Obama's Windfall Taxes Shift: First Broken Promise?

The Obama team's decision to drop the idea of forcing oil and natural gas companies to pay a tax on their windfall profits has caused a firestorm among liberals and small business coalitions.

As first reported in the Houston Chronicle, Obama's reference to a windfall profits tax, which he articulated during the campaign at a time of skyrocketing gas prices, had been removed from the transition team's Website, change.gov:

President-elect Barack Obama has quietly shelved a proposal to slap oil and natural gas companies with a new windfall profits tax.

An aide for the transition team acknowledged the policy shift Tuesday, after a small-business group discovered the proposal -- touted throughout much of the campaign -- had been dropped from the incoming administration's Web site.

"President-elect Obama announced the policy during the campaign because oil prices were above $80 per barrel," the aide said. "They are below that now and expected to stay below that."

At liberal blog Campaign For America's Future, David Sirota writes:

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.

On Mother Jones' blog, Nick Baumann wrote a post asking, "Did Barack Obama just break his first camaign promise?":

Obama talked about a windfall profits tax as early as April. As crude oil prices topped $110 a barrel, Obama promised to "put a windfall profits tax on oil companies and use it to help ... families pay their heating and cooling bills and reduce energy costs." And in August, the Democratic nominee issued a campaign ad that promised "a windfall profits tax on big oil to give families a thousand dollar rebate." The windfall profits tax was a key point of contention between President-elect Obama and McCain in June, when McCain criticized Obama for the plan, calling it "dangerous".

The removal was noticed by the American Small Business League which fumed in a press release:

The American Small Business League questions whether the sudden elimination of this issue is a further indication that large corporations are already demonstrating their ability to influence the Obama adminstration...

President-elect Obama owes the American people an explanation as to why these campaign promises have been pulled from his agenda.

Comments

[Maygressive]

This is precisely why gas prices are being held down right now, so they can sneak them back up when people forget how pissed they were about them for the last several years. Smooth move Exxon

[b1rd67]

I'd love to see the oil and gas companies take in the butt like we have for the past 8 years but there was never any possibility that tax was going to be retroactive. I fail to see how this is breaking a promise, he promised to tax windfall profits. Now that oil prices are back in the $40 - $50/barrel range there are no windfall profits to tax. If prices go back up and he does not implement a tax at that point then he will have broken his promise.

[AdamAnt12]

Prices ONLY went up after enviromental special interset-groups got their wish and shut down a lot of off-shore drilling in the USA....GWB and the republicans got that overturned this July, and off-shore drilling resumed. This was ALL due to the democratic congress coming in in 2007 and changing off-shore drilling standards. This summer, it was changed back, much to the dismay of the democrats and progressives in congress and in the nation. Thank the dems for the year and a half of HIGH prices....­there was NO 8 years of high prices due to GWB....whe­re have YOU been?

[CharlieD]

I didn't vote for Obama but c'mon people! How has he broken any promises? Is today January 21, 2009??? Besides we have a fluid economy, the laws must be flexible. Maybe he's just researching the windfall tax and all of the implications it entails. Wouldn't it be just as beneficial if he repealed big oil's tax breaks?

[fflambeau]

CharlieD: He is breaking promises with this flip on windfall profits. He pledged often to enact just such a tax. He's also backing away from another key pledge: to bring fairness to taxes and raise taxes on those making over $250,000 a year. His key pledge was to bring change to Washington; remember all those statements about the "old faces cannot bring change to Washington because they are part of the problem" ? I'm paraphrasing. Well, he has selected the most important posts and all of them have gone to old hands (like Gates) and Clinton retreads. That too is a broken promise. Not a single pick from the democratic wing of the democratic party. Nothing for Howard Dean or Russ Feingold (now, wouldn't he make a great AG)? It's easy to brak promises before being installed in office (as noted above). Not only has he broken promises, he has taken action (or inaction) contrary to what he pledged. You talk about a "fluid economy" but the problem is the economy was in the tank when he made those promises. Nothing new has happened.

[AdamAnt12]

Raising taxes on those making 250,000/yr and more is FAIR? When this segment ALREADY pays OVER 78% of ALL of the federal income taxes in this country? WOW, you are really way off base with this "fairness" stuff, aren't you? tsk, tsk

[b1rd67]

Nothing new has happened..­. when he made the promise oil was $130+ per barrel... not it's $43 that's seems like a different situation to me!

[hardybear]

Welcome to the next administration, a campaign it is not.

[FreedomTruth]

You're stupid.

[baseball45]

I think Bush is still the president or ru hussin obama people think he had anything to do with the falling oil prices....­..........­.....what a crock yu people are your saviour hussin will lie to save his butt

[b1rd67]

If you aren't educated enough to spell correctly or use proper grammar then why should we think you're smart enough to have an informed opinion?

[AdamAnt12]

He is right...pr­ices shot up in 2007 when the democratically controll congress banned alot of off-shore drilling. Before that, prices were fairly stable. Once the dems got ahold of congress, and these bans on off-shore drilling came to be, prices went through the roof. It's economics 101, people. Supply and demand. This summer, congress, headed by all the republicans and a few democrats, voted DOWN the bans, and Bush announced in July that off-shore drilling would resume in the USA....dow­n came the prices....­it was THAT easy.

If you really want to know who caused the high prices, it was the democratic congress that was seated after the 2006 mid-term elections. Afte almost 2 years of HIGH oil and gas prices, I guess even some of the progressives got tired of hearing the American people complain. Once again., the USA is in the oil business, and NOT having to rely solely on Middle Eastern oil.

[baseball45]

last time I looked Bush was still the president and I think gas is like a 1.67 a gallon....­..........­geee my mymy or has the saviour hussin obama done that your a@#$%$

[apoliticalchick]

It's actually quite humorous to see the press and others fall all over themselves to highlight Obama's first big "broken promise." I'll take this so-called broken promise over a war-mongering self proclaimed liberator of millions any day.
http://democralypsenow.blogspot.com/

[AdamAnt12]

I am sure you would, apoliticalchick.

[DrZero]

Broken Promises:

1. Will abide by campaign finance limits in his Presidential election run.
2. Will support getting troops out of Iraq ASAP.
3. Will be an alternative to the Clinton gang.
4. Will repeal the Bush tax cuts for the wealthy.

[atlantajoe]

Don't forget about invading Pakistan to get Osama. He also campaigned on stopping electronic wiretaps, until he voted for it.

[Clever Screen Name]

Number three was NEVER claimed, you made that up to buttress your point. And numbers two and four are not "broken promises" -- first, he's not president yet. Second, "ASAP" is undetermined -- sixteen months may be "as possible" or it may be a bit longer, no broken nothing there, he said all this during the campaign. As far as four goes, delaying the tax shift is probably a good idea right now... maybe you haven't looked at a newspaper recently?

[bringmetheheadof]

Sirota's article especially adopts this accusatory tone that b/c Obama's website took down comments on this one matter, all of sudden the entire platform is falling into some right-wing framework of excusing ALL wealthy individuals & corporations from paying their share of taxes. hardly a sufficient argument. really, how do you break a promise as president during the transition period? like the Campbell Brown rant about tough questions from the press, this is simply more inflammatory BS hurling at a campaign winner who hasn't taken office & therefore is not capable of breaking campaign promises.

get a grip folks & wait till the man is officially able to exercise the executive powers in holding the feet of the wealthy corporate powers-that-be to the same fires of public scrutiny to which you would hold his feet.

[fflambeau]

Bringme, you ask, "how do you breark a promise as president during the transition period?" It's really quite easy. You shift your position entirely on major campaign positions that got you elected: like it is necessary to bring new faces to Washington to bring about change. Remember, he's not only broken this promise, he's taken action by selecting people who are Washington insiders: like Gates at Defense who's been around forever (and does not want to withdraw troops from Iraq on a timetable). Or all the Clinton retreads. Meanwhile, note that Obama has not chosen a single person from the democratic wing of the democratic party, cf. Howard Dean or Russ Feingold (would make a great attorney general). As a big Obama supporter, I'm very disappointed in his stiff arming of the people who got him elected.

[allonfla]

Why is this not on the front http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.phpc.php

[evenclearerminded]

He Promised Change. The very first thing he changed...­was his mind.

http://myrealitYtelevision.com/2008/12/obama-promised-change-the-first-thing-he-changed-was-his-mind/

Then apparently, he changed it back.

[allonfla]

Hey Dum Dums: Did you see the correction of this article that states that Obama IS NOT dropping his promise? http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.php

[kotexbarbie]

He's still dropping the windfall profits tax. The HuffPo article, which quotes the Houston Chronicle, says, "An aide for the transition team acknowledged the policy shift Tuesday...­" That sounds like it's coming directly from the Obama campaign to me. The TPM article deals with government subsidies -- totally different issue.

[atlantajoe]

He is dropping the idea because it is stupid, it was done under Carter and repealed for a reason. Can anyone hear name one corporate tax raise that was not passed on to consumers?

[fflambeau]

Here's the lame-assed reply from the Obama team from the Talking Points Link: "Obama announced the policy during the campaign because oil prices were above $80 per barrel," an Obama aide said. "They are currently below that now and expected to stay below that."

That's very lame because: 1) oil companies revenues are at an all time high; 2) it's very unlikely that oil prices will continue to stay low (there is only a finite amount of oil and demand worldswide increases every year) 3) there is plenty of legislation on the books to take effect after certain things happen. The reason: deter things from happening (just look at the criminal code, or
the IRS code--if you make such and such, then your tax will be....). These are really poor excuses for the Obama team which got caught with its pants down trying to change a position. Yet again, like it changed its key position on it is necessary to have fresh faces to bring change to Washington (so he keeps Gates and appoints only Clinton retreads).

[b1rd67]

"The reason: deter things from happening (just look at the criminal code, or
the IRS code--if you make such and such, then your tax will be"

So are you saying that the tax code is to deter people from making too much?

[AdamAnt12]

As long as congress does NOT ban off-shore drilling again, like the 2006 mid-term election congress did in Fweb. 2007, prices should stay fairly low.

[allonfla]

I want to know what's going on here? The same guy, Llyod Chapman that started this rumor on Nov. 24th on Huffington Post has now posted another article saying that Obama now drops campaign promise to end contracting abuses - using the same evidence as with the windfall profits tax - it wasn't listed on the website. Here is the link from Nov. 24th : http://www.huffingtonpost.com/lloyd-chapman/corporate-giants-force-ob_b_146214.html And here is the link to article about contracting abuse: http://www.huffingtonpost.com/lloyd-chapman/obama-drops-campaign-prom_b_148524.html

[skaterdon66]

Pols lie to get elected...­lie to stay in office...a­nd lie to get re-elected­..
So what's new??

[allonfla]

Not much. Especially when it comes to readers who take the effort to find out the truth. There is anothe article debunking this article. - The correction came several hours ago and your post is recent. Shows me you don't read with scrutiny.

[Waitaminute]

I am not looking forward to the level of criticism, once Obama takes office. He's not president yet, is he? Just wanted to make sure.

[diogeron]

It was a stupid idea in the first place. We need a carbon tax and a way to keep gas above $3.00 a gallon. That's change we can believe in. The "windfall" profits tax is just lousy economics and the companies would just pass it along to consumers anyway.

[atlantajoe]

We do not need a carbon tax.

[southernsepia]

Obama taking a sh^t has caused a firestorm among Liberal bloggers.