Democrats Seek to Balance the Budget by Ending $21 Billion in Subsidies for Big Oil

by , 05/11/11

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Senate Democrats announced a plan on Tuesday to help fix the national budget by ending decades-long subsidies for big oil that would mean $21 billion in new revenue over the next ten years. The plan was announced as a comeback for the Republicans’ proposal that $2 trillion in spending cuts be traded for Republican support to raise the national debt ceiling. With Americans still complaining about gas prices and the biggest oil companies still raking in record profits, Democrats believe calling attention to this disparity by cutting tax loopholes for big oil is the best thing to do. We’d love to see this plan go through and become an impetus for more renewable energy research but as always, we’re not holding our breath.

big oil tax break, oil tax break, oil taxes, taxes on oil companies, democrat tax increase, republican tax cut, budget deficit, budget debt, national debt, high taxes, low taxes, renewable energy taxes

The targeted loopholes would only affect the largest of the oil companies — Ex­xonMobil, Shell, BP, Chevron and ConocoPhillips — and would not affect smaller producers. Republicans are promising that their $2 trillion in cuts will not include any new tax cuts but the Democrats’ plan is not a tax increase. Rather, this strategy closes unnecessary loopholes that cost US taxpayers billions. Those on the left side of congress are trying to pull the conversation into the center by forcing Republicans to address and defend taxpayer subsidies for some of the most profitable companies on Earth. If passed, this legislation would mean a big political blow to the oil industry and a possible push forward for clean energy investments.

Do you think working-class families should be the only people sacrificing to help lower the deficit?” said Senator Robert Menendez (N.J.). “Do you think the wealthy and powerful should pay their fair share to help balance the budget, or should we simply let their high-priced lobbyists shield them from their responsibilities?” Menendez then noted the latest quarterly profit from the five largest oil companies, which totaled $35.8 billion, and that’s just for January 1st through March 31st of this year. Keeping that in mind, $21 billion over the next decade seems like a small drop in a very large, dirty oil bucket. With gas prices throughout the rest of the world doubling those in the United States — information on gas prices can be found on this webpage from the Department of Energy — and profits from those prices always creeping higher, this legislation seems like a small but fair thing to do.

Via The Washington Post

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  1. jafo May 16, 2011 at 12:36 am

    Well, it depends on the problem you want to solve as to the answers we need to explore.
    If it is the budget, the tax breaks and even subsidies will have very little impact to the positive. Companies by and large do not pay taxes. They operate on a profit margin. Increase any of the underlying inputs that go in to the price and if they keep the margin the same the price will have to go up. Therefore, in a very real sense, the are only collecting the taxes from the end user. Make the product cost more, people will buy less, and you will earn less revenue.
    If, we are seeking to end dependence on foreign oil, then we need to get out of the way of the oil industry and let them “drill baby drill”. This will decrease our need to import the oil and probably decrease prices in the shortest amount of time of any solution on the table.
    If, we are wanting to move to a more sustainable way of living, then we need to end the breaks and perhaps spend the money on research. This will not have a short term effect (other than higher prices for everything), but probably has the best long term results.
    I personally think it is a dangerous step to take to monkey with the tax code in such a way to force it to target just a few companies. If the tax breaks are so evil, end them from everyone. Make it an even playing field. We should not have the government get in to the practice of choosing which individual companies to punish or reward. That is a very scary road to me.

  2. Red vs. Blue is BS May 11, 2011 at 3:11 pm

    No. Let’s argue about who’s fault it is, rather than solve the problem.

  3. R_cavaretti May 11, 2011 at 10:52 am

    Fact: you’re delusional if you believe any drilling here and now will have ANY impact on the future of gas availability or pricing.

    I’m perfectly fine with letting the oil companies stand on their own, as I am with $4 or more per gallon gas. Then and only then will it spur innovation and remove us from the choke hold that is the petroleum industry.

  4. ajdorsey May 11, 2011 at 10:23 am

    Fact | The Oil industry only has an 8% profit margin.

    The Democrats are the ones who are perfectly fine with $4 a gallon gasoline. They won’t allow any drilling to keep prices reasonable for the elderly and for society as a whole.

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