In case you missed it, there was quite a performance in the U.S. Senate yesterday. Liberals put on an election-year show, with the personal encouragement of President Barack Obama, in which they attempted to impose higher taxes on the oil industry as punishment for their profits while gas prices are at an all-time high.
The Senate rejected the bill 51-47. Despite certain defeat, liberals brought up the legislation in hopes of distracting the American people from the fact that President Obama is refusing to take steps that would help increase the supply of oil in the United States, and decrease regulation, thereby bringing down costs for consumers. As Senate Minority Leader Mitch McConnell (R-KY) put it, "Day after day after day, Democrats ask us all to come out here, not so we can make an actual difference in the lives of working Americans and families struggling to fill the gas tank, but so we can watch them stage votes for show."
Heritage expert David Kreutzer points out, most of what the President and his allies call "subsidies" are merely manufacturing tax credits that already put the oil and gas industry at a disadvantage:
[T]he unfair tax break that makes up nearly half of what Obama calls "subsidies" is the manufacturing tax credit. All manufacturers except the oil and gas industry get to deduct 9 percent of their revenues before calculating their tax bills...Though oil and gas producers get the deduction, they are singled out for a lower 6 percent deduction. The oil and gas industry gets a deduction that is only two-thirds as generous as for all other manufacturers ...yet the deduction is called a subsidy to oil and gas. The President's proposal does not eliminate the deduction for any other industry.
To make matters worse, if this legislation had passed and the President achieved his goal of increasing taxes on the oil industry, it would have only served to raise the price of fuel at the pump. When industry is taxed, they invariably pass on the costs to the consumers. But that fact apparently doesn't matter to the President. His plan, instead, is to take money from the oil industry and hand it to his friends in the alternative energy industry, as he described:
Instead of taxpayer giveaways to an industry that's never been more profitable, we should be using that money to double down on investments in clean energy technologies that have never been more promising. Investments in wind power and solar power and biofuels; in fuel-efficient cars and trucks and homes and buildings. That's the future.
While the President talks about the future, he glosses over the past. For over three years, he has talked about the promise of alternative energy --and he has invested billions of taxpayer dollars in order to prop up those companies. But those efforts have failed. Solar energy company Solyndra went bankrupt, despite $535 million in taxpayer funding, along with Beacon, Ener1, Abound and others. The New York Times criticized the President's efforts and concluded that his promise to create five million "green" jobs over 10 years has proven to be nothing more than "a pipe dream." Meanwhile, The Washington Post reported, "Meant to create jobs and cut reliance on foreign oil, Obama's green-technology program was infused with politics at every level."
The President's crony capitalist devotion to the alternative energy industry -- at the expense of energy sources that work -- comes with serious consequences. Heritage's Nick Loris explains:
The reality is that when it comes to energy policy, the free market works. Indeed, the business environment for energy is robust despite seemingly endless forays by policymakers and bureaucrats into the energy industry. But those attempts to control energy markets do have an effect: They result in higher prices, fewer available energy sources, reduced competition, and stifled innovation.
But the President wants even more government involvement in the energy business -- on his own terms. In Obama's FY 2013 budget, he included billions of dollars for a hidden green stimulus -- taxpayer money to be spent by the Department of Energy to fund research on technologies that are not commercially viable. In a new paper, Loris identifies $5.5 billion of wasted money that should be cut from the President's budget, thereby removing the government--and taxpayers--from the role of subsidizing research.
Instead of picking winners and losers, the federal government should let the free market do its job. In addition to getting out of the business of funding research best left to the private sector, that also means ending targeted tax credits for oil, renewables, nuclear, alternative fuels and vehicles, and advanced coal and gasification. The next step is for the federal government to open access to domestic energy sources and end unnecessary, overly burdensome regulations that get in the way of energy production. And the President should approve the Keystone XL pipeline and open up federal lands for energy exploration.