Do Americans Want 'Shared Sacrifice? Big Oil Exec Says No

May 12, 2011 -- Americans don't expect the oil industry to help reduce the budget deficit, the CEO of Chevron told Congress Thursday as lawmakers consider cutting billions in government subsidies to big oil companies.

"I don't think American people want shared sacrifice," John Watson, CEO of Chevron, said at a Senate Finance committee hearing today. "I think they want shared prosperity."

"I'm not out of touch at all," said Rex Tillerson, CEO of Exxon Mobil. "We do understand the big picture. We do understand the enormous challenges confronting the American people with respect to this enormous deficit that has to be dealt with."

But Sen. Jay Rockefeller, D-W.Va., said the oil companies' unwillingness to turn over their tax subsidies showed they were "out of touch."

"I think you're out of touch, deeply profoundly out of touch and deeply and profoundly committed to sharing nothing," Rockefeller said. "You never lose. You've never lost. You always prevail."

Senate Democrats pounded executives from the country's five largest and most profitable oil companies – BP America, Chevron, ConocoPhillips, ExxonMobil and Shell – about accepting taxpayer subsidies while gas prices continue to rise.

"I find it hard to understand how you can come here before this committee and the American people and say, when you are projected to make $125 billion in profits this year," Sen. Bob Menendez, D- N.J., said. "That somehow the loss of $2 billion a year, which means you only make $123 billion in profits, is somehow so punishing, somehow not part of shared sacrifice, somehow you need to go back at them at the pump to make up for it."

It is all part of an effort by Democrats to push a new bill that would scrap tax breaks for the five companies, the biggest and most profitable ones in the country. Democrats want to cut about $2 billion per year in tax subsidies for the companies and use the savings to pay down the nation's soaring federal deficit.

Sen. Ron Wyden, D-Ore., pointed to a 2005 hearing where the CEOs of the major oil companies said incentives were not needed for oil and gas companies to conduct exploration.

"Conditions today were pretty much like they were in 2005," Wyden said. "I just can't understand how even if you account for all the possibilities in the world how you can make the case that you need these industry-specific incentives when oil is at $10 a barrel when you told me you didn't need them at $55."

But the oil executives clung to the belief that cuts to their tax subsidies would be unfair and would stifle job creation and economic growth.

"It is not simply that they are misinformed and discriminatory. But they are counterproductive," Tillerson said.

"Don't punish our industry for doing its job well," Watson said.

The panel's top Republican Orrin Hatch rose to the defense of the oil executives, calling the hearing a "dog and pony" show.

"If you're going to do this you should treat them fairly along with all the other companies that receive some type of tax expenditures," Hatch said. "I don't want them mistreated just because they're an industry that people hate and they're supposed to be 'big.'"

Sen. Chuck Schumer, D-N.Y., challenged the oil executives by asking if other initiatives, such as student loans, should be sacrificed instead of gas companies' subsidies when deciding how to reduce the national deficit.

"Do you think that your subsidy is more important than the financial aid we give to students to go to college?" Schumer asked.

ConocoPhillips CEO James Mulva said he couldn't answer the question, saying, "They're two totally very different questions."

"But we have to weigh those two things, Mr. Mulva. We have to weigh it because we have to get the deficit down to a certain level," Schumer said.

Mulva also refused to apologize for a ConocoPhillips statement this week categorizing those who want to increase taxes for the big oil companies as "un-American."

The oil executives said the bill would not help lower gas prices, a point House Speaker John Boehner echoed in his press conference today.

"We all know that going after oil companies is easy politics, but we also know that if this bill were to pass it wouldn't lower gas prices one penny," Boehner said.

The Senate is set to vote on the measure sometime in the next week, but its chances of passing appear slim to none. The measure will need 60 votes to pass, a tall order in a chamber where there are only 53 Democrats and even some of them -- such as Alaska's Mark Begich and Louisiana's Mary Landrieu -- don't support the measure.

"It's a gimmick," Begich railed on the Senate floor Wednesday, denouncing the bill as "good fodder for the news" but nothing more.

Landrieu, meanwhile, said the bill would not "reduce the price of gas by one penny." It was not the first time the Louisiana lawmaker has blasted attempts to target the industry.

"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 at a March 10 news conference.

"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, D.C.," she added.

Republicans have lined up in opposition to the Democrats' new bill.

"Every time gas prices go up, Democrats claim there's nothing they can do about it," the Senate's top Republican, Mitch McConnell of Kentucky, said Monday. "Then they propose something completely counterproductive just to quiet their critics. This time it's a tax increase. That is the Democrat response to high gas prices: a tax hike.

"Well, the first thing to say about this proposal is that it won't do a thing to lower gas prices. In fact, raising taxes on American energy production will increase the price of gas. Oh, and it would also make us even more dependent on foreign sources of oil.

"That's not my view," he added. "That's the view of the independent Congressional Research Service, which concluded in March that the Democrat's proposed tax increase on energy production would, 'make oil and natural gas more expensive for U.S. consumers and likely increase foreign dependence.' Sounds like a brilliant strategy."

Across Capitol Hill, House Republicans have shown little appetite to back what could be seen as a vote to raise taxes. Boehner told ABC News in an exclusive interview last month that oil companies deserve a share of the blame for rising gasoline prices and that he believes reviewing oil subsidies is "certainly something we should be looking at."

But Boehner later backed off the comments and indicated that he does not want to consider the Democrats' bill.

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.