President Barack Obama has finally released the details of how he will spend funds raised by a proposed $10 tax on barrels of oil, and it’s looking to be a costly endeavor.
The White House plans on raising more than $300 billion from taxing oil, which economists argue will be passed onto consumers through higher energy prices. The net effect is a massive energy tax on the American economy to pay for “green” infrastructure spending.
Obama’s budget “invests an average of $32 billion per year over 10 years into a multi-agency initiative to refocus Federal investments, reward local and State governments for innovation, accelerate integration of new vehicle technologies, and ensure the safety of the transportation system,” according to White House documents.
This is all part of Obama’s plan to funnel $900 billion towards infrastructure projects over the next decade. The president has also likened this effort to a second stimulus program.
In light of the massive spending proposal, The Daily Caller News Foundation has laid out all the important details about how Obama plans on using funds raised by taxing energy.
The Tax
Obama’s so-called “21st Century Clean Transportation Plan” will be financed through a $10.25 tax on barrels of oil. The White House expects to raise more than $300 billion from this tax, which would be used for green transportation programs and go towards the financial solvency of the Highway Trust Fund.
Obama can argue this is a sort of “user fee” that’s being paid by oil companies, in lieu of American drivers. Just like how drivers pay taxes on every gallon of gas they buy to fund roads and highways, oil companies will now be adding to this revenue stream.
“By placing a fee on oil, the President’s plan creates a clear incentive for private-sector innovation to reduce America’s reliance on oil and invest in clean energy technologies that will power our future,” according to Obama’s budget proposal.
But oil companies are likely to pass this oil “fee” onto their customers, which will eventually make its way down to people who use petroleum products in their everyday lives — that’s every American.
Everyday, millions of drivers fill up their cars, use heating oil to stay warm or turn on diesel generators. So, every American will feel the bite of a more than $300 billion tax.
In fact, Obama admitted in 2011 a $10 increase in the price of oil translated to a 25 cent increase in the price of gasoline.
The White House tacitly acknowledges this fact, and would spend 15 percent of the oil tax revenues on “assistance to families with burdensome energy costs” which would include “supporting households in the Northeast as they transition from fuel oil for heating to cleaner forms of energy.”
The Spending
No matter who actually ends up paying for this oil tax, Obama has big plans for these revenues.
For starters, Obama will spend $32 billion a year over the next decade through various federal agencies on green infrastructure he says is necessary for America’s future competitiveness. This includes the following:
- An additional $20 billion a year to reduce traffic and find “new ways for families to get to work and to school.” Basically, Obama will dedicate billions more dollars every year to funding mass transit and high-speed rail.
- Obama’s also pledging $10 billion a year to overhaul “how local and State governments plan, design, and implement new projects.” This would basically shell out grants and such to finance state and local land-use and green city planning.
- The budget includes $2 billion annually in research and development funding for “ clean vehicles and aircraft.” Obama wants to spend millions more on researching self-driving vehicles, alternative fuels and green planes.
- Obama would spend $400 million per year “to ensure that these technologies are integrated safely into America’s transportation system.”
The Prospects
Obama’s budget has been hailed by environmentalists because of its increased funding for green energy and global warming programs. Activists also like how Obama’s budget sticks it to the oil industry with a new tax.
“This budget sets important priorities to continue the historic progress achieved in recent years on protecting our climate, air, land, water and oceans,” Rhea Suh, president of the Natural Resources Defense Council, said in a statement. “Republican leaders in Congress ought to greet it with more than their usual ‘just say no’ approach to policymaking.”
But environmentalist enthusiasm aside, Obama’s budget must be approved by Congress — a dim prospect since both the House and Senate are in Republican hands.
“We won’t let that happen. Instead, we will focus on developing ideas to maximize our energy resources, not tax them and keep them in the ground,” House Speaker [crscore]Paul Ryan[/crscore]’s office responded to Obama’s oil tax plan Monday.
Ryan’s not the only Republican leader to lambast Obama’s oil tax. Oklahoma Sen. [crscore]Jim Inhofe[/crscore], who chairs the Senate’s environment and public works committee, also came out against the budget plan.
“The president has been using his budget proposals to create a legacy of destroying fossil fuels and reducing our military and influence in the world,” Inhofe said.
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