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Obama’s Proposed Oil Tax Is ‘Something Of An Ironic Work Of Fiction’

John Kemp, Reuters

President Barack Obama’s final budget will propose a $10 per barrel oil tax, investing the proceeds in mass transit, high-speed rail, urban planning, highway upgrades and self-driving cars, among other programs. It’s  a piece of political theatre with no prospect of becoming reality.

“President Obama’s 21st Century Clean Transportation System”, outlined by the White House to reporters on Thursday, drew predictable praise from environmental groups and howls of outrage from oil producers.

But the most important thing to remember about the clean transportation plan is that it stands no chance whatever of becoming law.

Raising revenue and spending money are powers reserved to Congress by the U.S. Constitution. The president can propose but Congress decides (“Constitution of the United States”, Article I, Sections 7 and 9).

The Budget and Accounting Act of 1921 requires the president to submit a unified budget to Congress each year (“Preparation, Submission and Execution of the Budget”, Office of Management and Budget, 2015).

Before the Budget and Accounting Act, agencies sent requests for funding individually to the legislature without central coordination.

The budget last budget, for fiscal 2016, which extends through September 30, and was published in February 2015, ran to 150 pages, plus 364 pages of historical tables, and hundreds of pages more of supporting documents.

But while the president is required by law to submit a unified budget, Congress is under no obligation to enact it or even use it as a starting point for its own deliberations.

Congress jealously guards its control over taxation and expenditure and does not look to the president for leadership in this area.

The White House has difficulty getting Congress to follow its proposals even when both houses are controlled by the president’s own party let alone when they are controlled by his opponents.

The budget is therefore something of an ironic work of fiction, used by the administration to showcase ideas most of which have little prospect of becoming reality. […]

Even the administration does not appear to be taking the proposal seriously.

When asked how the tax would work, the director of the White House economic council said only that it would be paid by oil companies but not at the wellhead where oil is produced.

“We look forward to working through the details with Congress,” he said (“Obama proposes $10 per barrel oil tax”, Financial Times, Feb. 4).

The chances of a Republican-controlled Congress with close ties to oil and gas producers and an aversion to increasing taxes “working through the details” are not significantly different from zero.

The administration is well aware of all this. The president’s clean transportation plan and its $10 oil tax are a piece of political theater rather than meant to be taken as a serious policy proposal.

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