Capitol Idea: Big Oil Gets Its Tax Breaks – Democrats Gain A Solid Political Issue

Republicans insist that hard-pressed Americans accept trillions of dollars in cuts to Medicare, Medicaid, and other federal programs, all in the name of taming the federal budget deficit.

They like to preach that “tough choices” and sacrifice are necessary. Apparently, though, conservatives don’t much like practicing what they preach.

Republicans refuse to make what ought to be the easiest cut to save $21 billion — eliminating taxpayer-funded giveaways to the five largest oil companies.

These oil companies keep holding their hands out for these subsidies, all while recording record profits and you and I are paying them ever-higher prices at the gas pump.

The Big 5 oil companies have made nearly $1 trillion in profits — not revenue, but flat-out profit — in the last decade and more than $30 billion of that in the first three months of this year alone, but they don’t want to give up their unneeded federal subsidies.

Republicans try to cover them up by saying that if we were to get rid of these goodies, that would amount to a “tax increase.”

Don’t believe it. Let’s call it what it is: corporate welfare.

And if the oil company execs try to tell you that we’d be paying even higher prices without forking over those handouts, don’t believe that, either.

A 2007 Joint Economic Committee analysis found that repealing the oil and gas tax breaks would not raise energy prices for consumers. Because the U.S. share of production is only 10 percent, it is nearly impossible to pass on to consumers the cost of cutting oil and gas subsidies.

Further, a 2009 Treasury Department estimate found that eliminating every single oil and gas tax break for the entire oil and gas industry would cause domestic oil and gas production to fall by less than one-half of 1 percent, so eliminating oil and gas subsidies for only the five most profitable oil companies would have even less effect.

Democrats have been fighting to pass a bill that would repeal the subsidies. Obviously, Republicans aren’t going along with that.

That’s okay because, while they might succeed in allowing Big Oil to keep its subsidies, they’ve also provided Democrats with a powerful political weapon.

Most Americans aren’t going to buy the Republicans “tax increase” smokescreen. They know corporate welfare when they see it. They understand that Republicans coddle the rich.

Democrats are so confident that they’re on the winning side of this argument that they are trumpeting the press coverage that their campaign to eliminate the subsidies has been receiving this week.

Republicans will find that they may win this battle, but they have lost the war.

Why should the middle class stand for a single additional federal cut if the richest get to keep their goodies? After all, if the reduction or elimination of any given federal nugget amounts to a “tax increase,” why should the rest of us settle for any such increase ourselves?

Medicare cut? That’s a tax increase.

Education cut? Tax increase.

Jobs programs? Well, you get the picture.

What’s good for the goose, after all.

Each and every time a Republican stands up to demand a big federal cut, Democrats should laugh and say, “Not until you kill those oil and gas subsidies.” And Republicans are almost automatically prevented for letting that happen.

Individuals and political action committees affiliated with oil and gas companies have donated $238.7 million to candidates and parties since 1990, 75 percent of which has gone to Republicans, according to the Center for Responsive Politics, which tracks political spending.

The Republicans are bought-and-paid-for with oil money, and now Democrats have finally backed their budget rampage into corner that the GOP will be hard pressed to escape from.

 

Scott Nance has covered Congress and the federal government for more than a decade. Capitol Idea is his regular column from Washington. This article was first published as Big Oil Gets Its Tax Breaks – Democrats Gain A Solid Political Issue on Blogcritics.


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