Obama's budget to call for slashing oil tax breaks, boosting clean energy

President Obama is expected to call on Congress Monday to eliminate billions of dollars in oil industry tax breaks, while setting aside money for his top clean-energy policy priorities.

Obama will send his fiscal year 2012 budget request to Congress on Monday. The budget comes as Republicans are calling for massive cuts in spending, unveiling a proposal this week to fund the government through the end of this fiscal year that would cut $100 billion in spending when compared to Obama’s 2011 budget request.

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Obama’s 2012 budget request will also make major budget cuts. It will freeze domestic spending for he next five years and cut the deficit by $1.1 trillion over the next decade.

Obama’s budget request will call for eliminating a series of oil industry tax breaks. The Department of Energy estimates that such a repeal will save $3.6 billion in fiscal year 2012 and a total of $46.2 billion during the next decade.

But the proposal to eliminate oil tax breaks faces major opposition in Congress. Though Democrats have thrown their support behind the proposal, Republicans have said any attempt to revoke industry tax breaks could harm the economy and result in job losses. The president has long called for cutting the tax breaks, but Congress has not been able to muster the necessary support to pass such a proposal.

While Obama’s budget will be marked by major cuts, the administration will make a series of investments in clean energy. The budget request will include more than $8 billion for clean energy programs, including money for research and development.

Obama’s budget request will outline a plan to achieve two of his major clean energy policy goals: a plan to make commercial buildings 20 percent more energy efficiency by 2020 and a plan to put 1 million electric vehicles on the road by 2015.

As part of the plan to put more electric vehicles on the road, Obama’s budget will call for giving consumers a $7,500 rebate when they purchase an electric vehicle.

The electric vehicles rebate proposal is modeled after the successful “cash-for-clunkers” program, which gave consumers rebates for exchanging older vehicles for more fuel-efficient ones. Obama will propose turning a current $7,500 tax credit, which would be redeemed on consumers’ income taxes, into a rebate, which would be received at the point of sale.

In order to reach the energy efficiency goal, Obama’s budget request will outline a proposal to provide new tax credits for energy efficient buildings and to offer local and state government incentives to streamline their building codes.

Despite the administration’s commitment to key clean-energy programs, the budget will make significant cuts at the Department of Energy.


In an overview of the department’s budget Friday, Energy Secretary Steven Chu said the budget request will call for cutting $70 million in hydrogen energy research. That is about 40 percent of the research program. The budget for the department’s Office of Fossil Energy will be cut by 45 percent or about $418 million.

“Fiscal responsibility demands shared sacrifice – it means cutting programs we would not cut in better fiscal times," Chu wrote in a blog post on the Energy Department’s website.

Meanwhile, the budget request will call for cutting a program to clean up the Great Lakes by $125 million.

The administration will also propose major cuts to a program that provides financial assistance for low-income Americans who are having trouble paying their heating bills. The budget request will propose cutting the Low Income Home Energy Assistance Program by $2.5 billion.

News of the cut to the program brought a rebuke from lawmakers this week. Rep. Edward Markey (D-Mass.) and Sen. John Kerry (D-Mass.), citing this year’s harsh winter in the Northeast, called on Obama to fully fund the program.