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Phony 'Emergency'

By INVESTOR'S BUSINESS DAILY | Posted Friday, August 01, 2008 4:20 PM PT

Stimulus: Barack Obama's newly unveiled "Emergency Economic Plan"
is quite a document, sounding more like the rantings of an extremist fringe
candidate than a serious contender for the presidency.

The six-page package is a doozy, replete with populist ideas that will
wreck the economy and leave us poorer. The only real emergency we should
worry about is the debacle that would follow its passage.

It's shocking that a mainstream candidate, with so many supposedly
well-regarded economists advising him, would produce such a shoddy, poorly
thought-out plan.

Take his proposal to send every family a check for $1,000. Don't worry, he
assures us, we won't have to pay for it. "Windfall profits from Big
Oil" will pick up the tab -- in this case.

Sen. Obama seems to be trying to take advantage of reports that Exxon Mobil
reported record second-quarter income -- indeed, the highest quarterly
profit for any corporation ever.

But the reality is that as Obama and his equally unknowing friends push
windfall taxes, Exxon Mobil has already given the U.S. a massive windfall.
As economist Mark Perry has noted, Exxon Mobil will pay more taxes this
year to the U.S. Treasury than the bottom 50% of all taxpayers -- combined.

In the first half, Exxon Mobil's after-tax income rose 15% to $22.6
billion. A lot of money, to be sure, until you consider that Exxon Mobil
paid $61.7 billion in taxes -- also a record.

People shouldn't fall for such cheap, recycled class-warfare argument. Yet
many will. Sadly, it will saddle big energy companies with higher taxes and
crimp their exploration and drilling budgets. That means less oil on the
market and higher prices.

We know this because it has been tried before. Jimmy Carter's windfall
profits tax led to a 6% drop in domestic oil output and as much as a 15%
surge in oil imports, according to the Congressional Research Service. Now,
Obama wants to play it again.

The rest of Obama's plan is just as nonsensical. It would spend $50 billion
on various kinds of stimulus, including $25 billion to help erase state
government budget deficits. In other words, he'll reward profligate states
and punish thrifty ones. This is "stimulus" only if you think
stimulus is saving government jobs.

Another $25 billion would go towards "replenishing" the Highway
Trust Fund to rebuild the nation's roads and bridges. The problem with this
idea is that we're already paying for it, with a 18.3- cents-a-gallon tax
on gasoline and even more on diesel.

Unfortunately, under the last transportation bill, Congress chose to spend
more than it had coming in -- the result of runaway pork-barrel politics,
not need.

As the Transportation Department's inspector general wrote in a scathing
2007 report, "Many earmarked projects considered by the agencies as
low priority are being funded over higher-priority, non-earmarked
projects."

The real problem is not that we pay too little in taxes, or that "Big
Oil" is enjoying "windfall profits." It's a big-spending,
big-taxing Congress that "emergency" plans such as Obama's will
only embolden. This lame plan will hurt the economy, not stimulate it.
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