It seemed as though Sen. Barack Obama was (thankfully) against shortsighted policy prescriptions when he opposed a gas tax holiday supported by Sens. Hillary Clinton and John McCain earlier in the summer. But, unfortunately, he's not. He recently announced a plan to give consumers $1,000 checks funded by a windfall profits tax on oil barrels traded at more than $80 dollars by U.S. oil companies.
In a gesture blatantly aimed to buy new voters, Obama has reneged on his earlier stance against this foolish policy and conspired to hurt the hard-working Americans he purports to help. Though many economists have warned against the long-term ill effects that punitive taxes would have on new exploration and development, consumers have raged against the confluence of high oil prices and the high incomes of top oil executives. They want justice, but only partially deserve it.
The proportion of pay (awarded before corporate taxes) that goes to executives is miniscule compared to the profits that go to shareholders and the taxes that already go to the government. If people are concerned with the executives' millions of dollars in salaries and bonuses, they should support higher income taxes on the wealthiest bracket, not higher corporate taxes on specific businesses. These higher corporate taxes only hurt the ability of our domestic companies to compete with international companies and countries, push them into tax havens and hurt stockholders.
And who are the stockholders? Sure, wealthy individuals are a large majority, but so are pension plans and mutual funds - specifically the Teachers Retirement System of Texas, our state's largest teacher pension program. With home equity values decreasing and Social Security seemingly on the brink of failure, workers may have to rely more and more on their pensions, which are managed by organizations like the TRS.
The TRS's largest domestic equity holding is - you guessed it - Exxon Mobil, with more than $1.5 billion in stock and their ninth-largest holding is Chevron with more than $500 million. The Texas Employee Retirement System, for public employees across the state, likewise has Exxon as its largest domestic equity asset and Chevron as its ninth.
Though some question the wisdom of long-term investment with companies that operate in commodity markets, many pension and mutual fund managers have done so because of the economic downturn in the U.S. since 2001. Because energy markets have consistently been the highest earners in domestic equity markets, many pension managers have sought to put money there to keep employees' pensions healthy.
The S&P energy index is the only portion of the S&P that has a positive monthly and yearly basis. Materials has a slight yearly performance at .19 percent, but that's nothing compared to energy's 8.12 percent growth. Other states, especially California, have similar pension investments in oil companies.
Obama, state workers and presumably private workers with pensions should realize what they are really doing when they punish oil companies. There's a lot at stake beyond those $1,000 checks.
Wilson is a Plan II and English senior.
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