Obama’s $10–a-Barrel Oil Tax Will Do Nothing To Fix Infrastructure–And It Could Mess With Hillary

Matt Vespa
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Posted: Feb 08, 2016 8:30 PM
Obama’s $10–a-Barrel Oil Tax Will Do Nothing To Fix Infrastructure–And It Could Mess With Hillary

President Obama is planning $300 billion in infrastructure and other green energy-related projects over the next ten years, which is part of a string of last minute budget requests that have zero chance of passing Congress. The president's plan to pay for it all: a $10-a-barrel oil tax (via Politico):

The biggest chunk of Obama’s proposed new spending, about $20 billion a year—roughly equivalent to the EPA and Interior Department budgets combined—would go to “enhanced transportation options,” especially alternatives to driving and flying. That would include subways, buses, light rail, freight rail modernization projects, and a major expansion of the high-speed rail initiative that Obama launched in his 2009 stimulus bill. It would also include a 150 percent increase for a more popular stimulus program known as TIGER, which provides competitive grants for multi-modal transportation projects with measurable economic and environmental benefits.

Obama’s plan will also include about $10 billion a year to encourage local, regional and state governments to plan and build smarter infrastructure projects, including incentives to reduce carbon emissions through land-use planning, public transit, electric-vehicle charging, and other strategies. There would be a Climate Smart Fund to reward states that make greener choices with existing federal dollars, as well as competitive grant programs to promote region-wide planning, more livable cities, and infrastructure projects with greater resilience to climate impacts.

Finally, Obama will call for more than $2 billion in annual investments in clean transportation research and development, including efforts to deploy self-driving cars, charging stations for electric vehicles, greener airplanes, and other climate-friendly technologies.

As with most policies emanating from this administration, it won’t nearly be enough to ameliorate America’s infrastructure woes (via Wired):

The new law “falls far short of the level needed to improve conditions and meet the nation’s mobility needs and fails to deliver a sustainable, long-term source of revenue,” according to Trip, a private nonprofit research think tank. Last year, Trip found that clearing the epic backlog of repairs to roads, highways, and bridges would cost $740 billion. Even Obama’s relatively aggressive proposal doesn’t get there. According to The Washington Post, once the tax is fully phased in, it will generate about $65 billion annually—but not all of that is going toward infrastructure repair. And even if it were, we’re looking at more than a decade just to fix the stuff that’s broken now.

And it could screw Hillary Clinton on the campaign trail:

…[B]y raising the specter of new taxes on fossil fuels, it could create a political quandary for Democrats. The fee could add as much as 25 cents a gallon to the cost of gasoline, and even with petroleum prices at historic lows, the proposal could be particularly awkward for Hillary Clinton, who has embraced most of Obama’s policies but has also vowed to oppose any tax hikes on families earning less than $250,000 a year.

Hillary’s proposed agenda for America is projected to cost us $1 trillion in new spending. The promise of tax hikes not being impacting families who make less than $250k is also a long lost promise; Obama included a cigarette tax to pay for State Children's Health Insurance Program (SCHIP). Also, there’s the Obamacare tax slapped on those who remain uninsured under the new Affordable Care Act. More Americans are remaining uninsured since paying that tax is often cheaper than paying the premiums for the plans under Obamacare. Oh, and premiums are set to spike just before Election Day.

Infrastructure is part of the economy; it’s in bad shape. The president has a plan, albeit a bad one, to fix it–and you can bet that the press will be asking her if she would undertake a gas tax to pay for such projects if she’s elected come November. Additionally, does she support the president’s dead on arrival tax hike?

Yes, this policy could spur debate, which seems to be the intention, but it could also allow voters (and the media) to ask her about how she would pay for her own infrastructure agenda as well. Yet, given the hollow promises of no tax increase for the middle class made by Democrats, you can bet that Clinton will duck, dive, dip, and dodge on this gas tax question to further avoid alienating voters. Either way, it could end up being a pickle for her, as she would have to defend a tax and spend policy that usually doesn't turn out well for Democrats. Not to mention, detrimentally impact millions the home budgets of millions of hard working Americans who will have to eat the tax.

Speaker Paul Ryan was quite adamant that this proposal is a non-starter.

"Once again, the president expects hardworking consumers to pay for his out of touch climate agenda. A $10 tax for every barrel of oil produced would raise energy prices—hurting poor Americans the most. This announcement, the latest in a series of regulatory attacks on the energy sector, proves President Obama is still on a mission to destroy a major backbone of the U.S. economy. The president should be proposing policies to grow our economy instead of sacrificing it to appease progressive climate activists. The good news is this plan is little more than an election-year distraction. As this lame-duck president knows, it's dead on arrival in Congress, because House Republicans are committed to affordable American energy and a strong U.S. economy."