The US Senate had the opportunity to do the right thing yesterday. They failed.
The Democrats proposed a bill that over the next ten years would eliminate $21 billion in tax breaks for the oil industry. They pledged that the resulting increase in tax revenue would be used to pay down the deficit.
Republicans argued against the bill because “it would do nothing to solve the problem of high gas prices.” In fact, they declared: “any tax increase would be passed along to consumers in the form of higher gas prices.” They were hesitant to “raise taxes on the very people who invest in our economy and create jobs.”
The Republicans prevailed, defeating the bill in a procedural vote; effectively preventing the matter from reaching the floor for debate. The bill failed 52-48.
This should have been easy. This should have been a piece of cake, no brainer, slam dunk a lay up. But once again the Senate lacked the courage to stand up to the big corporations and do the right thing for the American people.
Let’s examine the Republican argument.
First of all, does anyone believe that the repeal of subsidies will have any effect of the price we pay for a gallon of gas? Gas prices have reached record highs even though the supply is plentiful and the oil company profits robust. There is no correlation between the two. The price we pay at the pump is determined by the speculators on Wall Street and the sheiks of OPEC. While $21 billion dollars would help to reduce the nation’s debt it will have little effect on the price we pay.
The exploration and sale of oil and gas is an incredibly lucrative enterprise. Over the past five years the top five oil companies earned net profits of $126 billion dollars. According to Citizens for Tax Justice, less than 10% of these profits went toward the exploration of new oil while 58% (2005) to 89% (2009) went toward buying back stock and paying dividends. And while their profits have grown substantially over the last five years their employment rolls have decreased. The top five oil companies employ roughly 10,000 fewer workers today than they did in 2005.
And let’s not forget the fact that the oil companies said that they don’t need the subsidies. In 2005 the CEO’s of the top five oil companies testified that they no longer needed the money. At that time oil was trading at $55/barrel. Today that same barrel is trading at $100. As Citizens for Tax Justice points out: “Oil companies are wildly profitable and have huge incentives to find and sell more oil. Repealing the subsidies will not change this.”
No one should begrudge the oil industry their success. Their profit margins are in line with many other major industries and they have the right to distribute those profits in any way they choose. But providing tax breaks to companies having this much success while the government is struggling to make ends meet is a poor waste of taxpayer dollars.
The Senate missed an opportunity here proving once again how out of touch it is with the American people. And the voters are paying attention. In a recent USA Today/Gallup Poll 63% of voters say most members of Congress should be replaced. That exceeds the dissatisfaction expressed by voters in 1994, 2006 and 2010 when they swept the well clean in favor of change.
This vote should have been easy. And if the senate could not get this one right you have to wonder how they will cope with the difficult decisions that lie ahead. The voters are wondering as well.