Better in their words…

If this isn’t the way it is, let me know.
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WSJ 2/10/2016

President Obama rolled out his $4.1 trillion fiscal 2017 budget proposal on Tuesday, and the good news is that most of it has no chance of passing. The blueprint is nonetheless important as a statement of progressive priorities and the direction a Democratic successor might lean. That goes in particular for his proposal for a $10 a barrel tax on oil.

The tax is notable politically because a year ago even Mr. Obama would not have dared to propose it. Gasoline taxes aren’t popular, and Mr. Obama’s levy would increase the price per gallon by about 25 cents. But on his way out of town, and with gas prices under $2 a gallon in much of the country, the President thinks he has an opening. So he’s trying to grab for the government a share of the U.S. consumer windfall from falling oil prices.

And what a windfall the tax would be—about $650 billion over 10 years, according to Robert P. Murphy of the Institute for Energy Research. Mr. Obama says the tax as a way to fund about $32 billion a year in new “green infrastructure.” This means more high-speed rail, bike paths, mass urban transit, and electric-car charging stations. But even $320 billion in new green subsidies over 10 years would leave $330 billion to spend on other progressive dreams.

The other goal is to punish fossil-fuel production. A White House memo admits the point by saying that one benefit is that the tax would provide “a clear incentive for private-sector innovation to reduce our reliance on oil.” Mr. Obama has been frustrated in his climate-change ambitions because green fuels can’t compete economically with oil and gas. So the oil tax is designed to raise the cost of oil production while subsidizing competitors.

Only in government is this called an “incentive” for “private-sector innovation.” It’s more accurate to call it a stick to punish energy sources Mr. Obama dislikes in order to assist those he favors.

The White House is also dishonest about who will pay the tax, calling it a “fee on oil paid for by oil companies.” Translation: It is a tax on drivers collected by oil companies. Studies show that families that make less than $30,000 a year tend to spend more than 25% of their after-tax income on energy, while families that earn more than $50,000 a year spend less than 10%. Mr. Obama’s proposal would increase inequality.

The White House says the tax would be phased in over five years and offset by transfer payments for low-income Americans. So after reducing their spendable income, Mr. Obama will gladly take credit for replacing some it. But the feds can’t possibly afford to offset the lost spending power for the millions of middle-income families that would pay the levy.

They are already getting soaked by an 18.4 cent a gallon federal gas tax, state gas taxes that average 26.5 cents, and fuel-efficiency mandates that raise the price of automobiles. The oil tax would also add to the operating costs of industries that would also pass those costs on to consumers, raising food and consumer prices.

The tax would hit U.S. energy production when it’s already reeling from lower prices. The Saudis would be especially happy because the tax would add to the woes of a U.S. industry whose innovation in recent years had threatened to displace imports. The tax is also a bad fiscal tradeoff for much of the U.S., since energy has until recently been the revenue mainstay of such states as Texas and North Dakota.

By the way, we hope our conservative friends note that Mr. Obama is not proposing to offset his new$10 a barrel tax with other tax cuts. A “revenue- neutral” carbon tax has become a mantra among some on the right, but progressives aren’t interested in that trade. They want a carbon tax as an additional revenue source, and once a new levy is created they will fight to repeal any income- tax cut that conservatives offer.

Mr. Obama’s oil tax is one more sign of the left’s shifting climate-change priorities. The greens used to favor mandates for energy efficiency and reduced carbon consumption. But as that agenda has foundered on economic reality, their new campaign is to stop as much oil and gas production as possible. The new command is to “leave it in the ground.”

Mr. Obama’s tax is a down payment on that ambition, so don’t expect the oil tax proposal to go away when his Presidency does.

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