Republicans Object to Obama Tax Hikes

At the House Ways and Means Committee hearing on the Obama Budget yesterday, Republicans vociferously objected to President Obama’s devastating new taxes on energy found throughout the budget that would drive our already fragile economy down.

Crippling taxation on the small independent oil and gas producers and Obama’s “cap and trade” policy would at once burden families across the country with staggering gasoline and electricity costs, drive manufacturing jobs overseas and sound the death knell for domestic oil and gas production at a time when there is no transitional source of energy.

Ranking member Dave Camp (R-Mich.) told me in an interview yesterday, “Energy is found in everything we use and buy and consume from the food we eat, the clothes we wear and the cars we drive.  Estimates from places like the EPA say that gas could go up $1.70 [per gallon], that electricity rates will go up as high as eighty percent as a result of this ‘tax and trade’ energy tax.  Of course, both of these pale in comparison to the potential job losses, which the National Association of Manufacturers estimates to be in the range of 3 to 4 million.”

In an exclusive interview with HUMAN EVENTS, minority leader John Boehner (R-Ohio) said of the energy tax increases in the Obama budget, “If you drive a car, or you have a job, or if you have the audacity to flip on a light switch, you’re going to pay higher taxes.  They call this ‘cap and trade’ because people don’t quite understand it.  It’s a bit of an illusion, but let’s just call it what it is:  it’s a carbon tax.  Rather than doing it straight up, in an efficient way, by collecting carbon tax, they’re trying to hide this.  This has been estimated at $1.3 trillion dollars of new taxes over the next 10 years.”

“But what nobody’s talked about are the tens of millions of jobs that are going to get shipped overseas if they go down this path,” Boehner continued.  “There’s no indication that China or India or other industrialized nations are going down this path.  Europe is on their third try with a cap and trade system that’s not working very well.  And what are they doing in Germany?  They’re building all of these coal-fired power plants.  In the midst of the economic turmoil that we’re in, to raise taxes on all Americans and to risk losing tens of millions of American jobs — this will have a very difficult time passing in this Congress.”

I spoke with Niger Innis, national spokesman for the Congress of Racial Equality (CORE), one of the four oldest civil rights organizations in America.  CORE has been at the forefront of the energy debate in defense of America’s inner cities and poorer communities that were devastated last summer by the steeply-rising cost of energy caused by the Democrat Congressional majority’s refusal to expand domestic production.  Innis told me, “When you consider that energy is not a luxury but a necessity for progress and survival in life, any direct or indirect tax on energy or energy production or government policy that stifles the development of energy resources for all consumers across the board, that burden is disproportionately borne by the poor and working class families.”

Abundant, affordable energy is the key to a thriving economy: you can’t have the latter without the former.  Yet in this time of economic instability, in addition to the “cap and trade” carbon credits, Obama is targeting America’s domestic independent oil and gas industry for death by taxation.

There are tens of thousands of small, independent oil and gas producers in America, mostly family-owned mom and pop operations that provide millions of direct and industry related American jobs.  I spoke with George Gafford, a Texas owner of one of these small, independent shops that drill literally ninety percent of all oil and gas wells actually drilled in the United States.  Gafford told me, “The Obama administration budget plan proposes to eliminate the expensing of intangible drilling and completion costs, repeal existing depletion allowance and require a minimum of seven years (an increase from five years) amortization period for all geological and geophysical drilling expenses for independent producers.  Obama’s budget plan also calls for the repeal of additional tax credit provisions for enhanced oil recovery, which are the processes by which over half of oil and gas resources are extracted in a field.  If Obama’s budget is enacted as currently written, it would destroy the American independent oil and gas industry.  Independent producers simply could not afford to do business.”

Of this frontal assault on domestic energy production, Boehner told me, “This is all part of the administration’s plan to tax carbon, to make it difficult to produce oil and gas.  I’m for solar power, I’m for wind power, I’m for nuclear energy, I’m for all of the above.  If we’re seriously going to move our country toward energy independence, we have to do all of the above.  I think taking a big chunk of our energy sector and trying to tax it out of existence is a bad idea, and it won’t work.  We could get more energy quicker by doing all of the above.  Clearly oil and gas production in the United States could be increased quickly.  It’s going to take awhile to have more wind to have more solar energy, but I still think that all of the above is what most Americans think we should be doing.”

I spoke with Rep. Trent Franks (R-Ariz.), a former independent oil man before his election to Congress.  “This is a recipe for bankrupting almost every small or medium-sized independent oil company in America,” Franks said.  “Most of the time the equation is that the smaller companies discover new reserves, and the intangible drilling cost reductions are critical to that capability.  Then the large companies come in and either buy them out or lease around them and develop the field.  This will hurt the small companies far more than it will hurt the big ones.  I am looking at Mr. Obama’s policies and they are surreal.  It is almost as if they are deliberately trying to find a way to crush the greatest economy on earth.”

In the hallway outside of the hearing yesterday, I spoke with Charles Boustany (R-La.), a member of the House Committee on Ways and Means, about the impact these Obama policies would have on oil companies and jobs in his southwest Louisiana district that borders the Gulf of Mexico with its deep-water  drilling.  Boustany told me, “This will hurt every single production job, fabrication job, maritime job — everything associated with this oil and gas industry.  We’ve been down that route before back in the 1970s under Jimmy Carter when he imposed a windfall profits tax that drove jobs overseas.  

“Our oil and gas companies will become less competitive in comparison to other companies overseas.  Our U.S. oil companies are competing for less than 10% of those oil reserves in the world.  If we drive our companies to be even less competitive by taxing them, then what does that do to energy independence for our country as we try to transition to whatever the next energy economy is going to be?  Let me point out that natural gas is one of the key transition fuels, and one third of the natural gas we’re using today in this country has come from drilling of rigs and production over the past two years.  So if we knock that out, how are we even going to transition?  We’re talking about very high energy prices, we’re talking about a massive loss of jobs in the energy industry and without an alternative.  What’s the alternative?  Green energy?  We’re not there yet.  And it’s going to take 20-30 years to get to a point where we may have bio fuels and other things that we can do so this is not in the interest of national security, it’s not in the interest of job growth, and it’s the worst possible time to impose these kinds of taxes.”

Far from making America energy independent, which is vital to our national security and to stabilizing our economy, it is the consensus of all I spoke with yesterday that the Obama budget will accomplish the exact opposite.  

Through heavy taxation, every single American will suffer an increase of up to 80 percent in energy costs, and an entire industry — along with the millions of jobs it provides — would be taxed out of existence.