Earlier this week, the Obama Administration unveiled plans to pay for its $450 billion jobs plan. In a speech at the White House earlier this week, President Obama held a copy of the “American Jobs Act” and touted that the jobs stimulus plan would be paid in full by taxing middle income Americans and repealing vital tax incentives for the U.S. oil and gas industry.
Specifically, the Administration plans to limit itemized deductions for families with taxable income of $250,000 or more a year, which is estimated to raise over $400 billion over the next ten years. The other $45 billion will come from repealing oil and gas tax incentives such as the intangible drilling deduction, the domestic manufacturing deduction, and the percentage depletion deduction.
Since his campaign in 2008, President Obama has relentlessly worked to repeal these tax deductions that most oil and gas producers depend on heavily. For decades, these tax breaks have generated high-paying and long-term jobs for millions of Americans while ensuring the exploration and production of low-cost energy for all U.S. consumers.
In his unveiling speech, President Obama asked, “Do we keep tax loopholes for oil companies, or do we put teachers back to work? Should we keep tax breaks for millionaires and billionaires, or should we invest in education and technology and infrastructure?”
Of course, we all want to see advancements in technology and investments in our country. However, the question we should ask ourselves is who can most effectively make those investments and grow them into viable opportunities and markets. The idea that the federal government can tax certain individuals and reallocate those dollars generated to invest in other businesses does not only go against the American foundation of a free and fair market, it makes absolutely no economic sense.
It is only the marketplace that can effectively determine viable technologies and generate jobs and economic growth. If there is a prime example where government investments into the private market have failed, we should look no further than the continued collapse of “green” energy companies nationwide. The recent $530 million bankruptcy of Solyndra, a California based solar panel manufacturer, is one of a number of investments made with tax dollars that have gone belly-up after competing in the open market. This example is very important given the fact that Solyndra was viewed as the poster child for the Administration’s plans to grant guaranteed loans to businesses of their choosing.
As these subsidized business failures prolong, the Administration has continued its support of a $38.6 billion loan guarantee program within the Energy Department that it claimed would create 65,000 jobs. In a recent article, the Washington Post reported that over the two-year period since the program was implemented, only 3,545 new, permanent jobs have been generated after giving out almost half the allocated amount.
My father once told me, “When you’ve worked hard and purchase something on your own, you will then learn how to account and take care of it.” His statement rings true today and should be applied to our dealings in the economy. If we continue to invest in businesses that have no accountability and take little to no capital risk in the market, our economy will remain in the doldrums.