The Senate blocked a bill Tuesday that would repeal about $2 billion a year in tax breaks for the five biggest oil companies, a Democratic response to $4-a-gallon gasoline that might fare better when Congress and the White House negotiate a deal later this year to increase the government’s ability to borrow.
The bill was defeated on a procedural vote. But Democrats hope to build their case to include the measure in a deficit-reduction package being negotiated by key lawmakers and the Obama administration.
“This bill says that even the most rich and powerful among us must do their fair share to help us reduce the deficit,” said Sen. Robert Menendez, D-N.J., the bill’s sponsor.
Republicans and some Democrats opposed the tax increase, saying it would hurt domestic drilling while doing nothing to reduce gas prices. The vote was 52-48 in favor of the measure, short of the 60 votes needed to advance it. Three Democrats – Mary Landrieu of Louisiana, Ben Nelson of Nebraska and Mark Begich of Alaska – joined with nearly all Republicans in opposing the measure. Two Republicans, Olympia Snowe and Susan Collins of Maine, voted for it.
The U.S. Chamber of Commerce called the tax increases “misguided, unwarranted and ultimately counterproductive.”
The measure would have affected Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp.
“This is not an energy strategy, this is a public relations strategy, this is a ‘how do I get re-elected’ strategy,” said Sen. John Cornyn, R-Texas. “It does not solve the problem or the pain that Americans are feeling at the pump.”
Some GOP lawmakers argued that the bill would increase gas prices further. However, the nonpartisan Congressional Research Service concluded that eliminating the tax breaks would be unlikely to result in higher gasoline prices, which are influenced by a host of factors. The report said the bill would raise about $1.2 billion in 2012. By comparison, the five oil companies had combined revenues of $1.5 trillion last year.
A GOP measure to increase offshore drilling is scheduled for a Senate vote today.
REPUBLICANS SNOWE, COLLINS JOIN DEMOCRATS IN VOTING FOR REPEAL
WASHINGTON — Both of Maine’s Republican senators sided with a Democratic-authored proposal to eliminate $21 billion worth of tax breaks over 10 years for the five largest oil companies.
Susan Collins and Olympia Snowe were the only two GOP senators to vote for the measure, which failed.
Snowe said that soaring gas prices reflect a “collective failure that encompasses multiples congresses and multiple presidential administrations” to develop a comprehensive energy policy.
Still, “It is difficult to justify oil development incentives, given the current level of crude oil prices, and the fact that the U.S. government has to borrow money to pay for these incentives,” Snowe said in a statement after the vote.
“It is unconscionable we are not viewing this issue in the larger context of our overall energy policy,” Snowe said. “We should not be reviewing individual aspects of our energy policies on a selective basis — it is imperative that we move forward with a complete overhaul.”
Collins told reporters before the vote that she was weighing arguments for and against the proposal as late as the policy lunches that each party holds on Tuesdays, and wanted to hear the final arguments by GOP leaders against eliminating the tax breaks.
Collins noted that the legislation wouldn’t lower gas prices. But she previewed her eventual “yes” vote when she noted that she had worked with Democratic Sen. Carl Levin of Michigan to scale back oil company subsidies and use the money for weatherization and alternative energy research.
She also was amendable to what Democrats wanted to do with the bill: devote the $21 billion over 10 years in tax breaks for the oil companies to reduce the deficit.
In a statement after the vote, Collins said, “Reducing or eliminating unnecessary subsidies and outdated tax breaks is a commonsense step toward deficit reduction. That is why I have also long called for the elimination of wasteful and expensive subsidies for ethanol producers.”
Collins noted that she is a co-sponsor of legislation seeking to repeal the 45-cent per gallon subsidy for corn ethanol, for a savings to taxpayers of about $6 billion a year.