Top Dems call on House GOP to eliminate oil industry tax breaks

Top Senate Democrats are calling on House Republicans to agree to a plan to eliminate oil industry tax breaks as a means of reducing the deficit.

The proposal comes as House Republicans have pledged to cut federal spending by billions of dollars in an upcoming government funding measure that must be approved by Congress by early March.

It’s unclear what spending Republicans hope to cut, though the GOP is expected to soon flesh out the proposal. But Republicans have been hesitant to endorse a proposal outlined by President Obama during his State of the Union address last month to eliminate oil industry tax breaks.

A spokesman for House Speaker John Boehner (R-Ohio) quickly cast doubt Tuesday on the chances of such a proposal gaining support. He argued that the proposal -- put forward by Senate Majority Leader Harry Reid (D-Nev.), Sen. Charles Schumer (D-N.Y.) and other top Democrats -- would raise gas prices. He also raised questions about whether the plan could gain support among other Democrats, particularly those from drilling states. "I’d be curious what Sen. Schumer’s Democratic colleagues think about this proposal to raise sky-rocketing gas and energy prices and destroy American jobs," Boehner spokesman Michael Steel said.

In a Tuesday letter to Boehner, Senate Majority Leader Harry Reid (D-Nev.) and other senior Democrats call on Republicans to consider the proposal.

“We are concerned that some of the cuts you may propose could undermine future growth just as our economy is beginning to recover,” the letter says. “Instead, we urge you to consider ending a number of tax loopholes and other subsidies that benefit big oil and gas companies. Closing these loopholes would save the federal government more than $20 billion over 10 years.”

Echoing Obama’s State of the Union comments, the senators argue that the oil industry no longer needs the tax breaks.

“The days of big oil companies making billions in record breaking profits while receiving billions in taxpayer-financed subsidies must end,” the letter says. “It defies common sense to cut programs that are creating jobs, helping jumpstart our manufacturing sector and strengthening the middle class while protecting taxpayer-funded handouts to big oil companies that add little to our economic or energy security.”

The oil industry has railed against the proposal, arguing that any effort to eliminate oil industry tax breaks would harm the economy.


Here is the full letter:

February 8, 2011

Dear Speaker Boehner,

As you know, Congress must act soon on a funding measure to keep the government running past this coming March 4. We understand that as soon as this week, House leaders may begin naming specific spending reductions in order to make good on your plan to reduce funding levels by $32 billion from the current continuing resolution.

There is broad, bipartisan agreement on the need to rein in spending, make government more efficient and bring down the deficit. We believe that the question before us is not whether we should do any cutting, but what exactly should be cut. So, as you consider spending-cut ideas for the remainder of this fiscal year, we ask that you focus on cutting programs that are wasteful and inefficient, as opposed to those that help create jobs and spur economic growth.

We are concerned that some of the cuts you may propose could undermine future growth just as our economy is beginning to recover. Instead, we urge you to consider ending a number of tax loopholes and other subsidies that benefit big oil and gas companies. Closing these loopholes would save the federal government more than $20 billion over 10 years. This is just one example of a wasteful item in the budget that could be cut in order to make a down payment toward reducing the nation’s deficit. If the House chooses to adopt this suggestion, it would represent a good first step towards cutting spending in a bipartisan way.

Just last month, Exxon reported a 53% boost in profits, making it the company’s best quarter in years. At the same time, Chevron’s fourth quarter income jumped 72%. The fact is, oil and gas companies are doing just fine while many Americans are still struggling to find work and support their families.

The days of big oil companies making billions in record breaking profits while receiving billions in taxpayer-financed subsidies must end.  It defies common sense to cut programs that are creating jobs, helping jumpstart our manufacturing sector and strengthening the middle class while protecting taxpayer-funded handouts to big oil companies that add little to our economic or energy security.  During these tough economic times, closing more than $20 billion in loopholes for big oil and gas companies would send a clear message that we can cut spending while protecting the middle class.  The country faces difficult challenges, and we look forward to working together across party lines for solutions that are in the best interests of our nation

Sincerely,

Sen. Harry Reid, Majority Leader
Sen. Dick Durbin, Assistant Majority Leader
Sen. Charles Schumer, Vice Chair of the Conference and Chair of the Democratic Policy and Communications Center
Sen. Patty Murray, Secretary of the Conference

Sen. Bill Nelson
Sen. Robert Menendez

Sen. Benjamin L. Cardin
Sen. Sherrod Brown

Sen. Sheldon Whitehouse
Sen. Kirsten Gillibrand

cc:       Honorable Eric Cantor, House Majority Leader

            Honorable Dave Camp, Chairman, House Ways and Means Committee

            Honorable Hal Rogers, Chairman, House Appropriations Committee

            Honorable Paul Ryan, Chairman, House Budget Committee

This story was updated at 1:13 p.m.