How Big Oil tax breaks hurt the economy

Focus Needs to Shift Back to Our Middle Class

By Congressman William R. Keating

My belief and my experience listening to individuals in our region consistently emphasize the need for jobs and deficit reduction. The effects of failing to address these issues in the present and the future will have the result of shrinking our middle class.

One of the most striking examples of this is the way we are approaching our energy needs.

Take, for instance, the current tax subsidies afforded to Big Oil. Everyday Americans are watching as prices at the pump creep higher and higher. As we see more money flying out of our wallets to pay for these increases, oil companies are seeing it fly right into their pockets. It should come as no surprise that an increase in oil prices directly translates into an increase in the profits to big oil companies. In fact, for the past seven years, a time period marked by great difficulty for American manufacturing, the oil industry has seen record profits specifically because of the escalating oil prices in our country.

It has been estimated that ending these tax subsidies for oil companies will save the country $43.6 billion over the next ten years.

In 2008, the US imported 4 million barrels of oil a day at a cost of approximately $150 billion. Increased importation of oil is increasing our deficit and directly linking our economic recovery to our consumption of foreign oil. Currently, we are spending approximately $1 billion a day on oil overseas instead of investing the funds here.

So why hasn't this entitlement program for Big Oil been addressed? It has been estimated that ending these tax subsidies for oil companies will save the country $43.6 billion over the next ten years.

On March 1, 2011, I introduced an amendment that would end these egregious tax benefits. Even the former CEO of Shell, John Hofmeister, agreed that the subsidies should end, stating recently: "The fear of low oil prices drives some companies to say that subsidies should be sustained, and my point of view is that with high oil prices such subsidies are not necessary." Yet, my amendment was defeated 176 to 249.

Economists on both sides of the aisle are predicting that if the House majority moves forward with these policies, it will cost our country approximately 700,000 jobs by the end of next year.

The current budget proposal being advanced by the House majority makes cuts to many critical domestic programs at the expense of our middle-class families. Economists on both sides of the aisle are predicting that if the House majority moves forward with these policies, it will cost our country approximately 700,000 jobs by the end of next year according to a February 28th report by Moody's Analytics chief economist Mark Zandi. Clearly, that is moving in the wrong direction.

The focus of our current debate needs to shift away from big businesses and back to our middle class families, our small business owners and our unemployed friends and neighbors who simply want to work again.

Instead of allowing Big Oil to dictate our energy policy, the House majority should forego their planned cuts to almost all investments in homegrown clean energy projects. Big Oil companies are the main funders of the organizations and lobbying shops perpetuating the falsehood that clean energy investments will kill jobs. But that argument simply does not make sense. Investments in new, homegrown technology often - if not always - result in the creation of jobs that can't be shipped overseas, more efficiencies and, in many cases, less costs. Clean energy initiatives would ensure America's energy security and also stop hard-working Americans from being prisoners of the pump.

Investments in a clean energy policy will make the middle class the benefactors, not big business.

Further, many of the largest oil companies get upwards of 40% of their oil from foreign countries with anti-American policies. Big Oil and the terrorist-harboring countries they fund are laughing all the way to the bank at our expense.

Investments in a clean energy policy will make the middle class the benefactors, not big business.

But this isn't just about cutting Big Oil's entitlement and investing in clean energy technology. It is also about all the other programs the House majority is targeting that provide direct support to our citizens. Programs to increase our border protection; programs that keep police on the streets; programs to improve our education system and provide opportunity for American teenagers who want to attend college; programs that provide cancer research and other life-saving information; programs that provide fuel assistance to our most vulnerable populations including our seniors - these are all being cut by the House majority.

Yet, Big Oil gets a tax break.

 

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