Obama’s Latest Budget Buster

On February 9, President Obama will release his final 2017 budget plan, and one of the most controversial line items is a $10 per barrel “fee” on crude oil.

With his time in office nearing an end, the President is taking all opportunities to push his climate change agenda, which he clearly made a top priority during last month’s State of the Union address. The oil fee is an attempt to discourage oil consumption and to fund clean transportation infrastructure: subways, buses, light rail, high speed rail, freight rail modernization, and self-driving cars.

With a phased implementation plan over five years, Obama hopes the fee will ultimately generate $300 billion to fund the clean infrastructure. White House officials said “by placing a fee on oil, the President’s plan creates a clear incentive for private sector innovation to reduce our reliance on oil.”

Theoretically, the fee will only be levied on oil companies, but some of the tax burden will very likely be passed along to consumers, who could feel as much as a $0.25 increase per gallon pinch at the pump. Obama’s plan does provide some relief for low-income families, and provides incentives for Northeastern families who choose alternatives to heating oil.

Critics charge that this is yet another costly proposal in a long line of Obama actions to further the climate change agenda. Poor decisions like the administration’s approval five years ago of the $535 million loan guarantee to currently defunct solar company Solyndra, as well as unprecedented green energy subsidies, leave critics reeling.

Only two months ago, the President signed the $286 billion FAST act, a five-year-program for highway and public transportation. Now, the 2017 budget calls for a major expansion of the 2009 stimulus bill high speed rail initiative, and also includes a 150 percent increase for the TIGER stimulus program, a program for multi-mode transportation competitive grants. Opponents feel the plan calls for too much spending on strategies that have yet to be proven cost-effective.

The Republican-controlled Congress has already said that the oil tax is “dead on arrival”, a fate which will likely apply to Obama’s entire budget plan, which is expected to top $4 trillion.

Historically, Congress has dismissed the President’s annual budgets for two main reasons: (1) the plans never feature a balanced budget and (2) the proposed items are usually miles apart from Republicans’ own fiscal priorities.

Even some Democrats have deemed the budgets “unworkable”. White House officials disagree; Press Secretary Josh Earnest commented that past budget proposals were “a genuine effort to compromise”, and thus contained proposals that better fit with Republican ideals and budget numbers that were reasonable.

Because Obama has not seen the kind of action from Congress that he expected to see on past budgets, this year, Obama decided on a no-holds-barred approach and therefore has proposed some pretty bold ideas; his own aids even admit to the theatrics.

The budget is so costly and so liberal that GOP officials will likely not even extend the traditional invitation to the White House for budget testimony. This is a long-standing tradition of budget season, but Congress won’t waste the time, instead utilizing those hours to continue to work on its own budget.

Proponents of the oil tax contend that Obama’s plan is the boldest vision for transportation since the Eisenhower era, in which the interstate highway system was envisioned.

In defense of his plan, the President contends that America should be funding the future rather than subsidizing the past. Instead of doing short-term fixes to the transportation infrastructure, proponents give credit to Obama for laying out this kind of long-term plan and investment.

While Democrats are realistic about the likelihood of Congress passing the budget, they hope that Republicans will pay attention to the plan’s merits, and at least begin a dialog for the future.

Adding taxes that will eventually hurt the middle class is the wrong way to go about it.






Article Sources:

Christian Science Monitor: http://www.csmonitor.com/Business/2016/0205/Obama-proposes-10-per-barrel-oil-tax

Los Angeles Times: http://www.latimes.com/nation/politics/la-na-obama-budget-proposal-20160207-story.html

Politico: http://www.politico.com/agenda/story/2016/02/obama-oil-tax-budget-000038#ixzz3zXICvlLR

Fortune: http://fortune.com/2015/12/07/congress-fast-act-bikes-autonomous-cars/

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