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

[biglover]

I first saw an article about it on HuffPo where the author said Obama has already broken this promise based solely on the fact that it was no longer listed on change.gov. I left a long, angry post asking why the author didn't attempt to get a comment from Obama's team or why they haven't explored the fact that there may be another reason why it was removed. I didn't curse in my post, but it must have been bad enough that they decided not to put it through. The next day, I see the same article with minor word changes, under a different author and under a different section of HuffPo. The next day, it was present as new article but as a press release from the activist group that was pushing the issue. It showed up on Reuters with a statement from an "aide" - I left another comment asking if this was official statement from Obama's team why isn't there a name listed for this aide? after 4-5 days of trying to stir this up with no success, HuffPo decided to run it as their main headline making it appear t there was some running debate about this "broken promise". They listed quotes from all these articles -which was actually one and now 4,000 people are in a twist. After all of that I find this article on TPM with a quote and a name completely denying that Obama has not broken his promise. WTF? I

[allonfla]

Who are you and why did you steal my comment?

[iranter]

the only lesson one needs know in order to be a great politician:

during an election make promises
after being elected, break promises

[kepary]

the first, what about not accepting public funds for his campaign..­. like any politician he said what ever it took to get elected

[momof3inGA]

With the price of crude oil suspiciously dropping -- just in time for Bush's exit -- it's understandable that this would be dropped.

The oi.l company windfall profits will be no more once Bush leaves. Imagine that....

[TakingBackTheUSA]

1) Name me a single politician that has kept all promises made while campaigning.

2) Hard to break a campaign promise when he's not even in office yet.

[NorthWoodsVoice]

Translations:

1) All the other bastards lied to get the job, so it's okay if our guy lies too.

2) It's okay to break any promise you want, so long as you do it during the transition period

Here's a thought: How about holding our guy's feet to the fire right from the get-go, so we don't have so far to drag him back to his pledges six months in. Welching on the windfall profits tax and rescinding the tax cuts for millionaires is a pretty disgusting precedent to set when your administration is in it infancy.

[allonfla]

How about holding HuffPo's feet to the fire? http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.php

[slowhand0728]

Good Point, Like Bush pretending to be a Conservati­ve...Puhle­ase!

[brodon]

He's breaking campaign promises so fast, it's hard to keep track.

You guys have your hands full covering up for him.

And it's only going to get better.

[BlueStateMan]

Well.... I'm SURE that YOU'LL keep track for ALL of us.

BLESS you, sir..... BLESS you (sniff).

[truthynesslover]

Things change and he changes with the circumstan­ces.Dont you think the advice hes getting from the experts might be better than your opinion?

[atlantajoe]

Did we vote for his experts or the guy that said he would accept public funding.

[allonfla]

You are jumping to conclusions faster than he can "break" his promises: http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.php

[JPAustin]

There's already a tax - the Accumulated Earnings Tax - which is rarely if ever assessed, that is meant to tax proftis held within a coproration 'beyond ordinary busness needs'. If it didn't have a million loopholes and the IRS actually spent some time looking at whether it was applicable, perhaps some of those 'windfall profits' would eith er be taxed to the company, or make their way to the shareholders (the way they are supposed to), where they would be taxed as dividends. Either way, retained and taxed or paid and taxed, the government would get the money and be able to theoretically do something with the revenue. If we could just look at what's already on the books, close the holes and enforce, there's no need for more legislation.

[california2000]

again

[SammyGone]

What ever happened to punishing the rich?

[BlueStateMan]

Why don't you tell us?

[california2000]

no seriously did you see how fast my post was erased????

why is that? who did that?

[atlantajoe]

Russia and Cuba punished the rich by confiscating assets, is that what you want?

[slowhand0728]

Here is one thing I never truly understood and would love some opinions. During the Whole IRAQ war I heard from people that the WAR was to get cheap oil and make all of Bush's friends rich...But the price never went down, and when the prices went up everyone screamed Bush is making his friends rich by allowing it. So which was it? The reason I bring it up is then why would the price not have been HIGH all 8 years? Or at least on average should have been higher than normal. The WindFall profit idea is not knew and has been kicked around before. So when or HOW do blame the free market for price changes and when do we blame manipulations? Your thoughts.

[BlueStateMan]

Iraq hasn't yet influenced the price of oil.

[Hank10303]

In all reality this is a silly thing and making a moutain out of a mole hill. First this is the problem with verbal information. He spoke of a windfall profit tax when oil companies were chraging twice what the price of a gallon of gas is now - he specifically said he would institute a wind fall profit tax to ease the burden on consumers. The price has fallen so the price of oil is no longer the burden that needs to be addressed. He never said or promised to institute a wind fall profit tax regardless of the price of oil but as a result of the price of oil. Second, when he proposed the windfall tax the economy was not falling from the cliff. Third has anyone considered the fact that considering his overall plan to, in effect bankrupt the oil companies with the development of green energy, there may have been discussions we are unaware of. For example, if big oil were to build on mandate 3 more refineries or further develop a process they may have in research to improve locating oil or how about his instistance that big oil isn't exploring lease it already has or that a large percentage of the excessive profits be reallocated to research and development of clean green energy. This story is missing several pieces and is only the surface of what actually did occur.

[GreenExec]

I have two major problems with the events discussed in this article.

1. We have been distracted by the lower price of crude.
Yes, crude is lower and gas prices are lower. I am excited about both. The windfall PROFITS tax was designed to tax record profits, in dollars and percent, made by increasing retail prices. This increased margin between the price of crude and the price you and I are paying at the pump, is where record profits come from. The price of Crude is NOT part of the argument. We have been distracted by the price relief at the pump and some good PR work by Obama's anonymous aide.

2. The abrupt and silent removal of a major campaign point.
The windfall tax was a major point that the Obama campaign used in his run for office. I would like to know that he plans to back away from a major plan. As a nation we have had 8 years of decisions made with little or no explaination. I would like a little transparency.

I like Obama so far, I like companies being successful, even big Oil companies. I do not like being taken advantage of by those companies. Please, we need to be a country that thinks these issues through before just taking any explaination, that's how we wound up in such a mess now.
Thanks to the American Small Business League for breaking this story.

[Hank10303]

As you stated in paragraph no. 1 the windfall was addressing the excessive profits that were being recorded. The price has reduced - the windfall is no longer being made, consumption has also declined and oil profits are falling to a break even point for the last quarter of 08. There is no need or purpose to institute a windfall tax at this time - however, there was another point made during the campaign regarding oil company tax cuts. As a result of the extremely high percentage of profit for the first 3 quarters of 08 and all of 07 there is no longer a need to provide tax cuts to big oil - that amounts to almost a trillion dollars that they, big oil, will now have to pay in corporate taxes. The Obama transition team has stated it still intends and will remove those tax cuts.

[allonfla]

You write a lot but you don't do your research. http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.php

[N2Sman]

You LIKE when Big Oil is successful!

Do you LIKE when the retiring CEO of Exxon/Mobile received a 400 Million dollar retirement package?

Do you LIKE that more and more money (esp under Bush) is being concentrated in less and less hands?

I'll wager that Exxon/Mobile makes just as much profit - They control the prices and the profits.

[atlantajoe]

N2Sman, Did the poor get richer and the rich get poorer under Clinton? More people became millinaires under Clinton that Bush. Yes I like big oil to be succesful because I like to be able to drive around without worrying about a gas shortage.

[allonfla]

I wonder why this article is not up at the top of your page like your original false http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_cffirms_c.

[allonfla]

http://tpmelectioncentral.talkingpointsmemo.com/2008/12/obama_spokesperson_reaffirms_c.php

[abby4ever]

Ok, what's the difference between lobbying (and lobbyist) as defined below in the OED, and demanding activists who think Obama owes them something for, according to them, being responsible for getting him the nomination and even the presidency? Here, it isn't about influencing Obama, it's about expecting certain things from him and, when they are not forthcoming, reminding him of 'who got him elected' (not my words, but words I've seen in posts from people unhappy with him over something or other). In principle, the attitude of the lobbyist and the attitude of the demanding activist, seems the same. I.e., 'You owe us.'
__________­__________­__________­__________­__________­_________
lobby
verb: to try to influence the actions of (public officials, esp. legislators).
noun: a group of persons who work or conduct a campaign to influence members of a legislature to vote according to the group's special interest.
__________­__________­__________­__________­__________­_________
This is not meant to be a nasty or sarcastic question, nor is it meant to be rhetorical. It is a question of pure curiosity.

[BlueStateMan]

The difference is in whether or not they are an organization that exists SOLELY to influence legislation, etc & are being PAID to do so.

An "advocacy" group who is only expecting that an official has an ethical obligation to see to their wishes, or because they feel somehow "entitled" to special consideration as a form of "payback" for their support are NOT "real" lobbyists.

[abby4ever]

I know they aren't real lobbyists. I know they don't get paid. That's why I put the emphasis on attitude and expectations. And why I said 'in principle'. I was just thinking of what seems to be the attitude of some, a kind of 'If we do you this favor we expect one in return' attitude.

Highly related question: What exactly, in your view, does Obama owe the people who say they got him the nomination? And let's suppose just for the question that they really did get him the nomination, that, were it not for them, Hillary or someone else would have got it?

Thanks.