Friday, November 7, 2008

Is this the definition of a Ponzi scheme or a circle jerk?

From the Obama Transition Site:

Barack Obama and Joe Biden will enact a windfall profits tax on excessive oil company profits to give American families an immediate $1,000 emergency energy rebate to help families pay rising bills. This relief would be a down payment on the Obama-Biden long-term plan to provide middle-class families with at least $1,000 per year in permanent tax relief.

Now let's get this straight. We're going to place a windfall profits tax on energy companies. We're going to pass out that money to American families as an energy rebate. American families will take that money and pay the energy companies. Hmmm.

Let's try this in playground. Johnny has a protection racket. We're going to charge him five dollars in a windfall profits tax. We are going to give each of his 20 victims a quarter each. Then each of those victims will give Johnny a quarter to pay for not being beaten up this week. Johnny will have been punished, and the victims will have been empowered.

Right. No, left.


David Reevely said...

Without commenting on whether it's good or bad policy (well, OK, it's bad policy, but never mind), it's not as incoherent as that. They're just taking money from the oil companies and transferring $1,000 to American families, full stop.

As confusingly as it's presented, the money only goes around the loop once -- the regular folks don't then have to pay their energy bills a second time.

Kevin Craig said...

Johnny the "protector" will be taxed TEN dollars on his "windfall profits," not five. Victims as a class will be given five dollars and the Obama/Biden class will keep the other five.

Anonymous said...


If you increase the taxes on the oil companies, aren't they going to increase their prices? And if their prices do increase, wouldn't consumers be able to afford less with their $1000 than if the government did nothing?