Senate blocks windfall taxes on Big Oil
Aspen, CO Colorado
WASHINGTON ” Senate Republicans on Tuesday blocked a proposal that would have taxed windfall profits of the largest oil companies and allowed the government to take OPEC members to court, handing Democrats fresh ammunition in an election year in which voters are struggling with surging gasoline prices.
The Democratic energy package would have imposed a 25 percent tax on any “unreasonable” profits of the five largest U.S. oil companies, which together made $36 billion during the first three months of the year. It also would have given the federal government more power to address oil market speculation that the bill’s supporters argue has added to the crude oil price surge.
Republicans, however, have said the bill would do nothing to ease soaring gasoline prices in the United States.
The Democrats failed, 51-43, to get the 60 votes needed to overcome a Republican filibuster ” a procedural tactic to delay debate on a bill ” and bring the energy package up for consideration.
The defeat affords Democrats another opportunity, going into the November congressional and presidential elections, to try to cast Republicans as siding with the oil companies at a time of record gasoline prices.
“Americans are furious about what’s going on,” declared Democratic Sen. Byron Dorgan. He said they want Congress to do something about oil company profits and the “orgy of speculation” on oil markets.
But Republican leaders said the Democrats’ plan would do harm rather than good ” and they kept the legislation from being brought up for debate and amendments.
On world markets, oil prices retreated a bit Tuesday but remained above $131 a barrel.
At the Capitol, Democratic leaders needed 60 votes and they got only 51 senators’ support, including seven Republicans who bucked their party leaders.
“We are hurting as a country. We’re hurting individually as Americans … and the other side says, ‘Do nothing. Don’t even debate the issue,'” complained Democratic Sen. Charles Schumer.
“Average citizens are scratching their heads and saying, what’s wrong with Washington,” said Schumer.
Republican opponents argued that little was to be gained by imposing new taxes on the five U.S. oil giants: Exxon Mobil Corp., Chevron Corp., Shell Oil Co., BP America Inc. and ConocoPhilips Co.
While these companies may be huge, they do not set world oil prices and raising their taxes would discourage domestic oil production, the Republicans said of the Democrats’ plan.
“In the middle of what some are calling the biggest energy shock in a generation … they proposed as a solution, of all things, a windfall profits tax,” Republican leader Mitch McDonnell of Kentucky chided the Democrats. He called their proposal “a gimmick” that would not lower gasoline prices and only hold back domestic oil production.
“The American people are clamoring for relief at the pump,” agreed Republican Sen. Pete Domenici, but “they will get exactly what they don’t want” under the Democrats’ plan ” higher prices and an increase in oil imports.
The bill’s supporters argued that their proposal was different from the windfall profits taxes of the early 1980s that thwarted domestic production and led to a rise in imports. The oil companies could avoid the tax by using their “windfall” to push alternative energy programs or refinery expansions, they said.
Shortly after the oil tax vote, Republicans blocked a second proposal that would extend tax breaks that have either expired or are scheduled to end this year for wind, solar and other alternative energy development, and for the promotion of energy efficiency and conservation. Again Democrats could not get the 60 votes to overcome a Republican filibuster.
Neither Republican presidential candidate John McCain nor his Democratic rival, Barack Obama, were in Washington to cast votes on the energy issue on Tuesday.
Obama, in a statement, said Republicans had “turned a blind eye to the plight of America’s working families” by refusing to take up the energy legislation. Obama has supported additional taxes on the oil companies. McCain is opposed to such taxes and has proposed across-the-aboard tax reductions for industry as a way to help the economy.
Election-year politics hung over the debate. Democrats know their energy package has no chance of becoming law. Even it were to overcome a Senate Republican filibuster ” a longshot at best ” and the House acted, President George W. Bush has made clear he would veto it.
The oil companies have been frequent targets of Congress. Twice this year, top executives of the largest U.S. oil producers have been brought before congressional committees to explain their huge profits. And each time the executives urged lawmakers to resist punitive tax measures, blaming high costs on global supply and demand.
In addition to the proposed windfall profits tax, the Democrats’ bill also would have rescinded tax breaks that are expected to save the oil companies $17 billion over the next 10 years. The money would have been used to provide tax incentives for producers of wind, solar and other alternative energy sources as well as for energy conservation.
In an attempt to dampen oil market speculation, the legislation would require traders to put up more collateral in the energy futures markets and would provide authority to regulate U.S.-based trading in foreign markets. And it would make oil and gas price gouging a federal crime, with stiff penalties of up to $5 million during a presidentially declared energy emergency.
After Tuesday’s defeat, Democrats did not rule out pushing the issue again.
“This was politics at its worst,” complained Democratic Sen. Claire McCaskill. “This was a refusal to debate the biggest problem confronting the American people. … That takes nerve.”
