Big Oil Claims About Tax Subsidies Don't Hold Water, Dems Pounce
House Republicans voted yesterday to expand coastal oil drilling, and no doubt felt pretty good about themselves. But it’s congressional Democrats who are on the offensive.
…House and Senate Democrats continued their push to repeal a variety of tax breaks enjoyed by the oil industry, some of them a century old and others that apply to all companies, not just petroleum concerns.
The Senate version of the bill would peel back $21 billion in such tax incentives over the next decade and devote the savings to deficit reduction. The House version would yield $31 billion in savings over 10 years and use the money for alternative energy programs and deficit reduction. Both bills apply only to the biggest multinational oil companies: Exxon Mobil, Shell, BP, Chevron and ConocoPhillips.
The chief executives of the Big Five are scheduled to appear before the Senate Finance Committee on Thursday morning to answer questions about their profits and to justify their tax treatment. One of the companies, ConocoPhillips, fired a shot in advance in a news release on Wednesday, calling the tax proposal “un-American” and saying it would discourage exploration and cost jobs.
That was an exceedingly dumb thing to say. It’s one thing for a highly-profitable oil company to demand taxpayer subsidies on top of their profits; it’s something else when that highly-profitable oil company says ending the subsidies is “un-American.”
Sen. Bob Menendez (D-N.J.) pounced, calling the comments “truly outrageous,” “not acceptable,” and “beyond the pale.” The Democratic senator added that he expects an apology.
Congressional Dems were also delighted to receive a report yesterday from the nonpartisan Congressional Research Service, which concluded that ending the existing tax incentives for the oil industry (a) wouldn’t slow oil production; and (b) would have a negligible impact on prices at the pump.
In other words, the main arguments from Big Oil and its allies just don’t stand up well to scrutiny.
All of this, however, is just a precursor to today’s Senate Finance Committee hearing, which should offer some compelling political theater.
It’s a tradition in Washington: the annual Capitol Hill version of the perp walk for Big Oil.
This time, Senate Democrats are hauling the top executives of five major private oil companies to the Finance Committee to rap them on the knuckles for making so much money — and benefiting from U.S. tax incentives — while charging hardworking Americans $4 for a gallon of gas.
It’s political theater at its best: Democrats get the visuals of the top execs standing and raising their right hands and can force them to explain why oil companies need billions of dollars in tax incentives and subsidies. Senate Majority Leader Harry Reid has already scheduled a test vote for next Wednesday on Democrats’ plan to repeal $21 billion in incentives over 10 years.
Dems think they have a political winner with this issue. I think they’re right.