From the Mouths of Babes... to the Pockets of Oil Execs
Times reporter pits oil profits against anti-poverty initiatives.

By Charles Simpson
Business & Media Institute
Feb. 14, 2006

     The New York Times has long made a habit of airing its disdain for “big cuts in domestic spending” and “soaring profits at major oil companies.” However, Edmund Andrews chose to reinvent the wheel by conflating the two unrelated issues in a front-page February 14 article: “U.S. Has Royalty Plan to Give Windfall to Oil Companies.”

     Andrews’ reductive thinking tied “one of the biggest giveaways on oil and gas in American history” to a congruent amount “Bush is proposing to cut from Medicare, Medicaid and child support enforcement programs over the same period.” Not only did Andrews eschew basic economics and facts, he insinuated a cliché that mothers use to convince their kids to eat Brussels sprouts.

     Andrews’ criticism of oil profits was unique only in structure. Much like supporters of the windfall profits tax, Andrews harped on the evils of oil profits and crusaded against a government plan to “let companies pump about $65 billion worth of oil and natural gas from federal territory over the next five years without paying any royalties to the government.”

     While he did admit that royalty relief for coastal drillers “had bipartisan support and was intended to promote exploration and production,” his article argued that the vulgar amount of profits going to greedy oil companies negated the necessity of such a policy: “The big issue … is whether companies should be exempted from paying royalties even when energy prices are at historic highs.” (emphasis added)

     Let’s answer this again: yes. One more time: yes. Say it with pride! Yes.

     As energy analyst Ben Lieberman wrote in a Nov. 15, 2005, Heritage Foundation report, “Given the tightness in current supplies and predictions of strong future growth in demand for energy, anything that discourages additional oil production will inevitably hurt the energy-using public.”

     Andrews also exercised some zero-sum thinking that most would remember from childhood. Whose mother hasn’t told her children to “eat their Brussels sprouts … because some child is going hungry tonight” and would love to have a plate of that loathsome vegetable? While it’s unnatural for such an appeal not to arouse guilt, it’s a non sequitur. A $35 billion reduction in oil royalty revenue does not result in a commensurate cut in anti-poverty programs – not in theory or fact.

     As the indefatigable Heritage Foundation outlined in its budgetary analysis, “Anti-poverty spending has surged 39% under President Bush to a record 16 percent of all federal spending.” The media’s redundant harping on “budget cuts” flies in the face of the clear expansion of government outlays from 2001 to 2005 for health care assistance (40 percent), food assistance (49 percent), and food stamps (71 percent). Imagine how much gaudier these numbers would be if they weren’t “cuts,” to say nothing of being implemented in a growing labor market and economy.