Senate defeats Democrats' measure to kill off ‘Big Oil’ tax breaks, 51-47

Senate defeats Democrats' measure to kill off ‘Big Oil’ tax breaks, 51-47

The Senate on Thursday thwarted Democratic plans to strip billions of dollars in tax breaks from the largest oil companies, just an hour or so after President Obama urged the chamber to kill off the deductions. 

Lawmakers voted 51-47 to move forward with Sen. Robert MenendezRobert (Bob) MenendezThe Hill's Morning Report: Can Trump close the deal with North Korea? Senate must save itself by confirming Mike Pompeo Poll: Menendez has 17-point lead over GOP challenger MORE’s (D-N.J.) bill. Sixty votes were needed to advance the measure.

Two Republicans — Sens. Susan CollinsSusan Margaret CollinsGOP senators introduce Trump's plan to claw back billion in spending Hillicon Valley: Sweeping new data rules take effect | Facebook, Google already hit with complaints | Schumer slams reported ZTE deal | Senators look to save cyber post | Dem wants answers about Trump's phone security Senators express concern over Trump's decision to scrap top cyber post MORE and Olympia Snowe, both from Maine — crossed party lines and voted to repeal the tax breaks. Four Democrats — Sens. Mark BegichMark Peter BegichPerez creates advisory team for DNC transition The future of the Arctic 2016’s battle for the Senate: A shifting map MORE (Alaska), Mary LandrieuMary Loretta LandrieuLandrieu dynasty faces a pause in Louisiana Senate GOP rejects Trump’s call to go big on gun legislation Project Veritas at risk of losing fundraising license in New York, AG warns MORE (La.), Ben Nelson (Neb.) and Jim Webb (Va.) — voted against the bill.

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The outcome of the vote was not a surprise, given that a similar plan failed 52-48 last May. But the decision to take another shot at passing the bill— and the decision by the White House to wade into the fight — underscore the political salience of rising gasoline prices in an election year.

Obama has sought to deflect blame for high gas prices, in part by casting Republicans as allies of big oil companies. He used a Rose Garden speech to urge lawmakers to back the plan.

“Today, members of Congress have a simple choice to make,” Obama said. “They can stand with big oil companies, or they can stand with the American people.”

The vote Thursday followed several days of tactical maneuvering on both sides of the aisle. Republicans oppose the Menendez plan but unexpectedly voted Monday to allow debate on the bill, saying they welcomed the chance to pit their energy plans against those of Democrats.

But Senate Majority Leader Harry ReidHarry Mason ReidMcConnell not yet ready to change rules for Trump nominees The Hill's Morning Report — Sponsored by CVS Health — Trump’s love-hate relationship with the Senate Trump to press GOP on changing Senate rules MORE (D-Nev.) cut debate on the bill short, blocking consideration of a handful of GOP amendments, including a proposal to dramatically expand offshore oil-and-gas leasing.

The Menendez plan would prevent the "big five" oil companies — Exxon, Chevron, BP, Shell and ConocoPhillips — from claiming several tax deductions. The bill, unlike the proposal defeated in May, would have also extended lapsed or soon-to-expire tax incentives for renewable power projects, biofuels production, electric cars, energy-efficient homes and others.

Republicans alleged the Democratic proposal would hit struggling consumers.

“That was their brilliant plan on how to deal with gas prices: raise taxes on energy companies; when gas is already hovering around $4 a gallon, then block consideration of anything else, just to make sure gas prices don’t go anywhere but up,” Senate Minority Leader Mitch McConnellAddison (Mitch) Mitchell McConnellGiuliani: White House wants briefing on classified meeting over Russia probe GOP senators introduce Trump's plan to claw back billion in spending The Hill's 12:30 Report — Sponsored by Delta Air Lines — Trump now says Korea summit could still happen June 12 MORE (R-Ky.) said on the floor.

Sen. David VitterDavid Bruce VitterSenate panel advances Trump nominee who wouldn't say if Brown v. Board of Education was decided correctly Planned Parenthood targets judicial nominee over abortion comments Trump nominates wife of ex-Louisiana senator to be federal judge MORE (R-La.) said the bill “is not a policy that will do anything but increase the price at the pump and decrease supply.”

“That is the opposite of what we need,” Vitter said on the floor ahead of the vote.

But Obama and Democrats say oil companies — especially at a time when they have been earning handsome profits — do not need the incentives, and that the revenues should fund green-energy incentives and help pay down the deficit.

Menendez called the continued oil industry tax breaks “insanity.” He argued the money is better spent on boosting green-energy technologies that provide alternatives to petroleum and help the U.S. become a leader in emerging industries.

“It is time we stop trusting Big Oil to do the right thing with our money, and use it for things that actually make sense,” Menendez 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.

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.