“I think he’s quite ill, mentally, and with one half of his mind, he is able to fabricate evidence. Then by some osmosis he is able to convince the other half that the fabrication is the truth.”
—Tommy Lee Jones as Clay Shaw in JFK
And back to Evil Big Oil. Again.
I can’t figure out whether this President is simply an idiot, a lunatic, or overtly evil. What I do know is he’s continuing to perpetuate a lie in his effort to push his populist class-warfare campaign narrative. What’s frustrating to me is that no one on the conservative side in Congress or among the GOP nominee hopefuls seems able or willing to get out in front and call Obama out on this.
Last Thursday, Obama—for the umpteenth time—upbraided Congress for not ending what he disingenuously refers to as billions in “subsidies” for Big Oil:
“[Congress] can either vote to spend billions of dollars on oil subsidies that keep us trapped in the past, or they can vote to end these taxpayer subsidies that aren’t needed to boost oil production so that we can invest in the future . . . It’s like hitting the American people twice. You’re already paying a premium at the pump right now. And on top of that, Congress up until this point has thought it’s a good idea to send billions more of your tax dollars to the oil industry.”
Taxpayer subsidies . . . send[ing] billions more of your tax dollars to the oil industry.
Obama makes it sound as though Congress is taking money from you, the taxpayer, and singlign out Exxon, Chevron, Shell, BP, and ConocoPhillips as special recipients of that money. Now, the fair first question you might ask in that instance would be what is Congress doing with my money in the first place? But leaving that aside, I want to focus on how the President is characterizing this. He’s telling you—over, and over, and over again—that this is a “subsidy,” that Congress is choosing sides by taking money from you and giving it to Big Oil. And if there were in fact such a subsidy, that’s what would be going on:
sub·si·dy (subʹ sǝ dē) n. A grant of money, as from a government to a private enterprise.
The problem, as I’ve had to keep explaining over, and over, and over, is there is no subsidy for oil companies. There just isn’t. Congress isn’t taking money from you and giving it to Exxon. The federal government isn’t writing the oil companies a huge check. There is, in fact, NO money being given to Big Oil either by the taxpayers or by the United States.
What is happening is that oil companies—like any other industrial business in the U.S.—are permitted to deduct certain capital costs associated with drilling, and claim credits for taxes paid to other government on earnings generated abroad. Nobody is giving oil companies money, and they're not getting special treatment. The government is simply not taking as much of the oil companies’ money as it otherwise might.
I’ve addressed this mental pathology before, but you need to understand that it’s no less dangerous just because in this instance it’s being applied to oil companies instead of to you. The underlying assumption is that it’s all the government’s money in the first place; that’s the only way Obama can claim that by letting—in this case, oil companies—someone keep it, the government is actually “giving” them that money (which is what a “subsidy” is).
Notice also the quick twist Obama makes. A cursory listen, and you’d think what he’s saying is taxpayers pay too much, and oil companies are making too much profit, so we’re going to reverse that by ending the subsidies. In other words, he makes it sound like what he wants to do is take money from the oil companies and give it back to you.
Right on! People before profits!
But look a little closer. He doesn’t want to end the “subsidies” and return that money to the taxpayers. What he wants to do is end the “subsidies”—i.e., take more money from oil companies—and “invest” it in more green energy projects (you know, stuff like Solyndra, Ener1, Evergreen Solar, etc.). The trouble is, the federal government isn’t supposed to operate as an investment bank.
Also implicit in Obama’s message is that somehow oil companies are reaping huge profits while getting away with not paying any taxes. According to the Tax Foundation, between 1981 and 2008, the oil industry paid over $388 billion in income taxes. During that period, they also paid $1.1 trillion in sales and excise taxes, and $472 billion in severance, property, and windfall profits taxes. That’s $1.96 trillion just in taxes; $70 billion a year, or about $192 million every single day. In addition to direct taxes, oil companies also pay millions in bonuses to acquire leases on government lands ($754 million in 2011 to the federal government alone, according to the ONRR) and billions in royalties on production from those lands ($11.2 billion in 2011).
So, where does all that money already flowing to the government come from? It comes from the oil companies’ shareholders, which include essentially anyone who has a share of a mutual fund in an IRA or 401K. In other words, the odds are very good that that money is coming from you. If government raises taxes on oil companies, the oil companies have two options. They can eat it, which really means returning less to their shareholders—i.e., taking it from you. Or they can add it to the cost of the crude oil used to make gasoline, which will, of course, increase the price you pay at the pump. The government has got you coming or going; one way or another the additional money going to the government is ultimately coming from you.
Think and listen carefully when the President pontificates about ending “subsidies” for Big Oil. At the end of the day, where is the exchange of money really taking place? To whom is the money being given, and from whom is it being taken?
Come to think of it, maybe Obama's right and there’s a subsidy here after all.
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