Obama calls for bipartisan initiatives, and more taxes on oil

26 January 2011 03:07  [Source: ICIS news]

WASHINGTON (ICIS)--President Barack Obama on Tuesday called for a new bipartisan effort to reduce federal spending but increase government investments in education, infrastructure and clean energy, and asked Congress to increase taxes on oil companies to help pay for the changes.

In his annual “state of the union” speech to Congress, the US president said the recent national elections – in which Republicans won major gains against Obama’s fellow Democrats to regain control of the House – mean that “governing will now be a shared responsibility between the parties”.

He noted that the US economy has in some respects begun to recover, but that joblessness persists.

“Two years after the worst recession most of us have ever known, the stock market has come roaring back, corporate profits are up, the economy is growing again,” Obama said.

However, what is now at stake “is whether new jobs and industries take root in this country or somewhere else,” he added.

“We have to make America the best place on Earth to do business,” he said. “We need to take responsibility for our deficit and reform our government.  That’s how our people will prosper.”

Obama said the federal government budget proposal he will send to Congress in a few weeks would include government spending in “biomedical research, information technology and especially clean-energy technology; investments that will strengthen our security, protect our planet and create countless new jobs for our people”.

“With more research and incentives, we can break our dependence on oil with biofuels,” Obama said.

“And to help pay for it, I’m asking Congress to eliminate the billions in taxpayer dollars we currently give to oil companies,” he added.

The US president also called for a simplification of both corporate and personal income tax laws to lower the overall tax rates for companies and private citizens, but also to close tax loopholes in order to maintain necessary federal revenues despite lower tax rates.

In a bid to help reduce the huge government budget deficit and the national debt, Obama called for a five-year freeze on US domestic non-military spending at current levels and for reform and reduction of federal regulations.

However, Obama’s calls for more taxes on oil companies and a freeze on domestic spending were quickly challenged, even by members of his own party.

Senator Mary Landrieu (Democrat-Louisiana) said “one of the most decisive steps we can take to put people back to work is to start again issuing permits for deepwater oil and gas drilling”.

Landrieu said that since October last year when the Obama administration technically ended its ban on deepwater drilling, “not a single new deepwater permit has been issued, leaving a large and significant segment of the oil and gas industry idle, even as gasoline prices continue to soar above three dollars a gallon”.

“If the president is serious about jump-starting the economy and putting America back to work,” Landrieu added, “taking immediate action to revive deepwater oil and gas drilling is an excellent place to start.”

Senator Mitch McConnell of Kentucky, leader of the Republican minority in the US Senate, dismissed the president’s call for a five-year freeze on domestic spending at current levels.

“The problem with the proposed freeze is that it keeps in place an extraordinary increase in federal spending that’s occurred over the last two years,” McConnell said.  Instead, he said he would support a proposal made by House Republicans to cut the federal government’s budget back to its 2008 or 2006 levels.

Senator James Inhofe (Republican-Oklahoma) said the president’s promise to cut government red-tape and rules rings hollow in light of what he called “the administration’s flood of new regulations”.

Inhofe, in particular, was critical of the administration’s developing plans to impose limits on industrial emissions of greenhouse gases (GHG).

“If the president doesn’t heed calls for change in his regulatory policies,” Inhofe said, “then Congress will have to change them.”

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Paul Hodges studies key influencers shaping the chemical industry in Chemicals and the Economy


By: Joe Kamalick
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