Senate rejects bill to cut oil tax breaks

The Senate rejected a bill Tuesday to cut billions in tax breaks for the largest oil companies, but Democrats vowed to revive the measure as part of high-stakes negotiations on the budget and debt ceiling.

Democrats’ pledge to continue pushing the bill signals that they view the effort as a winning political issue amid $4-a-gallon gas, soaring oil company profits and growing concern about the deficit.

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A procedural motion necessary for the bill to move forward failed in a 52-48 vote. The motion required 60 votes for passage.

Two Republicans – Maine Sens. Olympia Snowe and Susan CollinsSusan CollinsSenate takes lead on Trump’s infrastructure proposal Navy leaders defend Trump's lackluster ship budget Overnight Healthcare: CBO fallout | GOP senators distance themselves from House bill | Trump budget chief blasts score | Schumer says House bill belongs 'in the trash' MORE -- voted for the motion, while three Democrats – Sens. Mary LandrieuMary LandrieuMedicaid rollback looms for GOP senators in 2020 Five unanswered questions after Trump's upset victory Pavlich: O’Keefe a true journalist MORE (La.), Ben Nelson (Neb.) and Mark BegichMark BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (Alaska) -- broke ranks and voted against the motion.

The legislation would eliminate a slew of tax breaks for the five largest oil companies: Exxon Mobil, Shell, BP, ConocoPhillips and Chevron.

Democrats say the bill would save $21 billion over the course of 10 years, savings that can be used to reduce the deficit at a time of increased belt-tightening.

“Quite simply, we are talking about making drastic cuts to programs that touch the lives of almost every person in this country. Except for them,” Sen. Jay RockefellerJay RockefellerObama to preserve torture report in presidential papers Lobbying world Overnight Tech: Senators place holds on FCC commissioner MORE (D-W.Va.) said, referring to the major oil companies.

“Without a willingness to stare down sacred cows like corporate subsidies, we won’t ever be able to make progress eliminating the massive federal deficit, which is staring us in the face.”

Top Democrats vowed Tuesday to revive the oil tax breaks repeal proposal. Senate Majority Leader Harry ReidHarry ReidGOP frustrated by slow pace of Trump staffing This week: Congress awaits Comey testimony Will Republicans grow a spine and restore democracy? MORE (D-Nev.) said he plans to push the measure as part of negotiations on the budget and to raise the debt ceiling.

“I am confident that before we finish our budget negotiations here in anticipation of raising the debt ceiling that that will be part of it,” Reid told reporters in the Capitol.

A vote on raising the debt ceiling is expected this summer. The Treasury Department says it will no longer be able to avoid a default on its financial obligations by Aug. 2.

But Republicans and some Democrats blasted the legislation, arguing it would single out the oil industry for punitive treatment.

“We're here debating whether or not … to essentially punish a handful of companies," Sen. Lisa MurkowskiLisa MurkowskiA retreat from the Paris climate pact would imperil U.S. interests Overnight Finance: Dems introduce minimum wage bill | Sanders clashes with Trump budget chief | Border tax proposal at death's door Overnight Energy: Trump energy nominees face Congress | OPEC to extend production cuts MORE (R-Alaska) said on the Senate floor Tuesday. "Really there's no policy justification for it other than that they can afford it — they're making money. They can afford it."

Opponents of the bill dismissed the legislation as a distraction, noting that it will do nothing to lower gas prices.

“This is entertainment," Sen. Mary Landrieu (D-La.) said. "And it's really not funny, and it's not laughable — it's very serious."

The nonpartisan Congressional Research Service and the Joint Economic Committee said this week that the bill will likely have no effect on fuel prices.

Senate Republicans will get a chance to vote on a bill they say will put the country on a path toward more stable fuel prices.

Senate leadership agreed to hold a test vote Wednesday on legislation introduced by Senate Minority Leader Mitch McConnellMitch McConnellOvernight Energy: Trump energy nominees face Congress | OPEC to extend production cuts Senate confirms Trump's first lower-court nominee Top GOP senators tell Trump to ditch Paris climate deal MORE (R-Ky.) that would expand domestic oil and gas drilling.

The bill — which echoes major components of a three-bill drilling package passed by House Republicans in recent weeks — is not expected to garner enough votes for passage. But it offers Republicans the opportunity to cast Democrats as out of touch with consumers who are paying nearly $4 a gallon at the pump.

McConnell’s bill would require the Interior Department to hold lease sales in the Gulf of Mexico and off the Virginia coast, set a timeline for review of pending offshore permit applications and extend leases in the Gulf for one year, among other things.

The tax-break repeal legislation has ignited a firestorm in Washington over tax breaks and deficit reduction.

Americans for Tax Reform President Grover Norquist warned Tuesday that a vote for the bill would be a violation of a pledge signed by most Republicans not to raise taxes.

“Raising taxes on oil and natural-gas producers will do little to reduce the deficit — perhaps nothing — and only encourage Washington’s overspending problem,” Norquist said in a letter to senators. “It is for these reasons that I urge you to oppose [the bill], as it is a violation of the Taxpayer Protection Pledge.”

Meanwhile, fiscal watchdog Taxpayers for Common Sense says the bill doesn’t go far enough.

“Congress needs to go further," Taxpayers for Common Sense Vice President Steve Ellis said. "We cannot afford to just look at a few subsidies for a handful of companies. We need to eliminate all of these subsidies as part of an effort to deal with our nation’s fiscal crisis.”

-- Ben Geman, Josiah Ryan and Pete Kasperowicz contributed to this story.

-- This story was updated at 6:57 p.m.