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.

Watch it:

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.

When the Deepwater Horizon rig first exploded in the Gulf of Mexico, my ThinkProgress colleague Zaid Jilani noted that the company that operates the rig — Transocean, Ltd. — located its headquarters in Zug, Switzerland, in order to avoid U.S. corporate taxes. “Only a dozen of Transocean’s employees are physically located in Zug — more than 1,300 are based in Houston, Texas,” Jilani pointed out.

But this was only the beginning when it comes to Transocean’s steps to evade U.S. taxes. An article by Martin Sullivan in the latest issue of Tax Notes magazine lays out the dramatic drop in Transocean’s effective tax rate (along with a rising amount of income) as it moved its headquarters from the U.S. to the well-known tax haven of the Cayman Islands and finally to Switzerland:

Sullivan wrote:

The transaction in which a corporation changes its legal domicile from the United States to a foreign jurisdiction is referred to as an inversion or a corporate expatriation. These tax-motivated restructurings occur with little or no real change in day-to-day business operations. Top executives, key personnel, and all significant business operations in the United States before the transaction remain in the United States…An unusually large concentration of inversion transactions have been conducted by companies in the oil services industry.

As the table shows, Transocean was able to lower its effective tax rate to 16.9 percent from 31.6 percent, a drop of 14.7 percentage points. That actually makes Transocean’s tax dodging a bit lackluster compared to that of other corporations, such as General Electric and Pfizer, which reduce their tax rates by more than twenty points through planting profits offshore.

Once upon a time, even Republicans felt that such tax evasion was not a good thing. In 2002, in fact, Sen. Chuck Grassley (R-IA) said that “these expatriations aren’t illegal. But they’re sure immoral.” Now, however, Grassley considers cracking down on tax havens “shooting ourselves in the foot.”

Sullivan noted that one way to deal with tax avoidance like that employed by Transocean is to implement reforms suggested by Rep. Lloyd Doggett (D-TX), which “would be consistent with the president’s goals of tilting tax benefits away from fossil fuels and of raising revenue by suppressing aggressive tax avoidance by U.S. multinationals using shell companies in tax havens.”

Today, the New York Times reported that the financial services industry has “all but given up” trying to get the Volcker rule — which prevents banks from trading for their own benefit with federally insured money — out of the financial reform bill that is currently being hashed out in conference committee. Last week, Rep. Barney Frank (D-MA), who is chairing the conference committee, said that a strong Volcker rule in the “general direction” of that proposed by Sens. Carl Levin (D-MI) and Jeff Merkley (D-OR) (which includes stricter rules than that in either the House or Senate bill) will be included in the final product.

The potential success of the measure is due in no small part to its namesake, former Federal Reserve Chairman Paul Volcker, who has been outspoken in favor of both the rule itself and in keeping it “pure” and free from carve-outs and exemptions. Yesterday, Volcker appeared on CNBC with former FDIC Chairman Bill Isaac, and in a portion of the interview that didn’t air (but for which a transcript is available), Isaac offered his full support for the Volcker rule and even pushed Congress to go further in separating risky financial activities from traditional depository banking:

LARRY KUDLOW: Bill Isaac, do you agree with Mr. Volcker on this?

BILL ISAAC: Absolutely…Actually, I would go further with that. I actually would like to see us return to the Glass-Steagalll restraints. As they were in 1999 when we repealed the last of them. I think we’ve gone too far in repealing Glass-Steagall. I actually was in favor of it at the time.

LARRY KUDLOW: Yeah, I remember.

BILL ISAAC: Paul was opposed to it, at the time. He– I think he was right. And I thought we could regulate these activities better than we can. And so, I really would like to see us go further than the Volcker Rule. But I certainly would like to make sure we go at least that far.

It’s good that Isaac is willing to admit that his support for dismantling the regulatory wall between investment and depository banking was a mistake. While repealing Glass-Steagall is often cited as one of the contributors to the financial crisis, not many who supported it then have been willing to revisit what that support meant. (Former Citigroup CEO Jack Reed and House Majority Leader Steny Hoyer (D-MD) have been the exceptions.)

For his part, Volcker reiterated his insistence that the ban on proprietary trading not include any exceptions. “The problem with making the exceptions with plausible cases by individual institutions is once you begin, you can never stop. And if you make enough exceptions, you no longer have a rule,” he said.