Sen. Barack Obama announced today an “emergency economic plan” he wants enacted by this fall that would use oil profits to give every “middle-class” American family $1,000.
The full text of the plan is highlighted with subheads that read, “Take a Portion of the Windfall Profits from Big Oil and Put $1,000 in the Pockets of Working Families” and “Forcing big oil companies to take a reasonable share of their record breaking windfall
profits and use it to help struggling families with direct relief.”
The plan also calls for $50 billion additional spending to bail out states with budget shortfalls, $150 billion per year for developing renewable energy technologies and an additional, permanent tax relief package of $1,000 per year for middle-class families.
According to the plan, oil companies will pay over a five-year period to partly fund the first year’s $1,000 “emergency energy rebate check” for couples, a measure the plan calls “a down payment on Obama’s long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.”
The plan does not specify how the Democratic presidential candidate intends to pay for future years’ tax relief.
The official announcement states, “Obama simply asks that big oil companies contribute a reasonable share of the windfall profits they receive from high oil prices over the next five years to pay for emergency assistance for families right now.”
According to the 2007 joint report of the U.S. Census Bureau and the Bureau of Labor Statistics, in 2006 there were 58,495,000 people over the age of 15 in the U.S. who might qualify as “middle-class” or “working” individuals, making between $35,000 and $80,000. Multiplying that number by $500 per individual means Obama considers just short of $30 billion “a reasonable share of the windfall profits” for oil companies to pay.
A statement released by Republican presidential candidate John McCain’s press corps today cited a list of seven news articles, quotes and reports critical of an oil company profit windfall tax, suggesting such a tax would decrease domestic oil production, punish American businesses while leaving foreign oil companies unscathed and increase the cost of gasoline at the pump.
“The higher taxes that Barack Obama supports are one of the surest ways to kill jobs and exactly the wrong approach to a slowing economy,” the statement says. “While American jobs and families suffer from high gas prices, Barack Obama stubbornly opposes additional oil drilling, more nuclear power, and the gas tax relief we need.”
Obama’s plan states that it intends for families to use the “Obama energy rebate” to offset gas prices or pay for increased heating bills this winter.
“As we help to reduce the burden of rising energy prices,” the plan states, “Barack Obama believes it is important not to abandon our commitment to long-term fiscal discipline. That is why he is proposing to offset the cost of his emergency energy rebates over the next five years by enacting a windfall profits tax on big oil companies.
“While oil companies and shareholders need incentives to run well managed businesses that invest in efficiency and innovation, a significant share of the record profits the big oil companies have been making have nothing to do with their management skill. It is the result of changes in the price of oil because of factors like supplies in the Middle East, demand in Asia, and disruptions and distortions in the oil market.”
The plan’s $50 billion in proposed relief to states and local governments is divided into two initiatives, a $25 billion “State Growth Fund” to help states provide health, education and housing assistance programs and a $25 billion “Jobs and Growth Fund” for building and repairing transportation infrastructure and schools.
Both of the growth funds, according to the plan, are targeted at preventing state job losses.
The plan does not specify how the proposed $150 billion per year for developing renewable energy technologies will be raised or spent.