Barack Obama has a new ad out, continuing the negative campaigning he once eschewed. Obama now says that John McCain is in the pocket of the oil companies by refusing to impose a windfall-profits tax while taking $2 million in contributions from the industry. The ad never does mention Obama’s six-figure take from the same industry, however:

Every time you fill your tank, the oil companies fill their pockets. Now Big Oil’s filling John McCain’s campaign with 2 million dollars in contributions. Because instead of taxing their windfall profits to help drivers, McCain wants to give them another 4 billion in tax breaks.

After one president in the pocket of big oil… We can’t afford another.

Barack Obama… A windfall profits tax on big oil to give families a thousand dollar rebate. A president who’ll stand up for you.

Obama’s campaign stumbles on a couple of points. First, “Big Oil” doesn’t contribute to John McCain or to Barack Obama.  As Factcheck tried explaining to Team Obama earlier, corporations cannot make campaign contributions.  If Obama’s complaining about oil industry figures contributing to McCain, then the ad is hypocritical, since Obama has oil executives working as bundlers for his own campaign, and has received hundreds of thousands of dollars from the same industry.

As far as the windfall-profits tax plan Obama favors, the Jimmy Carter policy failed miserably when first tried — and as the Wall Street Journal asks, what makes a “windfall” anyway?

Mr. Obama didn’t bother to define “reasonable,” and neither did Dick Durbin, the second-ranking Senate Democrat, when he recently declared that “The oil companies need to know that there is a limit on how much profit they can take in this economy.” Really? This extraordinary redefinition of free-market success could use some parsing.

Take Exxon Mobil, which on Thursday reported the highest quarterly profit ever and is the main target of any “windfall” tax surcharge. Yet if its profits are at record highs, its tax bills are already at record highs too. Between 2003 and 2007, Exxon paid $64.7 billion in U.S. taxes, exceeding its after-tax U.S. earnings by more than $19 billion. That sounds like a government windfall to us, but perhaps we’re missing some Obama-Durbin business subtlety.

Maybe they have in mind profit margins as a percentage of sales. Yet by that standard Exxon’s profits don’t seem so large. Exxon’s profit margin stood at 10% for 2007, which is hardly out of line with the oil and gas industry average of 8.3%, or the 8.9% for U.S. manufacturing (excluding the sputtering auto makers).

If that’s what constitutes windfall profits, most of corporate America would qualify. Take aerospace or machinery — both 8.2% in 2007. Chemicals had an average margin of 12.7%. Computers: 13.7%. Electronics and appliances: 14.5%. Pharmaceuticals (18.4%) and beverages and tobacco (19.1%) round out the Census Bureau’s industry rankings. The latter two double the returns of Big Oil, though of course government has already became a tacit shareholder in Big Tobacco through the various legal settlements that guarantee a revenue stream for years to come.

When Obama becomes President, the federal government will determine how much profit any business is allowed to make.  Washington will set arbitrary levels for federal intervention and confiscation, and they will strip shareholders of value in order to redistribute the money to pet constituencies. This isn’t taxation at all, but penalizing success, even the moderate success as shown by the actual profit margin in the oil industry.

It’s robbery by government whim, and even if it hadn’t already proven itself as a complete failure in the 1970s and 1980s, it would still be wrong.

Obama’s ad misses the mark in another crucial way.  Seventy percent of Americans believe that high gas prices result from a supply crisis, one that can be resolved by opening up American resources and creating American jobs.  The “Big Oil” conspiracy theories don’t work any more.  The longer Obama pushes them as a campaign theme, the more marginalized he will become on the biggest domestic issue this year, and perhaps in the last decade.  He couldn’t possibly make himself more irrelevant than by running this ad.