Who wouldn’t jump on the bandwagon to soak the rich? I mean, when the economy is sour and scads of people are out of work, those who seem to still be doing just fine ought to be made to contribute a little (or even a lot) more, right? It’s good social justice to force those who have to fork over more, right?
Happily, we’re finally seeing that in states like Wisconsin, Ohio, New Jersey, and even Massachusetts(!), as they have taken steps to force public sector (as in, employed and paid by every tax payer, whether the tax payer can really afford the taxes or not) employees to share some of the hurt of this awful economy.
Now we hear about a proposal to end “subsidies” of the big oil companies. This exceptional move, one which can be lauded by all, apparently, will bring to the government an additional, whopping… $18 billion. Over 5 years. That breaks down to $3.6 billion per year. For perspective, the federal government borrows $28 billion (that’s “billion” with a “b”) every week, which extrapolates over 52 weeks to $1.46 TRILLION per year. Which makes the “savings” from this brave stand against big oil work out to a budget deficit reduction by 0.0025%. Brave.
But that doesn’t mean this brave stand will have no impact on the nation. Oh no: that would be too easy. It will make gasoline more expensive.
See, the “subsidy” isn’t a hand-out to the industry like so many farm subsidies: it is a tax break, which simply means that the company has to fork over to the government more of the money it rightfully earned when consumers freely chose to buy the product the oil company was selling. If this passes, the oil companies will have to send more money to the federal government.
Simple market principles dictate that the oil companies, who have been making modest 7% to 8% profits the last number of years, will not just absorb the $3.6 billion per year as though they are beneficent providers of gasoline to drivers and money to the government. They will pass along the cost of the additional outlay to the consumer. No problem there at all: that’s how business works.
The problem is twofold: first, those whom this will hit hardest are those with less money to spend in the first place on necessities like fuel for their car. The average struggling consumer will not automatically get a raise to compensate for the hike in already-ridiculous prices at the pump. The average unemployed person will find it that much more difficult to seek jobs that are a distance from their home, since gasoline will eat up so much of their income. Thus unemployment numbers will not improve and may even suffer.
And all this adds up to a de facto regressive tax—one which harms the poor at a higher rate than the wealthy.
The second problem is the promised programs that will result from this paltry sum. If the President and the bill’s sponsors get their way, not only will the money *not* be used to reduce the deficit by 0.0025% (guffaw, chortle) but it *will* be used to advance the still-ridiculous “green” agenda that still has only succeeded in making life more expensive for everyone.
What has the government got against poor people? Throttling domestic oil production thus driving up the cost of moving about, continuing the counter-productive ethanol, milk, and farm subsidies that drive up food costs, and consigning their kids to failing schools in so many areas just to satisfy the teachers’ unions…
Makes one long for a more humane, more market-based system where those with the coercive power of government are not also empowered to dictate prices and lifestyles based on their own Marxist ideological, green-religious (or atheistic), sexually deviant ways of seeing the world…