For the last two years, the Obama administration has proposed ending senseless tax subsidies that the federal government gives to oil companies, despite the fact that oil is an incredibly lucrative industry. Congress has, thus far, not responded, and as Congressional Quarterly reported today, “the numerous tax advantages enjoyed by oil and gas producers appear likely to survive virtually unscathed despite the political turbulence created by the biggest oil disaster in American history.”
However, that is not due to a complete lack of trying. Sen. Bernie Sanders (I-VT) has proposed an amendment to the tax extenders bill currently before the Senate, which would cut $35 billion in subsidies for Bil Oil. $25 billion of the savings would go toward reducing the deficit and $10 billion would fund a grant program encouraging energy-efficient buildings. Sanders took to the Senate floor today to point out that, in an age of high, long-term deficits, it makes no sense to subsidize one of the most profitable industries in the country with taxpayer money:
Twenty-two percent of the children in this country live in poverty, we have record-breaking deficits, we have a $13 trillion national debt, and Exxon-Mobil receives $156 million in a tax refund after making $19 billion in profit. Mr. President, this has got to stop…I get a little bit tired of hearing my friends come to the floor of the Senate talking about the need to reduce our deficit. I get a little bit tired about people talking about the need for equity. If we can not address a situation in which some of the most profitable corporations in America pay zero federal taxes, and in fact get a tax rebate, then I’m not quite sure what this institution is doing.
Sanders then asked for unanimous consent to move to his amendment. Sen. James Inhofe (R-OK) objected.
As CAP’s Sima Gandhi has pointed out, these subsidies are not only expensive, but they don’t actually add anything to domestic oil production:
These subsidies will cost the U.S. government about $3 billion next year in lost revenue and nearly $20 billion over the next five years…And it’s not clear that a few billion in subsidies for oil companies does much to impact their business decisions. According to estimates from the Office of Economic Policy at the Department of Treasury, removing subsidies for the oil industry would at most affect domestic production by less than one-half of 1 percent.
Gandhi has counted nine different subsidies that the U.S. government gives to the oil industry, including refunds for drilling costs and for the cost of searching for oil. This is corporate welfare at its finest, and yet, Inhofe is standing in the way, blocking Sanders’ amendment from even coming to the floor.