Wednesday, January 26, 2011

Obama throws down the gauntlet

US President Barack Obama wasted little time in his 2011 State of the Union address urging Congress to repeal federal tax incentives for the oil industry. The request came soon after he said that encouraging American innovation was the first step in winning the future, and he described clean energy technology research as “an investment that will strengthen our security, protect our planet, and create countless new jobs for our people.”

“We need to get behind this innovation,” he said a few minutes later. “And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies. I don’t know if you’ve noticed, but they’re doing just fine on their own. So instead of subsidizing yesterday’s energy, let’s invest in tomorrow’s.”

Oil and gas lobbyists expected him to renew the request he’s made in the administration’s last two federal budget requests. They recognize that Republicans taking control of the House and increasing their numbers in the Senate present an obstacle to its being enacted, but they’re also not complacent. “It’s still going to be a fight,” one told me.

Here’s one reason why: The only other industry he singled out for criticism was health insurance, when he said he was not willing to go back to the days when companies could deny someone coverage because of a pre-existing condition.

More broadly, Obama said that the federal government needs to remove barriers which he said stand in the way of investing heavily in innovation, education, and infrastructure. “For example, over the years, a parade of lobbyists has rigged the tax code to benefit particular companies and industries,” he maintained. “Those with accountants or lawyers to work the system can end up paying no taxes at all. But all the rest are hit with one of the highest corporate tax rates in the world. It makes no sense, and it has to change.

“So tonight, I’m asking Democrats and Republicans to simplify the system. Get rid of the loopholes. Level the playing field. And use the savings to lower the corporate tax rate for the first time in 25 years – without adding to our deficit. It can be done,” the president said.

He tried often to strike a conciliatory tone by saying that both sides of the congressional aisle need to work together to meet many significant challenges. It’s very possible that his request to end oil and gas industry the White House believes are outmoded will be the first big test of his call to simplify the federal tax code. And yes, it’s still going to be a fight.


Anonymous Concerned said...

It is definitely true that the Presidents request and noted direction to end the oil and gas sector is going to be a fight.

Renewables and clean energy are absolutely an imperative part of our energy and economic future. But we should not sacrifice current jobs and hinder an entire industry that is so needed in our current economy. Simply put "clean energy and renewables are good things, killing jobs and an entire industry is bad".

With President Obamas remarks about the subsidies and taxes I am not sure I agree. I don't see how it is a good thing in our economy to put additional taxes on oil and gas companies, which will just raise the prices, when we are already seeing prices rising. This is a time to cultivate our domestic resources and encourage growth, not add new economically stifling taxes and policies. I have had the chance to talk with Dr. Joseph Mason, and several of his colleagues, and his recent study shows the resulting fallout over the next ten years would include:

· Initial losses of over 154,000 jobs in 2011 alone;
· More than $341 billion in lost U.S. economic output; and
· In excess of $68 billion in lost wages nationwide.

January 31, 2011 at 11:16 AM  

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