In a recent display of affection for wealthy corporate interest, conservatives have once again come through for those who keep their boats afloat on a rising tide that has swamped the smaller fishing rigs
Once again, the Senate has failed to muster enough votes to end the federal subsidies for the oil industry that forks out roughly $4 billion a year of tax payer money to multi-national corporations that have generated nearly a trillion dollars in profits just amongst the top five producers over the last 10 years. Those top 5 corporations and their 10 year totals (in parenthesis) consist of BP ($158 billion), Chevron ($147 b), Exxon ($326 b), Conoco ($100 b) and Shell($219 b). All of them last year alone made no less than $4 billion (BP) and as much as $31 billion (Exxon/Mobil). So why are we dumping money into these overflowing vaults at a time we are struggling to reduce our deficit and sustain efforts to promote education and job creation?
$4 billion a year isn’t going to make a big dent in the national debt that is hovering just above $14 trillion at this time but it will offset some ugly cuts in the states where education is taking a serious hit to trim budgets there. It is also money not being invested in 21st century job creation with renewable energy sources and technology.
Let me put this another way. Oil companies, their CEO and top executives, stock holders and their supportive financial institutions are rolling in excessive dough while teachers are being summarily dismissed from classrooms and forced to join the ranks of the unemployed during the worst financial crisis in this country in the last 80 years. Likewise in an industry whose limited resources are already being outpaced by growing global demand, this $4 billion a year would go along way to create new jobs for green energy businesses that are destined to grow exponentially in the near future. Are there some values seriously skewered here?
And correct me if I am wrong but when you’re averaging profits of $95 billion each year after you have cleared your expenses, including salaries and bonuses for everyone, why do you need an extra $4 billion a year from tax payers. Well, according to big oil state Senator David Vitter of Louisiana, there needed to offset “the highest business tax rate in the world”. However, whenever a pro-corporate mouth piece like Vitter speaks, you can be assured the devil is in the details.
It’s true the U.S. has one of the highest corporate tax rates in the world, up to 35% in some instances. But this is not only NOT an across the board fixed rate but it is diminished by many loopholes built into the tax code where essentially corporate rates are lower than middle-income wage earners.
According to a piece in the NY Times last July, “the most recent study by the Congressional Budget Office, released in 2005, capital investments like oil field leases and drilling equipment are taxed at an effective rate of 9 percent, significantly lower than the overall rate of 25 percent for businesses in general and lower than virtually any other industry. And for many small and midsize oil companies, the tax on capital investments is so low that it is more than eliminated by various credits. These companies’ returns on those investments are often higher after taxes than before.”
So much for the absurd notion that the wealthiest and most profitable industries in the world are unduly taxed. And though the Senate was seeking to redirect these funds to help alleviate the cost needed to “pay for easing paperwork requirements for small business under President Barack Obama’s health overall law,” they decided instead to allow this oil subsidy to continue while passing “an alternative plan to pay for the $22 billion estimated cost over 10 years ($2.2 billion per year) of the small-business provision”, using unappropriated federal funds.
Instead of redirecting $4 billion a year away from highly profitable corporations to help provide better education and jobs for our children’s future, the Senate has in effect kept $6.2 billion a year of tax payer money away from issues where we are not even in the top 20 globally in student performance on Reading, Science and Math and where job recovery has not kept pace with Wall Street’s recovery. Corporate earnings are at peak levels by some reports and earlier this week the Dow went over 12,000 for the first time in 3 years.
For those who might suggest that such subsidies are needed to offset price fluctuations with oil due to global unrest in oil-producing states, I would point out that such volatile conditions are always anticipated by the oil industry and crude oil prices are increased automatically when such an impact seems likely. These price increases are always higher than what production costs are during these periods.
For instance, the recent upheavals in Egypt pushed benchmark crude up $3.70 to $89.34 a barrel on the New York Mercantile Exchange, according to a Wall Street Journal story last Monday. But according to the Energy Information Administration (EIA) oil production costs “ … can range from as little as $2 per barrel in the Middle East to more than $15 per barrel in some fields in the United States, including capital recovery. … technological advances in finding and producing oil have made it possible to bring once-expensive deepwater Gulf of Mexico oil into production for less than $10 per barrel.”
In light of the recent outrage where GOP Senators refused to extend unemployment benefits to out of work families last December until they got their tax increases for the nation’s wealthiest 2%, I find it amazing that voters are not taking to the streets like many Tea Party types did in 2009 when the government bailed out Wall Street financial institutions and left Main Street to fend for itself.
Those these loans have been paid back in full it is clear where the mind-set is for conservative legislators when it comes to spending tax payer money. There’s always enough federal largess for those who have enough but only Republican indifference for them that have lost their jobs, their homes, their savings and their futures.
- Obama Moves To Cut Oil Industry Subsidies (huffingtonpost.com)
- The Oil Industry Is Doing Alright (They Don’t Need Our Help) (sierraclub.typepad.com)
- Investing in Clean Energy Technologies by the Numbers (americanprogress.org)