Obamanomics 101

Was just perusing the Drudge Report and found this story quite fascinating:

President-elect Barack Obama is not planning to implement a windfall profit tax on oil companies because prices have dropped below $80 a barrel, an aide said on Tuesday.

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

Huh? I thought a "windfall profits tax" was supposed to be a tax on profits. What does that have to do with the cost of the crude oil input? Here's a little secret people: the oil companies will make huge profits whether the price of oil is $150 a barrel or $35. Why? Because they buy crude at the market price, refine it, mark it up and sell it. The fact that world demand for oil is relatively inelastic means they make their money anyway. The people who are being hurt by low oil prices are the sheiks and the thugs that own the stuff, not the companies that refine it.

Besides, that there's the convoluted logic of wanting to tax something when it's incredibly expensive and not wanting to tax it when it's cheap. Remember there isn't a single corporation that pays a penny of tax in this country. Taxes are a cost of doing business that get tacked on to the price of the good or service being sold or they come out of the pockets of shareholders by reducing dividends. And guess who owns oil company stocks? You, if you have an IRA, 401k, pension, annuity, mutual fund, etc.

Goes to show you, this clown would have said anything to get elected. I'm starting to lose my faith in the American people if they fall for this crap.

UPDATE: Just in case this post left you in doubt, I was against the windfall profits on oil companies, on any company really. So I'm happy they set the crappy idea aside (at least for the time being). What frustrates me is that either this was a half-baked idea to begin with that Obama threw out there because it sounded good to angry voters with an irrational hatred of "big oil" or it was a cold calculated ploy to attract such voters. And honestly I can't believe it was the former because all of my more "enlightened" liberal friends kept telling me how great Obama's economic team was like Warren Buffet and Robert Reich. Please. President-Elect Hopeandchange is just another liberal snakeoil salesman.

Posted by Henry Louis Gomez at December 3, 2008 01:49 AM