The bill, known as the "Close Big Oil Tax Loopholes Act," would cut about $2 billion per year in tax subsidies for the five major oil companies by eliminating the domestic manufacturing tax deduction and closing a loophole Democrats say "amounts to the U.S. government subsidizing foreign oil production."
The bill's sponsors -- Menendez, Sherrod Brown of Ohio and Claire McCaskill of Missouri -- are all up for reelection next year.
"There is more hot air around this building about deficit reduction than any other topic right now, and if we cannot end subsidies to the five biggest most profitable corporations in the history of the planet that come from the federal taxpayer, then I don't think anyone should take us seriously about deficit reduction," McCaskill said at a news conference Tuesday. "The bottom line is this: If we can't do this, if we can't remove subsides from these profitable big oil companies, then I don't know if we can ever get to the really difficult work that lies ahead."
Menendez said, "If the big five oil companies could just live with $123 billion in profits in 2011, they could pay their fair share in taxes, help lower the deficit and not raise the price of gasoline, and all of the savings here go directly to deficit reduction. This is not an argument about there's other spending we'd like to do; this is about going directly to deficit reduction.
"I don't think that the average American paying nearly $4 a gallon at the pump is going to believe that Big Oil needs another penny and a half out of them in order to earn another $2 billion. I don't think anybody believes that."
Democrats, led by Menendez, even gathered Wednesday at an Exxon station on Capitol Hill where regular gas was $4.29 a gallon to urge the Big Five oil companies to give up taxpayer-funded subsidies in an effort to bring down the deficit.
"Tell the truth," Schumer said. "You don't need this subsidy, and it ought to go to reducing the deficit."
ABC News' John Parkinson contributed to this report.