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What about Google, Senator Obama?

Or is your attack on oil companies political?

By: Kevin Holtsberry (Diary)  |  August 4th, 2008 at 03:12 PM  | 

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Senator Barack Obama today once again attacked oil companies, Exxon in particular, as greedy nefarious corporations who seek to bribe officials and prevent American energy independence.

Well, I have a question. If making “windfall” profits is greedy and a threat to our economy and way of life, why hasn’t the Senator spoken out against Google? Confused? Allow the Wall Street Journal to expain:

If Senator Obama is as exercised about “outrageous” profits as he says he is, he might also have to turn on a few liberal darlings. Oh, say, Berkshire Hathaway. Warren Buffett’s outfit pulled in $11 billion last year, up 29% from 2006. Its profit margin — if that’s the relevant figure — was 11.47%, which beats out the American oil majors.

Or consider Google, which earned a mere $4.2 billion but at a whopping 25.3% margin. Google earns far more from each of its sales dollars than does Exxon, but why doesn’t Mr. Obama consider its advertising-search windfall worthy of special taxation?

Btw, I used Google just because it is a ubiquitous brand (and as Erick has pointed out often up to no good). As the WSJ editorial points out, however, this arbitrary demagogic populism is worrisome:

The point isn’t that these folks (other than Mr. Clinton) have something to apologize for, or that these firms are somehow more “deserving” of windfall tax extortion than Big Oil. The point is that what constitutes an abnormal profit is entirely arbitrary. It is in the eye of the political beholder, who is usually looking to soak some unpopular business. In other words, a windfall is nothing more than a profit earned by a business that some politician dislikes. And a tax on that profit is merely a form of politically motivated expropriation.

It’s what politicians do in Venezuela, not in a free country.

So what is it Senator? Are you ready to go after Google and the other “overly-profitable” sectors of our economy or will you admit that you are playing politics with the economy in order to win an election?

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  • Jeff_Emanuel

    Link here.

  • Mord

    It is too complicated to be explained in a 30 second political ad. There are far too many big numbers and odd words like “profit margin”. I wish some genious could lay it out for the (usually dis-interested) layperson in a quick youtube video or something.

    The WSJ did an awesome job breaking down the issue, but the real facts need to get out about how much taxes these companies ALREADY pay…Exxon paid 19 billion MORE in taxes than they earned! That fact alone, if it became general knowledge would doom the democrats.

  • paint_it_red

    Obama is trying to tap into the average American not particularly caring about big oil, and scapegoating. Bottom line though is not whether big oil is making money, its about the price of gas. A windfall profits tax would increase the price of gas.

    Obama’s refusal to give a gas holiday was on the basis that it was a short term fix only, but that also increased the price of gas.

    Obama’s opposition to increased domestic drilling and offshore drilling (until recently) was predicated on his belief it would not bring the immediate relief needed. Even now he says we can’t drill our way out of the problem. (At least in part however, Yes We Can). This increases the price of gas.

    Obama is mischaracterizing McCain’s position as drilling centric and ignoring alternative energy sources. McCain has supported wind and solar energy same as Obama, however. And, McCain has supported tax incentives to facilitate entrepreneurs and scientists to make it happen, where until recently, Obama has not. Again, Obama’s policy was more likely to increase the price of gas.

    McCain has supported development of 40 or 50 new nuclear reactors to increase energy independence. (Obama disingenuously failed to mention this when accosting McCain as failing to take a comprehensive approach) Obama has opposed this safe form of energy, again increasing the price of gas.

    Obama has engaged in “futuristic” hopes instead of pragmatic policies as the third part of his plan for energy independence talking about how new fuel emission standards he spearheaded in bipartisan fashion helped move things forward in the automotive industry (which, while not lowering gas prices, decreased consumer choice for cheaper less efficient vehicles, thereby leaving less money in the average American’s pocket for gas. And, he did not spearhead it in a bipartisan fashion).

    Obama has stated that oil companies should be forced to drill on leased acres or lose their lease. Besides showing his willingness yet again to nix out agreements contractually entered into by the U.S. Government (free trade treaties), oil companies already are incentivized by the market to find oil where they can find it. Of course, if they make too much money, they would have to forfeit it in Obama-world to the windfall profits tax. This would increase, not decrease, the price of gas.

    The statistic people should be reflecting on when they fill up their tanks of gas is not how much money American oil companies are making. If we destroy American big oil, we become more reliant on foreign oil, which not only undermines our national security, but it increases the price of gas.

    The statistic people should be thinking of is all the bad policies Obama has supported and is supporting, and all the common sense policies he has opposed and is opposing that has increased the price of gas and kept it as high as it is.

    Maybe its not all Obama’s fault, but if people need a scapegoat, Obama’s the one.

  • Next93

    As I understand it, the price of a bushel of corn has more than doubled in the last year, while food riots are happening in the third world.

    Why is it the annointed one isn’t going after “windfall” profits by farmers?

  • persiflage

    why don’t you check the profits of big financial services firms (like G-S, M, etc)? In recent years, say up to June of last year, they were touting some truly obscene profits, running more than 3X what the big oil companies have been earning. A figure of 38% for a certain year sticks in my mind for one of those firms. All they did for that profit was to charge money for every financial transaction that went through their house, bring together buyers and sellers, and administer the sale of financial instruments. All low-risk and low value-added activities IMO. At least big oil produces valuable products that nearly everybody wants to buy – that’s how they earn their profit, Senator.