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Obama budget plan taxes oil, supports 'clean' transport tech

Feb. 9, 2016
"Rather than subsidize the past, we should invest in the future. That’s why the budget I will send to Congress this Tuesday will double funding for clean energy research and development by 2020."  —President Obama "Once again, the president expects hardworking consumers to pay for his out of touch climate agenda. A $10 tax for every barrel of oil produced would raise energy prices—hurting poor Americans the most." —Speaker Paul Ryan

The White House on Tuesday delivers the final Obama administration budget plan to Congress, highlighted by a tax on oil companies that would be used to drive innovation in the transportation system—but leaders in Congress have already said the proposal will not even get a perfunctory hearing.

With an eye toward both improving the national infrastructure and reducing greenhouse gas emissions, President Obama’s “21st Century Clean Transportation System” proposes a $10 per barrel fee on oil, which would be gradually phased in over five years. The plan would increase American investments in clean transportation infrastructure by roughly 50 percent and also “encourage innovation and leadership” in clean technologies for the future.

The White House notes the success of the interstate highway system in connecting 20th century America and providing opportunity and prosperity—yet more recently that transportation system “imposes a hidden tax through congestion,” which costs families $160 billion and businesses almost $30 billion a year.

“What remains today of that system is not ready to meet the challenges of a growing 21st century economy,” says a fact sheet published last week explaining the budget plan. “What used to be the world’s leading transportation system is no longer even in the top 10.”

And in his weekly radio address, the president called for the private sector to help lead the way in bringing new technologies to market.

“As I said in my State of the Union address, rather than subsidize the past, we should invest in the future. That’s why the budget I will send to Congress this Tuesday will double funding for clean energy research and development by 2020,” Obama said. “This will include new investments to help the private sector create more jobs faster, lower the cost of clean energy faster, and help clean, renewable power outcompete dirty fuels in every state.”

Dead on arrival

But House Speaker Paul Ryan (R-WI) claims the oil tax would result in an increase of the cost of gasoline at the pump of 24 cents per gallon, and “across the board tax” that will increase costs for trucking companies and airline passengers, along with motorists. And he notes that neither of the leading Democrats running for president nor the party leadership in Congress have come out in favor of the plan.

President Obama just proposed adding an extra $10 tax on every barrel of oil America produces—hurting poor Americans the most. Here's my response: It's dead on arrival in Congress.

Posted by Speaker Paul Ryan on Thursday, February 4, 2016

"Once again, the president expects hardworking consumers to pay for his out of touch climate agenda. A $10 tax for every barrel of oil produced would raise energy prices—hurting poor Americans the most,” Ryan said in a statement. “This announcement, the latest in a series of regulatory attacks on the energy sector, proves President Obama is still on a mission to destroy a major backbone of the U.S. economy. The president should be proposing policies to grow our economy instead of sacrificing it to appease progressive climate activists. The good news is this plan is little more than an election-year distraction. As this lame-duck president knows, it's dead on arrival in Congress.”

Indeed, as soon as the plan was previewed last week, House Budget Committee Chairman Tom Price (R-GA) and Senate Budget Committee Chairman Mike Enzi (R-WY) announced that neither committee would hold the customary hearings with the Director of the Office of Management and Budget (OMB) to review the president’s FY 2017 Budget.

But White House spokesman Josh Earnest suggested Congress was “taking the Donald Trump approach” to debates about the budget: “They’re just not going to show up.”

“I guess the future is pretty dim if you have Republicans in Congress unwilling to even talk about the budget with the White House,” Earnest said in a briefing. “We do see that Republicans are pretty eager to leap to the defense of the oil industry, but they aren’t really willing to have a serious, detailed conversation about our country’s budget priorities. It certainly does raise some questions about how serious Republicans actually are about governing the country.”

And he defended the plan, even as oil companies are pumping red ink.

“It does seem likely that oil companies would pass on at least some of that expense, but I think part of the president’s point is that we’re seeing that energy costs are lower than they’ve been in quite some time,” Earnest said. “So this is precisely the time when we should capitalize on that opportunity. This is a smart time for us to start considering how we can make fiscally responsible investments in new technology, in more modern infrastructure, in transportation systems that run on renewable energy, investments in research and development that would allow us to strengthen the economy but also to transition to the low-carbon energy economy of the future.”

Spending priorities

Calling the FAST Act, or the new highway bill, “merely a first step towards what our economy needs,” the new Obama plan invests:

  • nearly $20 billion per year above current spending to reduce traffic and “provide new ways for families to get to work and to school.” The plan would expand transit systems in cities, suburbs and rural areas; make high-speed rail a viable alternative to flying in major regional corridors and invest in new rail technologies like maglev; modernize the freight system; and expand the Transportation Investment Generating Economic Recovery (TIGER) program begun in the Recovery Act to support high-impact, innovative local projects;
  • roughly $10 billion per year to “transform regional transportation systems” by shifting how local and state governments plan, design and implement new projects. As part of reforming formula programs, the plan would create a new Climate Smart Fund that provides bonus funding to states that use existing formula funding to cut carbon pollution in the transportation sector; and
  • just over $2 billion per year to “launch a new generation of smart, clean vehicles and aircraft” by expanding clean transportation R&D and launching pilot deployments of safe and climate smart autonomous vehicles. It also accelerates the transition to cleaner vehicle fleets in communities around the country, including expanding Diesel Emissions Reduction Act Grant Program funding, and supports the creation of regional fueling infrastructure for low-carbon vehicles. The budget also proposes to invest $400 million a year to ensure that new and changing technologies are integrated safely into our transportation system.

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