President Obama’s proposal for a $10-per-barrel tax on oil is a cruel hoax on those he has been championing for his almost eight years in office: the unemployed, the underemployed, retirees and those at or below the poverty line.
{mosads}According to U.S. Department of Housing and Urban Development (HUD) data from 2015, nearly 565,000 people were living on the streets in cars, in homeless shelters or in subsidized transitional housing. That number probably underestimates the true number because many of the homeless are beyond the reach of the HUD survey. Although exact numbers are hard to obtain, a Huffington Post article stated that at least 30 percent live in their cars and others put the number closer to one-half. The president’s proposed tax would increase their gasoline costs by 24 cents per gallon. Since the average driver consumes about 600 gallons annually, this means that the working homeless will spend about $144 more annually to fund the president’s green ideological agenda.
Last year, The Wall Street Journal wrote about the benefits of falling gasoline prices, pointing out that they benefited lower income workers more than those with higher incomes “because energy costs account for a higher share of their income. The bottom fifth of earners spent around 12% of their after-tax income on gas last year, compared with around 3% for the top fifth of earners, according to Wells Fargo.” The reverse of that is also true. The Obama gasoline price increase will hit lower income people four times harder than upper-income earners.
The effect of higher gasoline prices was studied by the Federal Reserve Bank of Chicago. It confirmed the Wells Fargo analysis that the proportion of income spent by the working poor on gasoline is higher than for any other group studied. This is not surprising, since the working poor have lower incomes but still need transportation to work.
What is true of the working poor is also true of older citizens who live on fixed incomes like Social Security and the almost 3 million workers who have dropped out of the work force because of the anemic economic recovery produced by Obama economic policies and stifling regulations.
Fortunately, the president’s proposal has no chance of being passed by Congress. But merely proposing it shows a callous disregard for the impacts on the least well-off in society. It also shows that he does not understand that to achieve his “clean energy objective,” the price of gasoline, according to a Federal Trade Commission study, would have to be so high that it would interfere with economic growth.
The politics of this proposal make it “dead on arrival” according to House leadership. It is a political ploy to burnish the president’s image and legacy among the climate change establishment, which remains resolute in its apocalyptic outlook even though the real climate refuses to be accommodating.
O’Keefe is president of Solutions Consulting.