Obama needs cash, like everybody who doesn’t have an oil field in their pocket. One way to raise cash is taxing things. Any tax, will make some people mad, and introduce losses into the market. But, as I’ve tweeted,
Rock | Earth | Hard Spot
So, that’s where Obama’s charm could prevail…even if taxing things is taboo given the state of the economy.
If Obama started by educating the country on where oil dollars actually go (ie the 23 major exporters, which aren’t exactly democracies, who don’t exactly like the US, and who’s people are suppressed – the higher oil prices go) then the American public, might hear him out. And maybe be supportive of a tax on oil/gas.
He could call it, a “Freedom tax”, although don’t get confused – it’s an oil/gas tax, just spun the right way. If Obama said something like:
“In order for America to keep our freedom, we have to buy sustainability. Oil, is an addiction, just like cigarettes and alcohol. So, just like cigarettes and alcohol,we have to kill our dependence on it. Anybody that wants to continue abusing cigarettes, alcohol, or oil - is going to pay a tax to do so.”
He could then argue, that
“with this tax, we could invest in sustainable city projects, to guarantee that our freedom lasts, for generations”.
Invest in sustainable solutions and name the projects with a spin on Freedom – so people see the dollars spent. Americans like freedom, so why wouldn’t they like a light rail in their cities named something like “the Freedom Express”? “The Freedom Flow Water Utilities”? “The Freedom Solar Field”? “Freedom High”? “Freedom Hospital”? Freedom. Freedom. Freedom.
And oil tax would for-sure:
Reduce demand.
Encourage research, entrepreneurs, and innovation of solutions for renewables. Thus reducing the need for solar, wind subsidies.
Put a little money back in America’s pocket + reduce the wealth transfer to OPEC.
Encourage diversification and innovation in OPEC economies, for their own good + sustainability.
If Obama wanted to get real creative, and would like to avoid the implications of the downfall/risk from the tax itself - I have an idea. Tell everybody that he is GOING to tax oil/gas, starting in, say, January 2010 at 20%. Then, say it’s going to grow by 100 bp every quarter. He could then, borrow against that future cashflows – today… and give the long-term market a chance to find a smoother equilibrium, and reduce the risk of somebody launching a missile or two.
Update: A new follower, Wattzon points out, that less than 24 hours ago – Friedman did an op-ed piece on this topic.