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By Robert Rapier on Dec 8, 2008 with no responses

Obama’s Change of Heart on WPT

It seems that President-elect Obama has had a change of heart on enacting a windfall profits tax on oil companies. That, among other things, is angering the liberal wing of the Democratic Party:

Liberals voice concerns about Obama

Here are the excerpts from the article specific to this issue:

Liberals are growing increasingly nervous – and some just flat-out angry – that President-elect Barack Obama seems to be stiffing them on Cabinet jobs and policy choices.

Obama has reversed pledges to immediately repeal tax cuts for the wealthy and take on Big Oil. He’s hedged his call for a quick drawdown in Iraq. And he’s stocking his White House with anything but stalwarts of the left. Obama drew rousing applause at campaign events when he vowed to tax the windfall profits of oil companies. As president-elect, Obama says he won’t enact the tax.

One of the Campaign for America’s Future blogs commented on Obama’s decision not to tax oil companies’ windfall profits saying, “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.”

“I’ve heard the most grousing about the windfall profits tax, but on the other hand, Obama has committed himself to a stimulus package that makes a down payment on energy efficiency and green jobs,” Hickey said. “The old argument was, here’s how we afford to make these investments – we tax the oil companies’ windfall profits. … The new argument is, in a bad economy that could get worse, we don’t.”

Obama is asking for patience – saying he’s only shifting his stance on some issues because circumstances are shifting. Aides say he backed off the windfall profits tax because oil prices have dropped below $80 a barrel. Obama also defended hedging on the Bush tax cuts.

One of my hopes was that some of his promises amounted to campaign rhetoric, perhaps necessary if he was to win the election. Since winning the election, it does appear that he has taken a pragmatic approach to a number of problems, including this one.

On the other hand, if you are ever going to enact a windfall profits tax, now would be the time to do it. Let me explain. If you had a tax that triggered off of $80 oil – as has been mentioned – at least the oil companies could build that into their economic evaluations of new projects.

Mind you, I am not arguing for this approach, but it makes more sense than the standard knee-jerk reactions every time gasoline prices go up and profits rise. Of course what we really need is a comprehensive, long-term energy policy. What we have had over the past few years is an energy policy that changes every year or so. This makes life difficult for all energy companies (and not just oil companies).