Close Big Oil Tax Loopholes Act

Floor Speech

Mr. SCHUMER. I rise today in support of the legislation authored by my good friend from New Jersey, Senator Menendez. As you know, the Democrats here on our side of the aisle are focusing on this legislation this week and next. But Senator Menendez has been championing this legislation for quite a while. He was prescient to focus on this idea. I am glad we will have a vote on it. I hope the vote will pass. I have heard a few of our Republican colleagues now have said they would consider voting for it. Nothing would be better in terms of showing some bipartisanship and giving us some hope that we can come to a fair agreement on the budget than to pass this legislation.

In the last election, voters who gave those of us who have the privilege of serving in this Chamber two distinct mandates. They told us to do two things at once. First, perhaps foremost, make the economy grow. Create good-paying jobs. Make sure that American dream burns brightly, the dream that says to the average middle-class family: The odds are pretty good that you will be doing better 10 years from now than you are doing today, and the odds are very good that your kids will do better than you.

For that dream, which has burned so brightly in this country for hundreds of years, the candle began to flicker a little bit in this decade, because median income went down even before the recession, which meant that even if you had a job--and we know that millions are out of work despite the fact that they look--I think of all of the people whom I have met who are struggling because they do not have jobs. But even people who do have work have a difficult time when they sit down at that dinner table Friday night after dinner, figuring out how they are going to pay the bills. The cost and needs keep going up. And even when you have a job, the income does not seem to keep up.

So that is one obligation voters sent us, and it is a very justified one. Second, they said in no uncertain terms, rein in the out-of-control Federal deficit. Rein it in. And they are right. Because in a certain sense, I have said this before, but I think it is worth repeating: The debt--the symbolic nature of the debt is as follows: We, the U.S. Government, are a blindfolded man, and we are walking toward the cliff. Once we fall off that cliff, there is no getting back up.

Now the debate is whether we are 20 feet from that cliff or 200 yards from that cliff. But we know sooner or later if we keep walking straight, we are going to fall off. So that means try to rein in this out-of-control Federal deficit. It would be hard enough to accomplish one of these goals. To try to do both at once is a Herculean task. It is why we are having such divisions here, and it is why everyone is grappling.

I think everybody is trying to do the right thing regardless of their ideology. But there are strong feelings. So when we can come to issues that seem to have an easy common ground, because things are so difficult, we ought to jump at them. That is what the Menendez amendment is. It is a choice that is not a tough one, not a mile, because it is obvious that at this time, when there are so many needs, to continue to give the oil companies the kinds of tax break we do makes no sense. Getting rid of these corporate subsidies to Big Oil is a no-brainer. Decades ago these were passed. Oil was $17 a barrel. Maybe it made sense in those days to give companies an incentive to explore, to produce.

One of the subsidies the Menendez legislation repeals, the Oil Depletion Allowance, dates back to 1913. That is the same year a man named William Burton patented a new oil extraction process called ``thermal cracking.'' Well, Big Oil no longer cracks for petroleum using Mr. Burton's method. It is an outdated process, decidedly. But the outdated tax subsidy still remains on the books, amazingly enough. With oil hovering at $100 a barrel, Big Oil reaping record profits, it defies logic for this government to spend billions of dollars, for these taxpayers to give dollars out of their pocket every year when they are struggling, to tax giveaways to Big Oil which is making record profits.

Believe me, the free market gives the oil companies enough of an incentive to produce. When oil is $100 a barrel, they do not need an extra subsidy from the government to produce. They are going to produce every bit of oil they can.

They make huge profits, so they do not need a financial nudge from Washington. At the same time, middle-class Americans get hit with a double whammy. They are paying $70 or more to fill up their gas tanks, and then some of their hard-earned tax dollars are being used to line Big Oil's pocket.

In my home State of New York, the price of gas is up 35 percent on average compared to this time last year. Economists estimate the typical family will pay almost $1,000 more on gas this year than last. Families across the country are still struggling to make ends meet. As the economy slowly recovers, they cannot afford to get gouged at the pump.

With billions of dollars worth of tax subsidies and gas prices at near record highs, it is no wonder that the top five oil companies just announced mind-boggling profits. These companies are not only among the most profitable businesses in the United States, they are among the most profitable in the whole world. In the first quarter of this year alone, the Big Five brought in $36 billion in profits. In the past decade, they took home nearly $1 trillion--not a billion, a trillion dollars in profits.

There is nothing wrong with these profits in and of themselves. In America we celebrate success, we want the private sector to thrive. But at a time when the government is looking to tighten its belt, and we are grappling with painful cuts because we have the dual goal of growing the middle class but also reducing the deficit, it boggles the mind that we continue to subsidize such a lavishly profitable industry.

There are priorities. I said this to the oil company executives today when they testified before the Finance Committee. I want to salute Chairman Baucus for holding such outstanding hearings. There are priorities. How many Americans would say, if we had to choose, that we should give oil companies an extra subsidy rather than help kids who deserve to go to college pay for college?

That is what many of my colleagues are recommending. That is what the House budget recommended. How many of my colleagues would say we ought to cut cancer research but still continue to give the oil companies the subsidies we do? Again, the Ryan budget does that.

I understand they say we have to cut spending. We do. But we also have to cut out wasteful giveaways such as tax breaks for Big Oil. I would do that before I cut aid to college students who are struggling to pay for college, which is more and more expensive, before I cut cancer research, which has saved millions of lives, including people we know and love. I would do that before I cut money for veterans or cut money to keep our homeland secure. But the budget Mr. Ryan has proposed, and many of the budgets I have seen come from colleagues on the other side of the aisle, choose these subsidies to Big Oil over money to help kids pay for college, over cancer research, over helping our veterans, over keeping our homeland secure.

Hardly any American would agree with that. Hardly any American, Democratic or Republican, liberal, conservative, North, East, South, or West.

Try to wrap your head around it. Big Oil is reporting record profits, gas prices are near an all-time high, and we the American taxpayers are subsidizing the oil industry to the tune of $4 billion a year.

You do not need the imagination of Lewis Carroll to come up with a more ridiculous scenario. That is why I strongly support and I am proud to cosponsor Senator Menendez's Close Big Oil Tax Loopholes Act. This legislation will put an end to taxpayer handouts in the five largest integrated oil companies, and use the $21 billion in savings to reduce the deficit. This $21 billion is an excellent downpayment on our effort to get the Nation's fiscal house in order. The bill repeals a host of Byzantine tax provisions that only a lobbyist could love, such as the deduction for tertiary injectants and the deduction for intangible extraction costs.

Small and medium-sized oil firms are exempt. The legislation only deals with the Big Five: Shell, ExxonMobil, Chevron, ConocoPhillips, and BP. I have heard pundits from the hard right parrot Big Oil's talking point that repealing these giveaways would increase gas prices for consumers. Well, nothing could be further from the truth. Independent analyses have repeatedly found that ending these absurd subsidies would not impact the price of gas. In what was perhaps an inadvertent moment of candor at this morning's Senate Finance Committee hearing, ExxonMobil's CEO Rex Tillerson said: ``Gasoline prices are a function of crude oil prices, which are set in the marketplace by global supply and demand--not by companies such as ours.''

That does not seem like an objectionable comment. It is true. And when he made that comment, Mr. Tillerson of ExxonMobil has conceded that repealing taxpayer-funded subsidies for the Big Five will not increase prices. Prices are set, as he said, by global supply and demand.

That is not to say that repealing the subsidies will necessarily bring down prices. We are not making that claim. All along we have been clear that the purpose of this bill is to make a dent in the deficit by repealing tax breaks for the five companies that are the least in need of help from Uncle Sam.

Lowering the cost of gas and ridding our country of its dependence on foreign oil requires a long-term, comprehensive approach. In the months ahead, I expect the Democratic caucus will unveil a thorough and forward-thinking plan to do just that.

In the meantime, if Republicans in the House are serious about deficit reduction, the Menendez bill is their chance to show it now. There is no good reason not to support this sensible legislation. Speaker Boehner said earlier this week he wants to make trillions of dollars in cuts. Here is a good place to start. Indeed, the Speaker himself has previously said as much. Let's not forget he was in favor of repealing oil subsidies before he was against it. The bottom line is this: At a time of sky-high oil prices, it is unfathomable to continue to pad the profits of oil companies with taxpayer-funded subsidies. The time to repeal these giveaways is now.

Our plan to cut the deficit begins with ending wasteful subsidies to big oil. The Republican plan begins with ending Medicare as we know it. That is a bright-line difference between our side and theirs. We know what choice the American people will make.

Mr. President, I ask that the Presiding Officer report the nomination.

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