Giving needless tax breaks to oil companies has never made much sense. It’s been decades since oil companies had be to be induced to drill for domestic oil. And with $4-a-gallon gasoline prices around the country and oil companies awash in obscene profits in recent years — the Big Five earned a breathtaking $35 billion in net profits in the first three months of this year alone — it’s clearly time to terminate the industry’s wasteful tax breaks.
The two tax breaks that Democrats in the Senate sought to end Tuesday would have returned just over $2 billion a year to the Treasury, or $21 billion over 10 years, without prompting any increase in gasoline prices, an analysis by the bipartisan Congressional Research Service showed. Yet Senate Republicans, bought by Big Oil’s campaign contributions and political lobbyists, used a filibuster to kill Democrats’ attempt to get a straight-up majority vote to end Big Oil’s tax breaks.
With the help of three energy-state Democrats, Republicans produced 48 votes against the Democratic proposal. That was easily enough to keep the 52-member majority vote eight votes shy of the 60 needed to invoke cloture and call for a simple majority vote. Just two Republicans voted with the Democrats on that pivotal vote, which allowed the minority filibuster to prevail.
Democrats should bring the issue back, as some promised, when debate begins on raising the national debt ceiling. Republicans who want to slash the public’s vital safety net programs should be forced to give up some of the tax breaks they protect for big corporations.
Indeed, the $2 billion a year that would result from ending a few of Big Oil’s tax breaks is barely a drop in the proverbial oil profit bucket. Yet it clearly could help reduce the federal deficit, or offset the harmful cuts that Republicans are inflicting on every vital safety net program under the sun.
But to succeed in ultimately ending the wasteful tax breaks, Democrats will have to show why Republicans are so eager to defend the oil companies’ tax break. That shouldn’t be hard.
Consider the amount that oil and energy companies have given to Tennessee Senators Bob Corker and Lamar Alexander, for example. Corker has collected $413,650 from the energy industry since 1999 — the bulk of that since he became a senator in 2006. In the same period, according to figures compiled by the Center for Responsive Politics, Alexander has collected $370,500 from energy companies, mainly oil companies.
It’s not hard to see how that’s happened. Oil and gas companies, for example, spent $39.5 million lobbying Congress and handing out campaign contributions in just the first quarter of this year alone.
An analysis by the public-interest advocacy groups Oil Change International and the Public Campaign Action Fund drilled down a bit further in the Center for Responsive Politics’ data to show the effect of the money-for-votes business. It found that the senators who voted Tuesday to keep the oil industry’s tax breaks had received an average of $370,664 from the oil and gas industries’ PACs and employees. That’s five times the average of $72,145 received by the senators who were willing to close Big Oil’s tax breaks.
“Giving profitable, price-hiking Big Oil companies billions in taxpayer subsidies is plain wrong,” said David Donnelly, national campaign director for Public Campaign Action Fund. “The Senators who voted to prevent consideration of this bill have made it clear: They stand with their big oil donors over their constituents struggling to fill their tank.”
In fact, the industry’s tax breaks are indefensible. Executives of the oil companies themselves admitted to Congress in hearings in 2005 that they no longer needed the tax deductions. That was when crude oil, which accounts for two-thirds of the cost of gasoline, was selling for around $60 a barrel. With the current price of crude hovering around $100, the oil companies’ profits — a percentage which rises along with the price of crude — have surged and are now far higher.
With federal debt high, corporate tax breaks rampant and ordinary Americans losing ground on inflation-adjusted wages over the past decade, there’s ample reason to end unreasonable tax breaks for the wealthiest corporations and the ultra-rich. If Republicans really cared about ordinary Americans and working families, they would agree with that.
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