Of course, the oil companies have made a lot of profit lately, but so have many other businesses and industries. Although Exxon got big headlines for earning $9.92 billion in the third quarter, few analysts bothered to note that this only came to 9.8 cents per dollar of sales -- well below that of many other companies. For example, Citigroup and Microsoft each made 33.2 percent profit. Among other major companies that each made at least twice as much as Exxon in percentage terms are Bank of America, Merck, Google, Eli Lilly, Coca Cola, Intel and Yahoo.
An Internet search turned up no evidence that Gregg or any of the other dimwits calling for windfall profits taxes on the oil industry have also called for windfall profits taxes on the banking, pharmaceutical, software, hotel or other industries that earned much more per dollar than the oil and gas industry. Nor is there any evidence that windfall profits tax advocates have ever suggested compensation to offset oil industry losses in years when the price of oil fell. It's heads I win, tails you lose.
Others may be inclined to be more charitable, chalking up ill-informed comments from the Judd Greggs of the world to rhetorical hyperbole by an overeager press secretary. Unfortunately, bad rhetoric sometimes leads to enactment of bad legislation. In 1980, Congress enacted a windfall profits tax on oil companies that even included newly discovered oil, upon which there could be no conceivable windfall. The Wall Street Journal's lead editorial that day was titled, "Death of Reason." It was framed in a thick black border to indicate mourning over the loss.
Fortunately, the tax was repealed by Ronald Reagan before it could do too much damage. But given George W. Bush's proclivity for signing every bill that comes out of Congress, no matter how misguided, I have no confidence that he would veto another windfall profits tax should it reach his desk. Some political aide may explain that it tested really well among focus groups and will add several points to his approval rating.
Sadly, such arguments appear to have won him over in the past, as with the incredibly unwise Medicare drug benefit, Sarbanes-Oxley bill and campaign finance legislation.
Bruce Bartlett is a former senior fellow with the National Center for Policy Analysis of Dallas, Texas. Bartlett is a prolific author, having published over 900 articles in national publications, and prominent magazines and published four books, including Reaganomics: Supply-Side Economics in Action.
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