A Republican senator wants to raise taxes on oil companies to subsidize gas costs for low- and middle-income drivers, but the idea is attracting criticism from other GOP lawmakers.
Sen. Norm Coleman (Minn.) unveiled his proposal yesterday, the same day Republican leaders celebrated enactment of a $70 billion tax cut that largely benefits wealthy and middle-income taxpayers and Senate Democrats outlined their long-term energy agenda.
Coleman likened the bill to an extension of federal low-income heating assistance.
“Hopefully that coalition would be in place,” he said.
But some lawmakers were quick to criticize the offering, saying either that it does too much or too little both on the tax and spending sides of the ledger.
The bill would raise $4.3 billion through a retroactive revaluation of oil companies’ inventory under an accounting method known as last in, first out (LIFO), which allows companies to assume that the last inventory they bought is the first inventory sold. The money would then be disbursed to the states through a block-grant program that would defray prices at the pump for low- and middle-income drivers.
The LIFO portion of Coleman’s proposal was included last year in the Senate version of the $70 billion tax-cut package but was dropped in conference.
“The high cost of gasoline is greatly affecting hardworking families throughout the country, and it’s important that Congress step in and provide targeted assistance,” Coleman said. “This bill is not an open-ended money giveaway. Rather, it creates a needs-based block-grant program that gives states the resources they need to help families make it through economic hardship caused by high fuel prices.”
Sen. John Sununu (R-N.H.) called Coleman’s plan “a dangerous precedent and a foolish idea.” Sununu said Congress should not legislate accounting standards that are regulated by the Financial Accounting Standards Board.
Congress has had a difficult time finding a solution to high gas prices, even as frustration mounts among consumers. Senate Majority Leader Bill Frist (R-Tenn.) proposed a $100 rebate for drivers that was quickly quashed.
Democrats unveiled an energy plan yesterday that they say would significantly reduce American dependence on foreign oil. Their bill would create incentives and requirements for the manufacture of fuel-efficient vehicles and encourage the use of biofuels, according to a release.
“We stand ready to work with your administration and congressional Republicans to pass legislation reflecting these principles before the summer recess,” 43 senators wrote in a letter to President Bush yesterday.
Most of the Democratic caucus was joined by Sen. Jim Jeffords (I-Vt.), but West Virginia’s Democratic senators, Robert Byrd and Jay RockefellerJay RockefellerObama to preserve torture report in presidential papers Lobbying world Overnight Tech: Senators place holds on FCC commissioner MORE, did not sign the letter.
Many Republicans look at soaring gas prices as further reason to open the Arctic National Wildlife Refuge (ANWR) to oil and gas drilling, a position Coleman opposes.
“The solution here is to aggressively pursue our own oil reserves,” said Sen. Jim DeMint (R-S.C.).
Sen. Chuck GrassleyChuck GrassleyFlynn told FBI he didn't talk sanctions with Russian envoy: report Gorsuch hearing date set for March 20 Judiciary Committee wants briefing, documents on Flynn resignation MORE (R-Iowa), chairman of the tax-writing Finance Committee, said lawmakers should do something about gas prices but took issue with Coleman’s focus on low- and middle-income drivers.
“Whatever we figure out ought to benefit anybody who buys gas and not just one class of people,” said Grassley, who wrote the original Senate-passed tax reconciliation package that contained the LIFO provision.
Sen. Byron Dorgan (D-N.D.), chairman of the Democratic Policy Committee and a member of the Energy and Natural Resources Committee, said that he supports the LIFO change and that Coleman’s plan is “a small step in the right direction.”
But Dorgan said he would rather see Congress take “windfall” profits from oil companies and redistribute the money to consumers.
“I favor a bolder, more aggressive approach,” Dorgan said.
House Minority Leader Nancy Pelosi (D-Calif.) called Coleman’s approach “piecemeal,” a characterization that Coleman seconded by saying the country needs a comprehensive plan to reduce its dependence on foreign oil.
“For me the longer-term piece is what we’re doing with renewables,” said Coleman, a former Democrat.
Several senators said they had not yet seen the proposal.
“I’ll take a look,” said Sen. Lincoln Chafee (R-R.I.), who also opposes ANWR drilling.
Coleman’s proposal would allow states to structure their own programs, according to information provided by his office. But it would limit subsidies to households that make up to 250 percent of the poverty level while letting states choose to lower that figure to as little as 110 percent. The benefit would be available only to those who could prove they own or lease a vehicle.
In the past, the Republican congressional leadership has been reluctant to consider proposals that raise taxes.
“I’m a firm believer in cutting taxes to grow the economy,” Coleman said. But, he said, there is a growing consensus that “we’ve given some tax incentives to the oil companies that just aren’t needed.”
Coleman said the Senate should take up more comprehensive energy legislation this year.
“It is important for us to have another energy bill to continue moving forward,” he said.