The Double Whammy of Bush's Fiscal Policy
More Money for the Rich; More Money for Oilmen

President Bush is touring the country this week, trying to convince the nation that things aren't as bad as they look, that the economy is improving and we shouldn't pay any attention to rising unemployment or the $1 billion we're now spending each week on the Iraqi quagmire.

Most Americans realize that Bush's tax cuts favor the rich, and some are okay with that. Your average middle-class Republican trusts the wealthy to use their extra cash to reinvest in the economy and create jobs. But this doesn't seem to be happening, given that millions of jobs have been lost since the cuts. Furthermore, the wealthy are using some of their cash to finance Bush's reelection campaign at $2,000-a-plate fundraising dinners, but that's not much, considering the cash they've been handed - $88,000+ for taxpayers in the highest bracket, with the wealthiest getting untold millions more in their pocket.

Many of these same Bushites are oilmen, which isn't surprising given that Bush and Cheney are former oilmen and the administration is full of former oil executives.

A new report by The RAND Corporation points out that Bush's friends in the oil business have an inherent incentive not to produce too much oil, and NOW with Bill Moyers' David Brancaccio notes that the extra cost to the American economy pretty much equals Bush's tax cuts for the rich.

So there is your double whammy: Bush raids the Treasury to give tax cuts to his wealthy donors while turning a blind eye as his oil buddies rake in the profits by falling short on production and raising prices.

DAVID BRANCACCIO: Why should refineries ensure plentiful supplies anyway? Since it's fair to say they do make more money when there's less gasoline. Why spend money to expand capacity if the result is lower gasoline prices? Verleger thinks that allegation is a little far-fetched.

PHILIP VERLEGER: They have the crude oil. They'd like to refine it. And they're really good at this. So-- I just-- you know, that's a story that does not seem to fly.

DAVID BRANCACCIO: Other analysts see it differently. Yesterday, the Rand think tank published a study based on wide discussions with refining industry officials. According to the study, those in the industry are patting themselves on the back for getting so efficient by ridding themselves of so much capacity. The study includes one executive's "happy" thought: "I think the industry has learned that it's okay to fall short on product. There is no reward being long on product or production capability." [see page 4 of the following PDF]

In other words, there's no margin in being on the side of the little guy. If you're an investor in one of these refining companies, you may agree with that wholeheartedly. If you're driving somewhere this holiday weekend in a vehicle that requires fossil fuel, you may not. We can all agree on at least one thing, however. The biggest spike in gasoline prices on record is not just a household budget issue. It slows down the entire economy, costing by some estimates, as much as a billion dollars a week. Do the math. At that rate, it could cost us 52 billion dollars a year - almost as much as we got back from the president's latest tax cut.