ABC News’ John R. Parkinson (@jrpabcdc) reports:
Three Senate Democrats unveiled a bill Tuesday to scrap some tax breaks for the five biggest and most profitable oil companies and pledged to turn over the savings from the proposed cuts to pay down the federal deficit.
The bill, known as the Close Big Oil Tax Loopholes Act, would cut about $2 billion per year in tax subsidies for the five biggest 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 sponsors of the legislation – Sens. Robert Menendez, Sherrod Brown and Claire McCaskill (all of whom are up for reelection in November 2012) – said the savings from their bill would go directly to deficit reduction, not reallocated for new spending.
“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, D-Missouri, said. “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 that “it’s time for the Big Five to do the right thing for a change and pay their fair share” of taxes and slammed the so-called “Big Five” oil companies — Shell, BP, Exxon Mobile, Chevron and ConocoPhillips — for placing an economic burden on Americans as they raked in tens of billions in profits in the first fiscal quarter while gasoline prices climbed towards $4 per gallon.
“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,” Menendez, D-New Jersey, said. “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.”
While there is little appetite among Congressional Republicans to support what could be perceived as a vote to increase taxes, the confrontational move comes after House Speaker John Boehner told ABC News in an exclusive interview last month that oil companies deserve "some part of this to blame" for rising gasoline prices and that he believes reviewing oil subsidies is "certainly something we should be looking at."
President Obama quickly wrote a letter to Congressional leadership encouraging both parties to "take immediate action” to clear the daunting legislative hurdle and “eliminate unwarranted tax breaks for the oil and gas industry and use the dollars to invest in clean energy."
House Minority Leader Nancy Pelosi also sent a letter to Boehner, requesting that Republicans “schedule a vote on ending these tax breaks on the House floor” as soon as the House was back in session.
But ever since then, Republicans and Democrats only seem to have moved farther apart.
Aside from the provoking move in the Senate today, Democrats have repeatedly pounded Republicans for being on the wrong side of American values.
In the lead-up to a vote May 5 on a Republican measure to aimed at restarting the American off-shore leasing program last week, Democrats forced a procedural vote to shift consideration to a similar measure to end tax breaks for domestic manufacturing in the 2004 international tax law. The move was quickly defeated by a unanimous House Republican Conference and seven oil-friendly Democrats.
“It’s long past time to turn off the spigot of public funds flowing to Big Oil,” Pelosi, D-Calif., said in a speech on the House floor leading into the vote on a GOP bill. “We all must decide: will we stand with the American people or will we continue to send taxpayer dollars to Big Oil?”
Days after the measure failed, the Democratic leader’s press shop sent around an email Monday highlighting seven votes that House Republicans have taken thus far in the 112th Congress that Democrats say demonstrates their allegiance to the oil industry. Cleary, high gasoline prices are becoming a hot topic on the campaign stump as well as around the water cooler.
Republicans today will take up the second of three bills that they believe would tame rising gas prices by opening up domestic energy exploration and production.
Senate Majority Leader Harry Reid went to the Senate floor this morning to discuss the trio’s new legislation, admitting that “saving money requires a lot of difficult choices” on which programs to cut and which priorities to fund, but he said “Then there are the choices that aren't so tough at all.”
“We're giving billions and billions of dollars every year – $4 billion to be exact – every cent of it taxpayer money – to oil companies that already are more than successful,” Reid, D-Nevada, said. “Why are taxpayers on the hook for oil companies that are doing just fine on their own? If we're serious about reducing the deficit, this is an easy place to start. It's a no-brainer. Let's use the savings from these taxpayer giveaways to drive down the deficit, not drive up oil company profits.”
The Senate bill faces a tough battle as Democrats would not only have to secure votes from all 53 members in their caucus, but also seven Republicans as well.
Sen. Mary Landrieu, D-Louisiana, has already expressed her opposition to cutting the subsidies.
“Every time the companies start making money people want to tax what they get, but when they’re losing money no one wants to help them because of this sort of bias against oil and gas companies which comes from some sector, you know, of our democracy,” Landrieu said last Thursday. “We want to create more millionaires in America. We want to create more wealth in America, so we’ve got to be careful about continuing to pick on this industry every time somebody is looking for a dime around Washington, DC.”
ABC News’ Matthew Jaffe contributed to this report