CQ TODAY ONLINE NEWS – ENERGY
May 17, 2011 – 2:04 p.m.
Reid: Repeal of Oil Tax Breaks Could Factor Into Debt Limit Negotiations
By Lauren Gardner, CQ Staff
Hours before the Senate turned back a Democratic effort Tuesday to repeal a number of tax breaks enjoyed by the largest oil companies, Majority Leader
“I am confident that before we finish our budget negotiations here in anticipation of raising the debt ceiling, that that will be part of it,” the Nevada Democrat said before the chamber rejected, 52-48, a motion to proceed to the bill (
However, Minority Leader
“That’s not the kind of thing we’re going to be dealing with here in connection with the serious talks that are going on with the vice president’s group,” he said May 15 on CNN, referring to talks led by Vice President
The Senate Democratic bill is effectively dead, as it fell short of the 60 votes needed to advance Tuesday.
Three Democrats crossed party lines to oppose the legislation:
A competing GOP oil production bill (
The Republican measure contains provisions similar to those included in offshore drilling bills (
The Senate GOP legislation also would impose new deadlines for the Interior Department to act on drilling permit applications — a provision intended to address complaints about the slow pace of permitting since the spill.
Democrats Focus on Deficit Impact
Supporters of the Democratic measure say that given the need to reduce the deficit, the approximately $21 billion in tax breaks for oil and gas companies no longer are warranted and should be eliminated. To drive the point home Tuesday,
The White House issued a policy statement Tuesday supporting the Democratic bill, saying that the nation “cannot afford to maintain these wasteful subsidies.”
The bill would end the applicability of a number of tax code provisions — including a 6 percent domestic manufacturing deduction and a deduction for intangible drilling costs — to the oil and gas industry. Republicans have argued that singling out one industry is unfair when the tax code has so many other incentives geared toward specific business sectors. Some suggest that the measure could cause a rise in gas prices.
Reid: Repeal of Oil Tax Breaks Could Factor Into Debt Limit Negotiations
President Obama has proposed ending industry tax incentives in each of his budget proposals since taking office. But it is unlikely that any plan to terminate the provisions would advance without being connected to a broader corporate tax reform program.
Republicans Dig In
“I think oil subsidies have to be part of a bigger package,” Graham said. “If you had expanded drilling, I would consider reducing the subsidies . . . as part of the package.”
But Minority Whip
Niels Lesniewski, Brian Friel and Geof Koss contributed to this story.