I have no love for oil companies, speculators or Wall Street traders. But I do have a love of constitutional rights and the rule of law. There now seems to be a determined effort to subvert both in the pursuit of … well, anyone who’s unpopular.
First, the oil companies. The Democrats and various people are targeting subsidies for oil companies, which I’m fine with it. But it turns out that much of what they call subsidies aren’t subsidies at all.
Seriously, nearly half the “subsidy” number is the ability of a company to use LIFO accounting on inventory for their taxes? Since the proposition is to eliminate these only for oil and gas, what is the logic that somehow LIFO accounting is wrong in Oil and Gas but OK in every other industry? In fact, at least the first two largest items are both accounting rules that apply to all manufacturing industry. So, rather than advocating for the elimination of special status for oil and gas, as I thought the argument was, they are in fact arguing that oil and gas going forward be treated in a unique and special way by the tax code, separate from every other manufacturing industry.
In fact, many of these are merely changes to the amortization and depreciation rate for up-front investments. Typically, politicians of both parties have advocated for the current rules to encourage investment. Now I suppose we are fine-tuning the rules, so that we encourage investment in the tax code in everything but oil and gas. I will say this does seem to be consistent with Obama Administration jobs policy, which has been to try to stimulate businesses that are going nowhere and hold back the one business (oil and gas drilling) that is actually trying to grow. I am fine with stopping the use of the tax code to try to channel private investment in politician-preferred directions. But changing the decision rule from “using the tax code to encourage all manufacturing investment” to “using the tax code to encourage investment only in the industries we are personally sympathetic to” is just making the interventionism worse.
LIFO is fairly standard accounting practice. It’s just a way of delaying taxes by changing which inventory you claim to be selling. All businesses do it. But as we saw with the “GE pays no taxes” bullshit, accuracy is not the Left’s strong suit.
If you want to get rid of these “subsidies”, simplify the corporate tax code (or better still, eliminate it). But this is not some sneaky under-handed Cheney-concocted plot. It’s tax law.
But that’s not the worst violation that is occurring when oil is involved. The cadmium hat of dishonor goes to Bernie Sanders:
Oil trading data that exposed the extensive positions speculators held in the run-up to record high prices in 2008 were intentionally leaked by a U.S. senator, sparking broader concern about industry confidentiality as Congress moves on Wall Street reform.
Senator Bernie Sanders, a staunch critic of oil speculators, leaked the information to a major newspaper in a move that has unsettled both regulators and Wall Street alike.
The leaked information has sparked concern at the Commodity Futures Trading Commission, which is legally prohibited from releasing confidential information that identifies trader positions and identities.
The leak also raises broader questions as U.S. regulators gear up to collect massive new amounts of private data from market players on everything from swaps and hedge funds to blueprints for how large financial firms can be liquidated. The breach of data could make Wall Street less reluctant to hand over sensitive information if they fear it is not appropriately safeguarded.
Sanders is being praised in liberal circles for committing an egregious violation of privacy and bypassing the law. You can be damned sure that if this were private information about anyone other than eevil evil oil speculators, the Democrats would be screaming about privacy. But throw in some greed Wall Street types and their concerns about information safety vanish.
As it happens, speculators did not drive prices up in 2008; the world economy did that. Nor are speculators driving it up right now. Speculators can speculate all they want; it’s supply and demand that ultimately determines prices.
Even funnier is that they can’t decide who to blame. Stock market crashes are always blamed on “short sellers” even though short sellers are taking a risk and are critical to preventing bubbles. Now … are they blaming long sellers?
Maybe we just shouldn’t buy or sell at all. Remember that we are dealing with the only open socialist in Congress. To the likes of Bernie Sanders, finance is not a legitimate way of making money so financiers have no privacy or rights. The only legitimate work is being a prole in a factory. Anything else is evil.