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110th Congress - Dance of the RINOs

Rino The House has just passed H.R. 6, which aims to raise taxes on domestic oil companies (the compelling and insightful argument against which I outlined just hours ago) by a vote of 264-163.

The legislation is utterly atrocious, intellectually dishonest, and capable of inflicting significant damage on our oil industry, on American consumers, and indeed on our dependence on foreign oil.

Worse, 36 Republicans went along for the ride.

This was the 6th and final initiative among the new majority's 6 for 06.  Of those 6, 3 have been truly terrible bills that each deserve the "atrocious, dishonest, and damaging" labels.  In addition to H.R. 6, the 2 other abominations are H.R. 2 (the minimum wage hike) and H.R. 4 (the prescription price control bill).

With the votes for all 3 now on the board, a dozen Republicans bear the shame of having voted in favor of all three.  RINO watchers will find many of the names familiar:

  • Vern Buchanan (FL)
  • Michael Castle (DE)
  • Jo Ann Emerson (MO)
  • Tom Petri (WI)
  • Todd Platts (PA)
  • Tim Johnson (IL)
  • Walter Jones, (NC)
  • Frank LoBiondo (NJ)
  • Jim Ramstad (MN)
  • Chris Smith (NJ)
  • James Walsh (NY)
  • Frank Wolf (VA)

It's still early in the season, but congratulaions to the Disingenuous Dozen for their perfect records to date.  Of particular note are freshman Vern Buchanan, who has started his Congressional career with a deafening wimper, and Jo Ann Emerson, the most economically conservative Republican to put up an unblemished record of capitulation.

Honorable mentions go to the 27 other Republican Congressmen who have voted in favor of 2 of the 3 hyper-problematic bills.  A regrettable swarm of 91 (45% of Republican members) have voted for at least one of the patently asinine measures.

It looks like a large number of Republicans in Washington may have learned precisely the wrong lesson in November.

Update:   Andy Roth at Club for Growth notes that 28 of the 36 Republicans who voted for the oil tax hike broke explicit pledges not to do so, including half of the dozen perfect offenders (Emerson, Petri, Johnson, Jones, Ramstad, and Smith).  (HT: Townhall)

Handcrafted by Flip on January 18, 2007 |

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Comments

Flip, show me (and I mean this honestly, not argumentatively) the hard, historical, statistical data proving that taxing Big Oil will cause them to stop looking for oil, or reduce their inclination to do so. Even with heavy taxes, oil exploration, development, and production is, and will continue to be, very profitable. I find this analogous to the way that baseball team owners piss and moan every year about how unprofitable it is to own a baseball team, yet there is a long list of people that want to do so. I agree that, on a common sense level, punishing Big Oil is questionable and possibly disingenuous, but I don't see being in the oil business NOT still being profitable. I'd also like hear, or be directed to, your objection to the Medicare drug price negotiation idea.

Posted by: Tom Joad | Jan 19, 2007 1:20:52 PM

No one's arguing that the tax will cause the oil business to be unprofitable (after all, if there were no profits, they'd owe no taxes). The point is that when you make a business *less* profitable, private capital will flow away from it. The market ensures that whatever return investors require, in order to compensate them for the level of risk associated with oil exploration/refinement, is the level of return they receive (the adjustment mechanism being the price of those companies' equity). Artificially lower the return (without lowering the risk) through taxation and the market will push the price of their equity lower (i.e. people will sell, as they will have better opportunities to invest in other industries, not being selectively taxed) until that required return is re-established. The companies (i.e. investors in these companies) will be less inclined to take on new projects (the high risk associated with these projects will no longer carry the requisite returns), meaning less new production ensues. With reduced supplies, oil prices rise. As oil prices rise, eventually so too will prices in almost all other product categories. Foreign oil companies of course are not subject to this tax, so in addition to our domestic supply dwindling (or at least growing slower than it otherwise would), it's burdened with a price disadvantage to foreign competitors. So our dependence on foreign oil grows. Everybody loses. Except foreign oil companies. And maybe elected Democrats, if they can keep enough people from understanding how this works. Back to your question, it's not that the tax will make the oil business unprofitable, it's that it will make it less profitable, which undeniably has the effect of reducing new investment in the activity, when there are other activities not thus disadvantaged for people to invest in. And that leads to the aforementioned ill-effects. The best empirical lab we have for this is Jimmuh Carter's terrible decision to sign the Crude Oil Windfall Profits Tax in 1980. Domestic production fell by 3-6% and our dependence on foreign oil increased by 8-16%. http://www.taxfoundation.org/publications/show/1168.html http://eteam.ncpa.org/commentaries/taxing-profits-draining-energy The reasons not to do this (in fact, to do anything BUT this) are numerous and crucial. What I haven't heard is any reason TO do this. Pelosi & Co. passed it off as an attempt to get off our reliance on expensive and frequently foreign oil, but it has no shot of doing anything other than further exacerbating that problem.

Posted by: Flip | Jan 19, 2007 1:48:36 PM

There it is. I knew you had a specific example recently, I just couldn't remember what or where. This is the downside of the *other* blogs that I read, that there's no substantial discussion of what appears to be a prima facie bad idea. The obviously better idea, of course, as posed to me recently by a Repub, is to tax gas more.

Posted by: Tom Joad | Jan 19, 2007 2:30:46 PM

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