Democrats Try to Tax Their Way Out of High Gas Prices

NRCC - Gas prices this weekend continued to hover near $4.00/gallon, but national Democrats either didn’t notice or didn’t care. Last week, House Republicans passed bills to increase domestic made energy, only to meet strong opposition from top Democrats:

NATIONAL GAS PRICE AVERAGE: $3.96/GALLON. (“Daily Fuel Gauge Report,” AAA, Accessed 5/8/2011)

147 DEMS VOTE AGAINST GOP EFFORT TO EXPAND AMERICAN-MADE ENERGY: Final Roll Call Vote: 266-149. (Roll Call 298, Clerk of the U.S. House, 5/5/2011)

Democrats argued that increasing domestic energy production would not lower gas prices—but they somehow seem to think that raising taxes on oil producers will. President Obama and Congressional Democrats have repeatedly offered these tax hikes as their solution to rising gas prices:

HOUSE DEMS VOTE TO END “BIG OIL” TAX CREDITS: “But if Dems are going down, they are planning to do it loudly. The minority is planning a procedural maneuver to force a vote on a key tax credit for the five biggest private oil companies.” (Patrick Reis, “Morning Energy,” Politico, 5/5/2011)

SENATE DEMS TO JOIN IN ON THE TAX-HIKING FUN: “Senate Democrats are looking to bring to the floor next week a plan to strike billions of dollars in annual tax incentives for the five biggest oil companies.” (Darren Goode, “Senate Prepares to Go After Big Oil,” Politico, 5/6/2011)

OBAMA CARICATURES GOP AS WANTING TO “DRILL OUR WAY OUT OF THE PROBLEM,” SUGGESTS TAX HIKES INSTEAD: “President Obama called for the elimination of billions of dollars in oil industry tax breaks Friday, while stressing that the United States can’t drill its way out of high gas prices.

“ ‘We can’t just drill our way out of the problem,’ Obama said during an energy policy speech in Indiana Friday. ‘If we’re serious about addressing our energy problems, we’re going to have to do more than drill.’” (Andrew Restuccia, “Obama: Nation Can’t Drill Its Way Out of Soaring Gas Prices,” The Hill, 5/6/2011)

This emphasis on raising taxes, however, is problematic for the administration given that Democrats have been unable to explain how doing so will remotely reduce gas prices:

WHITE HOUSE PRESS SECRETARY JAY CARNEY AVOIDS QUESTION ON WHETHER TAX HIKE WILL LOWER GAS PRICES: “Q: ‘Okay. But so then the current context, these high gas prices, and probably going to be higher come summer, it’s a reminder of the need for this long-term plan that the President advocates and that’s where the tax subsidies come in. He’s not suggesting that even if Congress were to act on this, that the consumers would see a difference anytime soon -- is that fair?’

“MR. CARNEY: ‘There are -- he is very focused on this issue of gas prices. He is obviously looking at different things that need to be done or could be done, perhaps, to have an impact in the short or medium term. But the reality is that we have a dependence on foreign oil that holds us hostage to the kind of spikes in the oil markets that we’ve seen lately that drives up gas prices.’

“And he’s committed to finding a long-term solution to this problem and not doing what tends to happen here, which is whenever we see these spikes -- and we’ve seen it in the past; we’ve all seen this movie before when politicians run out and promise a variety of measures that will bring the price of oil down or gas down, and when those prices subside, usually because of the way the market works, everybody forgets that we have a problem. And he’s committed to a long-term energy policy that addresses the long-term problem.” (“Press Briefing by Press Secretary Jay Carney,” The White House, 4/26/2011)

TAX HIKES ON “BIG OIL” WILL ONLY PUNISH LOW INCOME CONSUMERS: “Do Democrats have any ideas that don't involve raising taxes? It doesn't seem that way, given their latest push to boost oil industry taxes in the face of record-high gasoline prices. ...

“And no economist — at least not any living in the real world — would argue that raising taxes on the oil industry will somehow lower the price of gasoline at the pump.

“Indeed, trying to punish the oil industry with higher taxes will in the end only wind up punishing consumers — particularly those at the lower end of the economic spectrum.” (Editorial, “Punishing Big Oil Won’t Cut Prices,” Investor’s Business Daily, 5/5/2011)

Still, Democrats' latest tax hike on energy producers makes perfect sense given President Obama’s history of advocating for higher gas prices:

OBAMA IN 2008: “UNDER MY PLAN…ENERGY RATES WILL NECESSARILY SKYROCKET.” “When I was asked earlier about the issue of coal, you know, under my plan of a cap and trade system, electricity rates would necessarily skyrocket. Even regardless of what I say about whether coal is good or bad. Because I’m capping greenhouse gases, coal power plants, you know, natural gas, you name it, whatever the plants were, whatever the industry was, uh, they would have to retrofit their operations. That will cost money. They will pass that money on to consumers.” (Remarks from then-Sen. Barack Obama, San Francisco Chronicle, Jan. 2008)

OBAMA: HIGH GAS PRICES NOT A PROBLEM IF “GRADUAL ADJUSTMENT”: “I think that I would have preferred a gradual adjustment. The fact that this is such a shock to American pocketbooks is not a good thing. But if we take some steps right now to help people make the adjustment, first of all by putting more money into their pockets, but also by encouraging the market to adapt to these new circumstances more quickly, particularly US automakers, then I think ultimately, we can come out of this stronger and have a more efficient energy policy than we do right now.” (Jim Geraghty, “Obama: On Gas Prices, ‘I would Have Preferred a Gradual Adjustment,’” National Review, 6/11/2008)

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