The Senate voted 92-4 Monday to begin an election-year floor debate over Democratic legislation to repeal oil-industry tax breaks, a plan that’s unlikely to ultimately pass but provides a platform for partisan warfare over gasoline prices.
The procedural vote advanced Sen. Robert MenendezRobert MenendezSteve Mnuchin, foreclosure king, now runs your US Treasury Senate Dems move to nix Trump's deportation order Senators to Trump: We support additional Iran sanctions MORE’s (D-N.J.) plan that would raise billions of dollars by removing incentives for the largest oil-and-gas companies, and also extend several green-energy and energy-efficiency tax breaks.
Most Republicans oppose the bill, but GOP members voted Monday for a motion that allows debate to proceed, a tactical move that shows they believe the fight will be beneficial politically.
Senate Minority Leader Mitch McConnellMitch McConnellDem senator predicts Gorsuch will be confirmed ObamaCare fix hinges on Medicaid clash in Senate A guide to the committees: Senate MORE (R-Ky.) said on the floor Monday that “common sense and basic economics” show that raising industry taxes will send gasoline prices even higher.
“This is the Democrat response to high gas prices,” he said ahead of the vote.
“And frankly, I can’t think of a better way to illustrate how completely out of touch they are on this issue. And that’s why Republicans plan to support moving forward on a debate over this legislation, because it’s a debate the country deserves,” McConnell said.
Republicans signaled Monday that they plan to use this week's debate to launch broad attacks on President Obama's energy policies.
GOP members took to the floor to allege the administration keeps too many federal lands and waters off limits to drilling, and slammed Obama's January rejection of a cross-border permit for the proposed Keystone XL pipeline that would run from Alberta, Canada, to Gulf Coast refineries.
Democrats — who are using the bill to paint Republicans as allies of “Big Oil” — say giants like Exxon and Chevron don’t need tax breaks, especially at a time of high oil and gasoline prices and handsome profits.
“This bill is pretty simple: We end wasteful subsidies to the big five oil companies and we use those proceeds to invest in clean energy, in creating jobs and reducing the deficit,” Menendez said on the floor Monday.
“I think the American people are sick and tired of paying ridiculously high gasoline prices at the pump and then paying Big Oil again with ... taxpayer subsidies,” he said, bashing claims that repealing tax breaks would lead to higher prices.
The bill would extend lapsed or soon-to-expire incentives for green electricity projects, manufacture of green-energy-related equipment, biofuels production, energy-efficient homes, electric vehicles and others.
President Obama has repeatedly called on Congress to repeal the incentives during wider, and increasingly high-profile, White House efforts to tout Obama's energy strategy and deflect GOP attacks. The White House issued a statement in support of the bill Monday afternoon before the vote.
“[H]eads of the major oil companies have in the past made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks,” the White House said.
The Joint Committee on Taxation estimates that removing the incentives would raise $24 billion over 10 years, while extending the green-energy and efficiency incentives would cost $11.7 billion over the same period, according to Menendez’s office.
The plan would prevent major integrated oil companies from claiming deductions on certain drilling costs, strip their ability to claim a lucrative deduction on domestic manufacturing income that’s available to a suite of industries and nix several other incentives as well.
Last May a similar tax break repeal plan stalled on a 52-48 procedural vote when 60 were needed to advance it.
Opponents of stripping the incentives have highlighted a March 2011 Congressional Research Service report that says a wide-ranging repeal of oil industry tax breaks could raise oil prices “on what would likely be a small scale.”
But a separate May 2011 Congressional Research Service report that analyzed legislation similar to the Menendez bill found that the repeal of five key oil-industry tax breaks would have little to no impact on gasoline prices.