to help broadly speaking and more long-term — including working with the auto industry to increase fuel efficiency standards on cars, and making investments in alternative fuel vehicles.

“And we’ve got to continue to increase production,” Obama added, “We can do that in a safe and effective way. We don’t want to repeat of the oil spill that we had in the Gulf last year. But we’ve got to continue to make sure that US production is strong.”

Apparently we can’t do it in a safe and effective way, because Obama’s administration isn’t approving any new drilling permits. He is, though, investing in drilling in Brazil.

Oil and gas companies are set to announce their earnings soon, White House Press Secretary Jay Carney said, adding that “they are expected to be quite large.”

“While we certainly are glad to see companies making a profit, we do not believe that given the size of those profits — record profits, in some cases — that they need to be subsidized by the American taxpayer,” Carney said. “Especially in these times of constrained budgets and especially when we need to use some of those dollars to invest in clean-energy technology, so that we can build the industries of the future, reduce our dependence on foreign oil and create jobs in America.”

Nice rhetoric from Carney there. Here are some facts:

When oil prices blew sky high in 2008, ExxonMobil paid $36.5 billion in income taxes, $34.5 billion in sales taxes, and $45 billion in other taxes, for a total of $116.2 billion in taxes paid and collected in 2008. That’s according to Mark Perry at the Carpe Diem blog.

And this year will not be much different from 2008.

I read somewhere that either Exxon or the whole oil industry pays more in taxes than the bottom 50 percent of the whole income-tax system. So while President Obama is out there ragging on oil companies to remove so-called tax subsidies, it’s odd that he doesn’t mention how much in taxes the energy firms actually pay to Uncle Sam.

There’s a laundry list of tax credits that go to oil, both large and small firms. Basically, these tax credits allow for the expensing of high-risk investment. That’s what this is about.

High-risk investments such as this:

Shell Oil Company has announced it must scrap efforts to drill for oil this summer in the Arctic Ocean off the northern coast of Alaska. The decision comes following a ruling by the EPA’s Environmental Appeals Board to withhold critical air permits. The move has angered some in Congress and triggered a flurry of legislation aimed at stripping the EPA of its oil drilling oversight.

Shell has spent five years and nearly $4 billion dollars on plans to explore for oil in the Beaufort and Chukchi Seas. The leases alone cost $2.2 billion.

And where does that money go for the leases that often turn out to be completely useless because the government decides they cannot – after spending billions – drill in that particular spot? Of course.

It depends where the leases are located and which states are involved, and it’s a lot of money. In fiscal year 2006, there were nearly $8 billion of bonuses and royalties generated to the federal government.

But subsidies aside, here is the inside scoop regarding who is trying to solve the problem of high gas prices.

Update:

White House Dossier questions Jay Carney about cutting the oil subsidies tax breaks:

WHITE HOUSE DOSSIER: But you don’t know that they won’t pass it on, do you? Is there any study you’ve done? Have you spoken with the oil companies?

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.

WHD: Even though prices may go up in the short term,

MR. CARNEY: I’ve just addressed it. Based on what we know –

WHD: 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.

Go read the whole thing. He’s pissed. This is nothing but a bait and switch, attempting to transfer voter disgust from Obama to the oil companies.

And, just for good measure – here’s Obama’s schedule for today

10:05 am || Departs Washington
11:10 am CST || Arrives Chicago
12:15 pm CST || Tapes Oprah Winfrey Show with first lady
2:30 pm CST || Departs Chicago
5:10 pm || Arrives New York City
6:00 pm || Delivers remarks at DNC fundraiser #1; private residence
9:25 pm || Delivers remarks at DNC fundraiser #2; Waldorf Astoria
10:15 pm || Delivers remarks at DNC fundraiser #3; The Town Hall
11:30 pm || Departs New York City
12:45 pm || Arrives Washington

Three fundraisers and a campaign speech with Oprah.

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16 Comments on “Mission Accomplished”


  1. Well, at least it is consistent with his utter lack of understanding of economics that he’s demonstrated so far.

    And his idea that says government will decide when you’ve made enough.

  2. Car in Says:

    Dana Milbank says we just are unable to comprehend his higher level of thought processes. Lost in Thought is the image he suggests.

    Obama’s strengths and weaknesses come from his high degree of “integrative complexity” — his ability to keep multiple variables and trade-offs in mind simultaneously. The integratively simple thinker — say, George W. Bush — has one universal organizing principle that dominates all others, while the integratively complex thinker — Obama — balances many competing goals.

    Ba haa ha a… honestly, I can’t believe he wrote that.

  3. Car in Says:

    Jonah has a good response.

  4. PCachu Says:

    Y’know, for someone who supposedly “balances many competing goals”, he sure does seem to be letting a lot of those spinning plates shatter on the floor…

  5. MJ Says:

    Great post Car in. I would only add that you are failing to see…or is not see?…that Obama’s brilliance of passing on higher costs to the consumer via the repeal of tax benefits will make the price go down. I think I have that right. Higher prices will lower prices. Yep, that’s it.

    As I’ve stated before: he’s not playing chess, he’s playing golf.

  6. Car in Says:

    You know, MJ, math is hard. Economics is even harder.

  7. Vmaximus Says:

    What I want to know is how including working with the auto industry to increase fuel efficiency standards on cars
    was spun from arbitrarily demanding a increase in CAFE standard.

    Kind of like beating you with a bat is called “working with”.

  8. Bob Says:

    oh bummer, wrong thread … thought this was about Obama taking down Bin Laden exactly 8 years to the day after Chimpy McStupid waved that Mission Accomplished banner on the carrier.

  9. agiledog Says:

    Wrong thread, Bob. And wrong facts again, too.

  10. PCachu Says:

    Now, now, AD, Bob the knuckle-dragging rah-rah jingoist neocon Neanderthal is absolutely right. I’m certain that this latest success is directly attributable to Glorious Leader holding military paychecks hostage so that he can continue to make Chimpy’s drunken-sailor-on-shore-leave spending seem restrained and responsible by comparison.

    Of course, we’ll definitely need a new thread to discuss what needs to be done about Pakistan, which has pretty obviously been harboring Mr. Bin Laden for some time. His mansion was across the street from a frickin’ police station, after all, and near a major military town to boot; asking anyone but The One (and Bob, and possibly Chrissy McTingles) to believe that they -didn’t- know he was there simply beggars the imagination.

  11. Pupster Says:

    But, Bob? Doesn’t killing terrorists just make more terrorists?

  12. Bob Says:

    (stretches)

    When the outcome is a grownup running the country, the country gets grownup outcomes.

    Obama 2012!

    You all dusting off your Ron Paul for President signs LOL?

  13. agiledog Says:

    When the outcome is a grownup running the country, the country gets grownup outcomes.

    “When the outcome …. gets grownup outcomes.” English, please!

    Please identify some of these “grownup outcomes” you’re talking about?

    $4.00/gallon gas?
    Closing of Gitmo?
    Obamacare and its 1000+ waivers?
    Improved relations with the Arab world?

    Or maybe a SEAL Team operation that all your “grownup” had to do was say Yes or No?

    Oh, I know. Obama has shaved 3 strokes off his golf game!

  14. Bob Says:

    If you say so, Mr. President!

  15. agiledog Says:

    You are such a tool, Bob! I don’t think that photoshop implies quite what you think it does. But you go ahead and spread it around as proof of your man’s abilities. I encourage it, even. Please?


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