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In his recently delivered economic policy speech, Senator Barack Obama said a windfall tax on big oil as well as a “green economy for energy” will be key in addressing a rapidly rising cost of living. Senior News Analyst Aijaz Ahmad explains what these policies are likely to accomplish, and argues that Obama has only started to flesh out his thinking on economic policy.

Story Transcript

PAUL JAY, SENIOR EDITOR, THE REAL NEWS NETWORK: Thank you for joining us for the next part of our interview with Aijaz Ahmad on Obama and McCain. And in this episode we’re going to talk about will Obama take on the oil companies. Thanks for joining us. Aijaz, here’s a clip from Obama’s recent speech on the economy, and here’s what he had to say about the oil companies.


SEN. BARACK OBAMA, US PRESIDENTIAL CANDIDATE (D): At a time when we’re fighting two wars, when millions of Americans can’t afford their medical bills or their tuition bills, when we’re paying more than $4 a gallon for gas, the man who rails against government spending wants to spend $1.2 billion on a tax break for ExxonMobil. That isn’t just irresponsible; it’s outrageous. It’s outrageous. I’ll make oil companies like Exxon pay a tax on their windfall profits, and we’ll use the money to help families pay for their skyrocketing energy costs and other bills.


It’s not very different than what Clinton was saying during the campaign. But there is a profound issue of a shift in how the economy works, and we talked about this in the last episode. Talk about what is the importance of taking on the oil companies and is there some indication that Obama might do it.

AHMAD: Paul, I would agree that you really can’t make a fundamental shift unless you really hurt the oil interests and you’re willing to hurt the oil interests. So far, what he has said is actually not terribly promising. On the one hand, he talks about this taxation on super-profits, which is fine enough as far as it goes. But that doesn’t really hurt them, because since the invasion of Iraq, these companies have consistently for the last five years posted much higher profit rates than other corporations in the US economy. So that would sort of pacify some other sectors of the US economy. And, yes, it would raise some money for subsidizing this, that, or the other.

JAY: This is the windfall tax you’re talking about.

AHMAD: Yeah, the windfall tax. If you were to impose a windfall tax, it would be short-lived. It would be opposed by the oil interests inside the Congress and outside. Would he be willing to take them on? If you really want to take them on, for example, what you need to do is to truly investigate through a federal commission the causes for this rise in the oil prices.

JAY: Yeah, because, as we know, the oil company margins go up as the price of oil goes up, but there’s really no rationale for the margins going up.

AHMAD: Well, not only that. Why does the oil price go up? The differential between supply and demand hasn’t gone up quite as much as the jump in prices. A very large part of this is speculation. A large part of it is hoarding. If we can push it up by a dollar this week, then next week what we have hoarded will get *[inaudible]

JAY: *And, clearly, the more aggressive a foreign policy, the more aggressive the rhetoric, the higher the price of oil goes.

AHMAD: That’s right. That’s right. It is part of the fear psychosis that if we don’t persist in Iraq, we don’t fix the Iranis, and so on, our dependence on them will continue, and all that. So I would say that so far his rhetoric on that is actually very moderate. It is liberal, it is progressive, but it doesn’t do any fundamental damage to those corporations. The other part of his energy policy that he talks about a lot is what he calls a green economy for energy. Now, again, he has not spelled out what he means by it. He does not speak much of any radical federal program to develop solar energy, for example, or anything like that. One thing that he keeps talking about is ethanol. Now, the fact of the matter is that in order to have eight gallons of ethanol-generated energy, you need to spend five gallons of energy in order just even to get that. And you take land away massively from food crops and go towards that, and oil corporations can always go into this new, federally subsidized economy of ethanol.

JAY: And the promotion of corn-based ethanol is very much a Bush project, and for that matter a James Woolsey project, former head of the CIA. The neoconservatives have been very much behind corn-based ethanol.

AHMAD: Oh, absolutely. Absolutely. And that gives tremendous subsidies to the corn lobby already existing. And all these big corporations can happily move into that sector. So, so far, I think he is not giving really a radical basis for attacking the oil interests, which have been distorting the US foreign policy, as well as the US domestic economy. The real heart of the economic package that has come our way so far from Obama is on the kind of investments in other sectors that he’s talking about. But, mind you, he’s only starting to flesh out his thinking on economic policy. At a later point, we might get something more on the oil companies that we can dig our teeth into.

JAY: Well, in the next part of our interview we’ll look at exactly what is Obama recommending in the short term and the long term. And as concrete as he’s gotten so far, let’s deconstruct it.


Please note that TRNN transcripts are typed from a recording of the program; The Real News Network cannot guarantee their complete accuracy.

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Based in New Delhi, Aijaz Ahmad has appeared many times on The Real News Network; he is Senior Editorial Consultant, and political commentator for the Indian newsmagazine, Frontline. He has taught Political Science, and has written widely on South Asia and the Middle East.