CLINTON PROPOSALS TOO COSTLY TO U.S.

The U.S. oil industry has much to lose from President Clinton's proposal to tax and spend the country toward his cozy vision of the country's future.

Feb. 23, 1993

3 min read

The U.S. oil industry has much to lose from President Clinton's proposal to tax and spend the country toward his cozy vision of the country's future.

Not least among the industry's prospective losses are uneven tax rates on the energy contents of various fuels. Markets, not governments, should select fuels. Industry, even the parts of it that might benefit from tax rate differentials, should oppose this manipulation as inefficient market intrusion. And it should recognize other perils in Clinton's message, including the attempt to nullify "special interest" opposition and the assertion that ever-higher taxes pave the road to national prosperity.

SPECIAL INTERESTS

Clinton's railing against special interests amounts to a populist trap. He is promoting an ideology some Americans regard as demonstrated failure-the belief that government, if only it had a little more money, can soothe all miseries. He thus would raise taxes again and spend more public money-cycling the federal budget back through a pattern that created the deficit in the first place. Some would call it an act not of special interest but of patriotism to ask why this round of taxation and spending will reduce the deficit any more effectively than have any of its all too frequent predecessors. No group facing costly government initiatives should also have to fight preemptive official assaults on the legitimacy of its views.

The oil industry is a special interest. And it has opinions the nation should hear on issues like federal oil and gas leasing and regulation of oil field wastes. Indeed, special interests, whatever their other failings, at least moderate the blunders of an institutionally activist government. A president who really wanted to limit the influence of focused political groups would limit the government's own forays into the private sector.

Such official self-restraint has so far not been one of the new administration's defining characteristics, which gives Clinton's attempt to marginalize special interests the aroma of cheap salesmanship. The oil industry should resist the ploy now to keep from playing the foil later.

Furthermore, the industry must not accept the inevitability of a tax increase. In an overtaxed economy, no one type of new tax is better than others. They all force wealth to take inefficient detours, which retards wealth creation overall. This is partly why the federal deficit continues to grow despite all the recent tax increases. The rest of the reason is runaway federal spending, about which the president offers nothing in the way of structural change.

MISSING THE POINT

Clinton misses the point when he implies that Americans haven't sacrificed or contributed enough. In fact, they have sacrificed much in a modernizing, globalizing economy, which is just now delivering payoffs in the form of rising productivity and renewed growth. Given the chance, this revival will deliver the job creation everyone seeks. Clinton should be encouraging the recovery with deregulation, real spending cuts, procedural steps to bring the federal budget process under control, and-above all-tax restraint. Instead, he wants the economy to carry more baggage for the government.

An industry that sells energy does better in an economy characterized by market choice and profitable work than it does in one skewed by bureaucratic decisions and sapped by government programs that earn nothing. Yes, the industry has a special interest in economic growth. But people do, too, and for precisely the same reasons. People first, Clinton said in his campaign. He must have been talking about who stands where in the sacrifice queue.