Klobuchar calls out oil companies to give up subsidies

Written by

Larry Bivins

 

6:26 PM, Jul. 12, 2011

WASHINGTON -- Sen. Amy Klobuchar urged oil companies Tuesday to follow the lead of the ethanol industry and give up government subsidies to help defray the nation’s burgeoning deficit.

In a speech on the Senate floor, Klobuchar said oil companies have been receiving tax breaks for almost 100 years. In the past decade, she said, the five largest oil companies have netted close to $1 trillion in profits, with the industry’s profits up 30 percent in the first quarter of 2011 compared to the same quarter last year.

Over the next decade, the oil industry tax breaks will cost taxpayers $50 billion, Klobuchar said.

“The oil companies no longer need those tax breaks, and we can’t afford them when we look at the debt we’re facing,” Klobuchar told colleagues. “The question isn’t about whether the oil companies deserve the profits. It is a question about whether a hugely profitable industry should continue to enjoy lucrative tax advantages at a time when our nation can least afford it.”

The Minnesota Democrat’s remarks came as President Barack Obama met again with congressional leaders to try to forge a deal to prevent the federal government from defaulting. Treasury Secretary Timothy Geithner has said unless Congress allows the government to borrow more money, the United States will not have enough revenue to pay all its bills as of Aug. 2.

Republicans have balked at raising the $14.3 trillion limit on the national debt without substantial cuts in spending. Democrats have countered that any debt-reduction plan must include revenue increases, such as elimination of tax breaks for the wealthy, along with spending cuts.

At the center of the debate is what to do about entitlement programs such as Medicaid, Medicare and Social Security. Most agree costs for the programs are growing at unsustainable levels.

Klobuchar told colleagues that partisanship on the issue can be overcome, and she offered as a model a recent compromise worked out between herself, Sen. Dianne Feinstein, D-Calif., and Sen. John Thune, R-S.D., to end government subsidies for the ethanol industry.

Under the agreement Klobuchar and Thune announced last week, the Volumetric Ethanol Excise Tax Credit would expire on Aug. 1. The deal still must be voted on in the Senate and would need to be approved by the U.S. House. The credit, which provides companies 45 cents for every gallon of ethanol blended with gasoline, costs taxpayers $400 million a month.

The deal calls for $1.3 billion of the savings this year, about two-thirds of the total, to be dedicated to deficit reduction.

“The ethanol industry came to the table and offered up over a billion dollars in savings to reduce the deficit and supported a compromise that is a model for reducing government subsidies going forward,” Klobuchar said. One reason the industry and its Senate supporters came to the table was an earlier Senate vote showing broad bipartisan support for eliminating the ethanol tax break.

Stephen Comstock, tax policy director for the American Petroleum Institute, said the industry agrees it can do more to help address the nation’s economic crisis, but doesn’t think relinquishing tax breaks should be part of the equation.

“We believe the solution to our jobs and deficit problems should not be punitive tax increases when our industry can contribute over the long term by letting us produce more of our own vast domestic resources here at home,” Comstock said. “Let us create more American jobs, increase our energy security and actually send more revenues to federal, state and local governments.”

Last week, Sen. Al Franken, D-Minneapolis, spoke for nearly 45 minutes on the Senate floor about the need for a balanced approach to addressing the debt crisis. Franken said the question centers on who should be asked to bear the burden, Exxon Oil or a Minnesota girl whom he identified only by her first name of Evelyn. She was born with cystic fibrosis and suffered liver failure at age 10 and has to rely on Medicaid for her medical expenses.

“In order for us to agree to balance the budget, everyone has to pay,” Franken said. “Who’s in a better position to give? Exxon or a little girl in Minnesota named Evelyn.”

Klobuchar, in closing her remarks Tuesday, reminded colleagues of the National Commission on Fiscal Responsibility report that said the solution to deficit reduction should involve shared sacrifice.

“We know this deficit isn’t going to fix itself,” Klobuchar said. “We all know we can’t just close our eyes and click our heels and wish our debts away.”