OBAMA AND MCCAIN SPOUT ECONOMIC NONSENSE
June 20, 2008
Sens. Barack Obama (D-Ill.) and John McCain (R-Ariz.) are busy demonstrating that in close elections during tough economic times, candidates for president can be economically illiterate and irresponsibly populist, says Karl Rove, the former senior adviser and deputy chief of staff to President George W. Bush.
Sen. Obama has promised to tax the windfall profits of oil companies; however, Rove notes that oil companies only make about 8.3 cents in gross profit per dollar of sales. Why, he asks, doesn't Obama slap a windfall profits tax on sectors of the economy that have fatter margins? For example:
- Electronics make 14.5 cents per dollar.
- Computer equipment makers take in 13.7 cents per dollar.
- Microsoft's margin is 27.5 cents per dollar of sales.
It's not the profit margin, but the total number of dollars earned that is the problem, Obama might say. But if that were the case, asks Rove, why isn't he targeting other industries?
- Oil and gas companies made $86.5 billion in profits last year.
- The financial services industry took in $498.5 billion in profits.
- The retail industry walked away with $137.5 billion.
- Information technology companies made off with $103.4 billion.
Sen. McCain doesn't support the windfall profits tax, but he has criticized oil companies not only for the obscene profits they've made, but also for their alleged "failure to invest in alternate energy." Rove points out that oil and gas companies report that they have invested heavily in alternative energy:
Out of the $46 billion spent researching alternative energy in North America from 2000 to 2005, $12 billion came from oil and gas companies, making the industry one of the nation's largest backers of wind and solar power, biofuels, lithium-ion batteries and fuel-cell technology.
Obama and McCain both reveal a disturbing animus toward free markets and success, says Rove. It is uncalled for and self-defeating for presidential candidates to demonize American companies.
Source: Karl Rove, "Obama and McCain Spout Economic Nonsense," Wall Street Journal, June 19, 2008.
For industry profit margin information:
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