U.S. Lawmakers Reject Plan to Tax Back Oil Company Profits
By J.R. Pegg
WASHINGTON, DC, June 10, 2008 (ENS) – Senate Republicans today derailed a Democratic plan to revoke tax breaks for big oil companies and impose a tax on excessive profits, arguing the proposal would do little to help Americans suffering from record-high gasoline prices.
Debate over the measure reflected deep and long-standing partisan disagreements over U.S. energy policy, as lawmakers rehashed familiar positions and quarreled over who is responsible for the nation’s rising energy bills.
The cost of getting around has
skyrocketed this year. (Photo
by Mathieu Thouvenin)
The legislation at issue called for repealing some $17 billion in tax breaks for oil companies and for imposing a 25 percent windfall profits tax. Companies could avoid the windfall profits tax if they invested the money in renewable energy development or in new refineries.
The measure also included provisions to increase regulatory oversight of oil futures markets, to create new penalties for gasoline price gouging and to combat price manipulation by OPEC, the Organization of Petroleum Exporting Countries.
“The Bush administration has failed to address these concerns,” said Senate Majority Leader Harry Reid, a Nevada Democrat. “Sadly, the Republican members of Congress have stood by his side, cheering him on, cheering on the oil companies as they make more money.”
Democrats were unable to muster the 60 votes needed to move forward, failing by a largely partisan vote of 51-43. It is the second time this year Senate Republicans have blocked Democratic efforts to repeal tax breaks for the oil industry.
Gasoline averages $4 per gallon across the
United States. (Photo by Matt McGee)
As gasoline prices top a national average of $4 per gallon, lawmakers are keen to blame their opponents for prices at the pump.
“The five largest oil companies in this country have made $600 billion in profits since George W. Bush became president,” said Senator Bernie Sanders, a Vermont Independent. “Do we need a windfall profits tax? You bet we do.”
Senator Claire McCaskill, a Missouri Democrat, called the tax breaks given to the oil companies “the largest packet of corporate welfare” ever granted by the U.S. Congress.
“Last year Exxon Mobile made $83,000 a minute in profits. Are they using all this profit to invest in alternative fuels? How about increasing refinery capacity? Oh no, they’ve got their hand out to us. This is the nerve,” she told colleagues. “What nerve does it take for us to give oil companies $17 billion in taxpayer money with those kind of profits? This is like the twilight zone.”
But Texas Republican Senator Kay Bailey Hutchinson called the plan a “pathetic attempt” at an energy bill.
“It does not produce one ounce of energy,” she said.
Hutchinson and fellow Republicans said the Democratic proposals were misguided, echoing industry criticism that the repeal of the tax breaks and the imposition of a windfall profits tax would discourage investment in domestic production and cause gasoline prices to increase even further.
“The biggest hit wouldn’t be to the energy companies – it would be the American consumer, who now dreads pulling his or her car into the gas station,” said Senate Minority Leader Mitch McConnell, a Kentucky Republican. “Hitting the gas companies might make for good campaign literature or evening news clips, but it won’t address the problem. This bill isn’t a serious response to high gas prices. It is just a gimmick.”
Senate Minority Leader Mitch McConnell of
Kentucky in his office (Photo courtesy
Office of the Senator)
McConnell called on Democrats to embrace his party’s plan to boost domestic energy production of oil and natural gas.
The Republican proposal treads familiar ground, seeking to open new offshore areas to oil and gas production, drill in the Arctic National Wildlife Refuge, reverse a moratorium on the development of oil shale in the Rocky Mountains and provide incentives to encourage the construction of new refineries.
“Republicans are determined to lower gas prices the only way we can and strengthen our energy security for the long-term – by increasing supply,” McConnell said.
But that plan is a non-starter for Democrats, who contend the focus on domestic production is illogical. It would take at least seven years to get oil of the Arctic National Wildlife Refuge, Reid noted, and experts believe it would have little effect on a price that is driven by global demand.
“We have less than three percent of the oil in the world,” Reid said. “We cannot produce our way out of the problem.”
Senate Majority Leader Harry Reid of
Nevada (Photo courtesy Office
of the Senator)
The Democratic leader also blasted Republicans for failing to approve a $50 billion tax bill that included provisions to extend tax credits for renewable energy development and energy conservation.
The bill was effectively killed Tuesday, as Democrats fell 10 votes short of the 60 needed to continue debate.
“There is an energy crisis,” Reid said. “And all this time, out there every day, we have sun shining, wind blowing, steam coming from the earth and we are doing nothing to capture it, virtually nothing. Why? Because we can’t get our Republican colleagues to join us in passing tax incentives.”
Republicans said they oppose the tax bill because it contains other tax increases, not because of the extension of the credits for renewable energy and conservation.
“We are ready to extend those tax credits – with no taxes added,” said Senator Pete Domenici, a New Mexico Republican.
After the vote, Senate Finance Committee Chairman Max Baucus said he would continue working to get the renewable energy and conservation tax credits extended, but lamented the failure of the overall bill.
“When gas is $4 a gallon, it’s unconscionable to refuse to help this country turn toward new sources of energy,” he said. “It’s time to stop delay and get this tax policy done.”