[Congressional Record Volume 157, Number 67 (Monday, May 16, 2011)]
[Senate]
[Pages S2981-S2986]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                         OIL COMPANY TAX BREAKS

  Mr. CARDIN. Mr. President, I come to the floor to talk about a 
conversation I had in Baltimore this afternoon dealing with the high 
price of gasoline. I was talking to a station owner. I mention that 
because the problems of the high price of gasoline have nothing to do 
with the station owners. These are small business owners. They are 
having a difficult time with the cash flow due to the higher costs to 
purchase their product. They are also on the front lines, getting the 
wrath of consumers as they get the sticker shock when they fill up 
their tanks.
  I can tell you that consumers are hurting today every time they go to 
a gasoline station to fill up their gas tanks. It is affecting their 
household budgets. It is affecting our economy. It will become even 
more dire as we go into the summer months when more and more families 
will be deciding on their family vacations, and the cost of gasoline 
will very much figure into it, having a direct impact on our economy.

[[Page S2982]]

  I can tell you a group of companies that are not hurting as a result 
of the gasoline price increase, and they are our big oil companies. 
With gas prices escalating, oil profits have soared. There is a direct 
relationship. As our economy is suffering with higher gasoline prices, 
the profits of the oil companies go up. The five largest oil 
companies--ExxonMobil, Shell, BP, Chevron, and ConocoPhillips--have 
seen nearly $1 trillion in profits over the last 10 years. In the first 
quarter of 2011 alone, the first 3 months, they had a record profit of 
$35.8 billion.
  When we compare that to a year ago, these companies have seen an 
increase in their profits. Where American businesses are suffering, 
where household incomes are being stretched, the oil industry makes 
more money on higher prices of gasoline.
  I am for the free market economy. I hope businesses make a lot of 
money and hire more people; that is good. But that is not the situation 
with the oil industry. Most of their profits go to their stockholders 
and to repurchase shareholders' interests. It is not going to creating 
new jobs in America.
  They are making these profits in part because of taxpayer subsidies. 
The person who goes to fill up his or her gas tank at a gasoline 
station is being affected adversely twice: first, by the cost of the 
gasoline today, and, second, they are being asked as taxpayers 
literally to help subsidize the oil industry. That makes absolutely no 
sense whatsoever.
  In 2005, President George W. Bush said:

       I will tell you, with $55 oil we don't need incentives to 
     the oil and gas companies to explore. There are plenty of 
     incentives.

  As you know, the crude oil price per barrel today is not $55; it is 
$100, and it has even gone higher than that. At the time, 2005, all of 
the Big Oil CEOs agreed there was no need for subsidies with oil prices 
reaching $55 a barrel. Once again, today it is $100 a barrel.
  We will have a chance later this week to consider legislation to 
eliminate these tax loopholes. Senator Menendez has introduced 
legislation, and we are going to have a cloture vote on that later this 
week.
  I want to talk about the largest tax provision that is involved in 
this legislation, section 199. There is about $18 billion of taxpayer 
revenue involved. Let me give a little history about the genesis of 
this tax provision.
  It was originally put in the tax law for foreign sales companies, 
U.S. companies that exported products overseas for, you see, a U.S. 
manufacturer is at a disadvantage with regard to a foreign company 
manufacturer. If you manufacture your product in Europe or Asia and you 
import it into America, you can take off from the imported price the 
value-added tax that is added in Europe and Asia. But if you are an 
American manufacturer, and you are sending your product into Europe and 
Asia--and, yes, there are taxes involved in producing a product in 
America--you cannot take that tax off when you send that product into 
Europe. So the playing field we are competing on is not a level playing 
field. American manufacturers do not share the same competitive 
advantage.
  Congress did something about that and passed a tax provision to give 
U.S. manufacturers that export products a tax break. That is what we 
did. Obviously, the oil industry did not get that tax break. First of 
all, they are not what we would call traditional manufacturing, and, 
second, they import a lot more than they ever export. They import their 
crude oil, and the amount of their exported product is a lot less than 
that.
  The problem happened after we passed this foreign sales provision. 
Companies in Europe and Asia took us to the World Trade Organization 
and said this was an illegal subsidy to U.S. manufacturers. We argued, 
and I think ours was the right position, that it was not, but we lost 
the case. As a result, we had to redo the tax provisions, and we passed 
what is now known as section 199.
  What we did is rough justice. We gave all manufacturing a certain tax 
break, figuring that it would be fair to deal with their manufacturing 
that was used for export.
  I must tell you, I don't think any of us envisioned at that time that 
$18 billion of that revenue would go to the oil industry. They did not 
need this break. This is not a matter of subsidizing their products 
into the export market when, as we know, petroleum and oil is a global 
product. It makes no sense whatsoever to continue this tax provision 
for the oil industry. It should have been repealed a long time ago.
  But one thing is clear. It is not needed. The profits of the oil 
industry are very high, and we need these revenues for other purposes. 
We need these revenues in order to deal with deficit reduction.
  I hear my colleagues on both sides of the aisle talk frequently about 
how we need a credible plan to reduce the Federal deficit. I agree with 
that. We do need a credible plan to reduce the Federal deficit. But if 
we don't start with getting rid of these tax expenditures that are 
clearly not serving any public purpose--if we can't start with what is 
easy--how are we going to make the tough decisions?
  If we are being asked to tell our seniors they will have to make do 
with less, students will have to pay more, let me tell you, the oil 
industry can do without this subsidy they do not need.
  We will hear all types of scare tactics used by those who oppose this 
repeal. One of the common lines is that it will increase the price at 
the gas pump. Nothing could be further from the truth. If I could just 
tell you the basic math: $140 billion in profits, we are talking about 
annually--projected to be $140 billion. The tax provisions are about $4 
billion on an annual basis. The numbers I was giving you before are 10-
year numbers; this is on an annual basis.
  In 2009, over 85 percent of the profits went back to the 
shareholders. So there is no possible way it would have an impact on 
price.
  Let me quote from some experts in this area. Severin Borenstein, the 
codirector of University of California Berkeley's Center for the Study 
of Energy Markets observes:

       Gasoline prices are a function of world oil prices and 
     refining margins . . . the incremental change in production 
     that might result from changing oil subsidies will have no 
     impact on world oil prices, and therefore no impact on 
     gasoline prices.

  Our own Congressional Research Service said:

       In the recent market environment . . . prices are well in 
     excess of costs and a small increase in taxes would be 
     unlikely to reduce oil output, and hence increase petroleum 
     product (gasoline) prices.

  So let me just put that myth aside.
  All of us are concerned about how do we bring down gasoline prices. 
Will eliminating this price bring down gasoline prices? No, it will 
not, in and of itself. But what it will do is give us all the tools we 
need in order to move forward with energy policies in America. We are 
going to be asking for budget priorities to deal with energy 
independence so we can bring down energy prices. We have to get rid of 
these unnecessary tax expenditures so we can have a budget that makes 
sense and is fiscally responsible.

  Yes, there are things we can do to help bring down gasoline prices. 
We can certainly regulate speculation in the commodities market, give 
the Commodity Futures Trading Commission the tools they need. Some of 
my friends on the other side of the aisle want to cut their resources. 
We think they should have the resources in order to get their job done.
  It is time we take on the monopolistic policies of the countries that 
produce oil. These are countries, many of which are not what we would 
call at all free economic countries. They are manipulating price and 
supply. We need to do a better job taking that on. We need a 
comprehensive energy policy.
  I have said many times on the Senate floor that America has a little 
over 2 percent of the reserves of oil and we consume 25 percent of the 
world's oil. We have to get off oil, imported oil. The only way to do 
that is develop renewable energy resources, use less energy so our 
Nation can become energy independent. That will not only help us as it 
relates to the current economic problems, it will also help us create 
more jobs in America, will make us more energy secure, and will also 
help our environment. The first step is to repeal the unwarranted 
taxpayer subsidies to the big oil companies.
  Let me close by quoting from an editorial that appeared in my local 
paper, the Baltimore Sun, on Friday, this past

[[Page S2983]]

Friday, May 13. I am going to quote a small part of it.

       What, tens of billions of dollars in potential profits 
     isn't good enough without the government adding some kind of 
     sweetener to your $100 barrels of black gold?
       That's just greedy, and with the nation facing a debt 
     crisis, it's downright immoral. To be talking about trimming 
     Medicare and Medicaid--basic health care for our seniors and 
     the poor--while preserving tax breaks that cost the federal 
     treasury $21 billion annually is just beyond the pale.

  I agree with the editorial in the Baltimore Sun. It is well past time 
that we end these taxpayer subsidies. We are going to have a chance to 
do it this week.
  The first vote will be on cloture, whether we want to take this up 
for a vote, up or down. I don't think this is terribly complicated. 
This is an issue on which the American people expect us to take a 
stand, on an up-or-down vote. I hope my colleagues will support the 
consideration of the bill of Senator Menendez to repeal these tax 
subsidies and vote to repeal these subsidies so we can help the 
American taxpayers and work together to develop an energy policy to 
make America secure so we can have a stable energy cost, including 
reducing the costs of gasoline at the pump, which is affecting every 
one of our constituents.
  I yield the floor.
  I suggest the absence of a quorum.
  The PRESIDING OFFICER. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. NELSON of Florida. Mr. President, I ask unanimous consent that 
the order for the quorum call be rescinded.
  The PRESIDING OFFICER. Without objection, it is so ordered.
  Mr. NELSON of Florida. Mr. President, the Senate is expected to take 
up a bill that would repeal $20 billion in outdated, antiquated tax 
breaks for the oil and gas companies. In many cases, this tax break was 
created about a century ago. They have little, if anything, to do with 
modern, job-creating energy policy. It is time for them to go.
  These oil and gas tax breaks are targeted in this bill we are going 
to vote on. They are narrow, special interest tax subsidies that 
distort the marketplace. It happens to pad the profits as a result of 
the tax breaks, and it does nothing to keep gas prices down.
  It simply doesn't make any sense to me that we would continue to rely 
on oil and gas tax breaks that were originally written in 1916. These 
rules are truly vestiges of another era. In some cases, rather than 
encouraging energy independence, the tax breaks actually promote energy 
dependence on the OPEC oil-producing member states and other foreign 
countries that produce oil.
  For example, there is a part in it called the ``dual capacity'' 
provision and it allows major oil companies to claim a foreign tax 
credit for royalties paid to foreign governments. The foreign tax 
credit was never intended to offset royalty payments. It was originally 
intended to offset foreign income tax payments. So a company does 
business in a foreign country, they pay an income tax. The foreign tax 
credit was created so you could offset your foreign taxes on your 
American income taxes. But what has happened is the oil companies have 
twisted that and are claiming the royalties they pay to foreign 
governments as an income tax. It isn't. It is a royalty payment. The 
foreign tax credit was never intended for that, and it is another 
loophole in our Tax Code that does nothing more than promote reliance 
and dependence on foreign oil and, for that matter, foreign 
governments. That is exactly what we ought to be reversing, just from a 
national security standpoint, not even speaking of the threat to our 
national economic condition, because we are now importing 70 percent of 
our daily consumption of oil from foreign shores.
  In addition to repealing those kinds of tax subsidies, we also need 
to close a loophole that allows oil companies to claim a tax break for 
their own irresponsible actions. It turns out that BP has figured out 
how to shift nearly a third of their cleanup and legal costs of the 
Gulf of Mexico oilspill onto the backs of American taxpayers. Here is 
what they have done. They have come out with a projection of future 
income and profitability in a report. They expect they are going to 
have somewhere in the neighborhood of $40 billion of payments they are 
going to make as a result of their irresponsible action of having this 
huge Deepwater Horizon oil spill in the Gulf. Part of that, of course, 
is payments to local governments. Part of that is payments through the 
Gulf Claims Facility Fund. Part of that is going to be a hefty fine 
that is going to be imposed by the Federal Government.
  Very cleverly, they have gotten their tax lawyers together and 
figured out what they can do is deduct the oil spill recovery payments 
as an expense, and save themselves $11.8 billion in taxes. What BP is 
doing is treating its cleanup and legal expense as an ordinary and 
necessary cost of doing business. These costs aren't ordinary business 
expenses and they should not be deductible.
  When the five oil company CEOs were in front of our Finance 
Committee, I asked the CEO of BP: Are you going to do this?
  He said: That is what the law allows and that is what we are going to 
do.
  I said: What the law allows doesn't make it right. Why don't you take 
a cue from the Boeing Company or from Goldman Sachs for the expenses 
they incurred as a result of untoward activity? They voluntarily did 
not employ this part of the Tax Code to use it as a business deduction 
and, therefore, to cut their taxes.
  Of course, when a company such as this cuts their taxes nearly $12 
billion, guess who makes up the difference? The rest of us do. The 
American taxpayers.
  I filed a bill, the Oilspill Tax Fairness Act, and it aims to reduce 
the deficit by billions of dollars by preventing oil companies from 
shifting the cost of oilspills onto our taxpayers. In the past, 
Congress has stepped in to prevent unconscionable tax deductions for 
expenses such as civil and criminal fines, bribes, lobbying 
expenditures, political contributions, excessive executive 
compensation. We have done that in the Congress by passing laws to 
prevent those as tax deductions. Well, we ought to step in and do it 
again. I think anybody would say BP was irresponsible and negligent to 
the detriment of a whole lot of people and the company should not be 
able to claim tax savings for their missteps, especially while our 
people are being squeezed at the pump every day because of the price of 
gasoline at the same time that in the first 3 months of this year, the 
first quarter, those five oil companies had $35 billion in profits. 
This is pouring salt on the wound. How much more flagellation can the 
American taxpayer take?
  Today's rising gas prices reflect more than just record profits for 
the oil companies. There is also rising demand in Asia. It is clearly 
evident that our oil and energy markets are no longer governed by 
supply and demand. Speculation is back with a vengeance. We saw the 
handiwork of speculators 2 years ago when the price of oil hit an all-
time high of $147 a barrel, only to plummet 80 percent of that price a 
few months later. That is not supply and demand. That is not the 
workings of the economic market. That is in part caused by speculators 
running the price of oil up, and then because they had to drop their 
positions on the Commodity Futures Trading Commission, and the 
exchanges, they started dropping all of those futures contracts in oil. 
Now speculators are using the turmoil in the Middle East and North 
Africa as an excuse to drive the price of oil sky high.
  It makes no sense that we continue to let the commodities exchanges 
self-regulate by setting their own margin levels and other rules. Last 
year, when we passed the Dodd-Frank Wall Street Reform and Consumer 
Protection Act, Congress empowered the Commodity Futures Trading 
Commission under the new law to rein in excessive speculation so that 
commodities markets don't fly off the rails. Yet this same commission 
has yet to finalize new rules to impose speculative position limits, 
which are hard caps on the amount any one speculator can invest in oil 
derivatives.

  There are a number of us who have been working for months in this 
Senate to push the CFTC to act. The law we passed was clear, and it is 
time for the Federal regulators to follow through.
  Sadly, I want to recall a little over a year ago something that a lot 
of us remember so vividly. Many people cannot forget the images of the 
oil that was gushing from 5,000 feet below the surface of the Gulf of 
Mexico.

[[Page S2984]]

  In my public service for decades, I have warned about the dangers of 
drilling out there in the gulf. It is now unbelievable that almost a 
year after the gulf oilspill and the environmental disaster that 
ensued, folks are still now talking about being willing to risk the 
economy of the entire gulf coast again. You remember that 11 people 
died because safety took a back seat to expediency and profit.
  Last week the House passed three bills that would speed up oil 
production in a way that ignores serious safety concerns. Now Senator 
McConnell has a similar proposal. These bills would require the 
Secretary of the Interior to approve or deny drilling permits within a 
maximum of 60 days, and if the Secretary does not take action within 
that time, a permit is deemed approved. That is like saying if a home 
buyer is not approved for financing within 60 days, they automatically 
get the financing regardless of their credit. Or it is like saying if a 
prisoner does not hear back from the parole board in 2 months, that 
prisoner is going to be automatically out on parole.
  It is simply irresponsible to deregulate an inherently dangerous 
activity in this manner, and it is a slap in the face to the commercial 
fishermen, the hoteliers, and the small business owners on the gulf 
coast who, to this day, have not been made whole. Yet these bills are 
out here. The House passed it.
  Senator McConnell's bill would roll back the Department of the 
Interior's post-Deepwater Horizon revisions to offshore leasing--
revisions that came about because of what we learned from the oilspill. 
Senator McConnell's bill seeks to limit the fundamental right of 
Americans; that is, access to the courts. His bill would not allow 
Floridians who want to file a civil lawsuit regarding any offshore 
energy projects in the Gulf of Mexico to have a claim near their home 
in Florida or their place of business in Florida. Instead, under his 
bill, they have to go to the Fifth Circuit. That is Mississippi, 
Louisiana, and Texas. Why should people from Florida have to file a 
claim there? Why can't they go through the Eleventh Circuit, which is 
the one for the State of Florida and Georgia? The Fifth Circuit 
certainly cannot be the only circuit with expertise on the subject of 
offshore energy.
  I believe we have a responsibility to protect access to the courts, 
and Senator McConnell's bill jeopardizes that for the people who do not 
have the luxury of going far off to another State to bring a lawsuit.
  Meanwhile, the House has passed a bill last week that seeks to open--
now it is getting personal--they seek to open the eastern Gulf of 
Mexico off of Florida, that which Senator Martinez and I made off 
limits in law. There are obvious reasons we have it off limits in law. 
It is the largest testing and training area for the U.S. military in 
the world. We have two letters from two successive Secretaries of 
Defense, including the present one, Secretary Gates, that says you 
cannot have oil drilling and related activities--they use the word it 
is ``incompatible'' with the military training and testing mission. 
That is the largest training and testing area for the U.S. military in 
the world.
  It is basically right off of Florida. Of course, you all have heard 
me over and over talk about all the dry holes. There is not much oil 
out there off of Florida. The oil is where the Lord intended the oil to 
be--and that was for years the sediments coming down the Mississippi 
River and then being compacted, and then for millions of years the 
compacting of the Earth's crust formed that oil. That is off of, 
primarily, Louisiana, some off of Mississippi, some off of Alabama and 
Texas, not Florida.
  The proponents of these bills claim they will lower gas prices. At 
the same time, the oil and gas companies are making billions of 
dollars. Just look at their first quarter report. And we are giving big 
tax subsidies to the oil companies.
  The price of oil dropped $17 a barrel last week. It was the largest 
weekly decline in over 2 years. But do you know what? I do not think 
the folks at the gas pump saw a commensurate drop. I think it is about 
time we gave them some relief, and we are going to have a chance to do 
that.
  I conclude by saying we are not fooling ourselves. To be able to get 
an individual bill such as this for specific tax breaks--however 
objectionable those tax breaks are, it is going to be difficult to get 
60 votes to break a filibuster. But help is on the way. There is a 
group called the Gang of Six. They are meeting, and they are trying to 
put together a package to solve our deficit crisis and to make real 
progress over the next decade or so, as we move toward budget balance--
a condition we enjoyed as recently as 2001--not only budget balance, 
but a budget surplus.
  It is my hope when we get down to putting this package together of 
how we are going to lower the deficit, people of good will will come 
together and recognize there are things in the Tax Code that have to be 
changed to make them right. I have enumerated but a few here today.
  Mr. President, with that, I yield the floor, and I look forward to 
the comments of the very distinguished Senator from New Hampshire.
  The PRESIDING OFFICER. The Senator from New Hampshire.
  Mrs. SHAHEEN. Mr. President, I am pleased I could be here to hear our 
colleague from Florida talking so eloquently about the importance of 
ending the subsidies we are currently paying to the Nation's largest 
oil companies and about the importance of continuing to preserve the 
gulf and to make sure the regulations we put in place last year 
continue.
  I appreciate his leadership on both of those issues, and particularly 
on protecting the gulf, which is a national treasure. So I thank very 
much our colleague from Florida, Senator Nelson.
  I came down to the floor today to talk about the important 
legislation that is before us to reduce our deficit by ending the 
needless subsidies for the Nation's largest oil companies.
  At a time when Americans are paying these companies $4 a gallon for 
gasoline--and in some places it is more than that--it might be 
surprising to some people out there that these same companies are 
receiving $4 billion a year in subsidies from the American taxpayer.
  The legislation that is before us in the Senate right now would end 
six of these separate tax handouts. One of them repeals a provision 
that essentially amounts to a subsidy for foreign oil production. A 
second closes a loophole that lets oil companies drill for free on 
public lands in the Outer Continental Shelf. Another ends a practice 
that lets oil companies manipulate the numbers when deducting the cost 
of new wells from their taxes. Under current law, in fact, oil 
companies sometimes can deduct more than they actually paid to put in 
place the well.
  While so many families and small businesses nationwide have struggled 
to pay the high cost of gasoline, the five largest oil companies in the 
United States collectively made nearly $1 trillion in profits over the 
last decade.
  Yet because of unnecessary and outdated tax subsidies, ExxonMobil--
the biggest oil company--paid no U.S. income tax in 2009. That is hard 
to explain to the small businesses in New Hampshire and Florida and 
Delaware that are struggling in this recession to pay their taxes, that 
the biggest oil company in the country that made the highest profits 
did not pay any taxes in 2009. With record deficits, ending those 
giveaways is a commonsense step toward fixing the Federal budget.
  I have heard some people who are in favor of these giveaways say we 
need them so the oil companies can keep prices low. But as Senator 
Nelson so clearly put it, the nonpartisan Congressional Research 
Service said last week in a report that rolling back these tax handouts 
will not raise gas prices. With prices so high, they said, oil 
companies will do all they can to maximize production from all existing 
wells and the oil supply will remain unchanged. A barrel of oil is 
currently selling for far more than it costs an oil company to produce. 
These subsidies are doing nothing to make gasoline cheaper.
  In fact, the former CEO of Shell Oil Company spoke about drilling 
subsidies last February, and he said: ``with high oil prices, such 
subsidies are not necessary.''
  But I think it is important to be clear. This legislation is not 
about punishing the oil companies for doing well. We want all companies 
in America to do well. It is about reducing the deficit and our debt 
and making smart policy choices with our limited resources.

[[Page S2985]]

  Tax breaks for big corporations are just spending under another name, 
and all government spending of taxpayer dollars has to come under 
scrutiny as we tackle our debt and deficits. We are never going to get 
our massive deficits and debt under control unless we are prepared to 
eliminate outdated and unnecessary government programs--and that means 
government programs that we support on the Democratic side of the 
aisle, and it also means outdated and unnecessary programs that our 
colleagues on the other side of the aisle support.
  Providing tax handouts to one of the most profitable industries in 
human history--an industry that clearly needs no help from taxpayers--
is a logical place to start.
  As we emerge from this historic recession and grapple with our long-
term deficits, we have to ask ourselves: What are our priorities--
investing in the next-generation economy, reducing the national debt to 
leave to our children or is it providing outdated tax breaks to one of 
the most profitable industries in the history of our country? I think 
the choice is pretty clear.
  I hope our colleagues will join us in supporting this legislation to 
eliminate these giveaways, reduce the deficit, and strengthen our 
economy.
  I yield the floor and I suggest the absence of a quorum.
  The ACTING PRESIDENT pro tempore. The clerk will call the roll.
  The assistant legislative clerk proceeded to call the roll.
  Mr. SCHUMER. Mr. President, I ask unanimous consent that the order 
for the quorum call be rescinded.
  The ACTING PRESIDENT pro tempore. Without objection, it is so 
ordered.
  Mr. SCHUMER. Mr. President, I rise in support of legislation we will 
later vote on this week, authored by the Senator from New Jersey, Mr. 
Menendez. As we all know, he has been championing this legislation for 
quite some time. He had the prescience and foresight to focus on this 
idea early on, and I applaud the hard work he has done to build support 
for it.
  I am also glad our leader, Senator Reid, scheduled a vote on it this 
week. I hope the bill will pass. I have heard that even a few of my 
friends from the other side of the aisle say they are considering 
voting for it.
  Nothing would be better, in terms of showing bipartisanship and 
giving the American people hope that we can come to a fair agreement on 
the budget, than to pass the legislation this week.
  In the last election, voters gave those of us who serve in this 
Chamber two distinct mandates. They told us to do two things at once, 
either one of which alone would be hard to do. First, and perhaps 
foremost, they said make the economy grow, create good-paying jobs, 
make sure of that the American dream which says the odds are that you 
will be doing better 10 years from today and the odds are that your 
children will do better than you. That is the American dream.
  Since the founding of our great Republic, that candle has burned 
brightly in the eyes of Americans, whose ancestors have been here since 
the Mayflower landed, as well as in the eyes of Americans who are just 
here for a generation or two and even new immigrants.
  They also gave us a second mandate--not just grow the economy, not 
just to employ people but a second one: rein in the out-of-control 
Federal deficit. The American people, as usual, had wisdom, because 
both these goals are important. Some say the debt isn't important. I 
believe it is.
  Here is the way I put it: We, the Federal Government, are a 
blindfolded man, and we are walking toward a cliff. Once we fall off 
that cliff, there is no getting back. The debate is whether we are 20 
feet from the cliff or 200 yards from it. But we know that sooner or 
later, no matter our distance, if we keep walking, we are going to fall 
off. Once you fall off, there is no getting back. So that means we have 
to take the bull by the horns and confront our mounting debt.
  It would be hard enough to accomplish one of these two goals. To try 
to do both at once is a Herculean task. I think everybody is trying to 
do what is right, regardless of their ideology, but there are strong 
and different feelings and clear policy differences.
  There are many tough choices ahead, but there is at least one choice 
that isn't tough at all--not by a mile. It is obvious to me and to most 
Americans, whether it is people you talk to as you go about your State 
or looking at the polling data, that at this time of fiscal restraint, 
to continue to give the big oil companies giant tax breaks makes no 
sense. Getting rid of these corporate subsidies to Big Oil is a no-
brainer.
  Decades ago, when these breaks were enacted, oil was $17 a barrel. 
Maybe it made sense then to give companies an incentive to explore and 
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. Big Oil no longer cracks petroleum using Mr. Burton's 
method. It is an outdated process, but the outdated tax subsidy still 
remains on the books, amazingly enough.
  With oil hovering at $100 a barrel and Big Oil reaping record 
profits, it defies logic for the government to spend billions of 
taxpayer dollars on these subsidies. We are writing out a check for $4 
billion to the big oil companies. Does that make sense when we have so 
many other needs and a huge deficit? To me, it doesn't.
  At the same time, Americans get hit with a double whammy. When they 
drive up to the pump, they are paying $4--or close to it--a gallon for 
gasoline, diesel fuel, and Big Oil is taking some dollars out of their 
pockets because their taxes--a small percentage of it--go to pay these 
Big Oil subsidies. How galling.
  In my home State of New York, the price of gasoline is up 35 percent, 
on average, compared to this time last year. Economists estimate that a 
typical New York family--a typical American family--will pay as much as 
$1,000 more on gas this year than last. When these families sit around 
the dinner table on Friday nights after dinner and mom and dad are 
trying to figure out how they are going to pay their bills, those gas 
prices make things much harder. Families across the country are 
struggling to make ends meet, as the economy slowly recovers. They 
can't 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 
these top five oil companies have just announced mind-boggling profits. 
These companies are not only among the most profitable businesses in 
the United States, but they are among the most profitable businesses in 
the whole world.
  In the first quarter of this year, the big five brought in $35 
billion in profits. In the past decade, they took home nearly $ 1 
trillion--that is with a T. There is nothing wrong with profits in and 
of themselves. In America, we celebrate success. We want the private 
sector to thrive and make good profits. But at a time when the 
government is looking to tighten its belt and we are asking every 
family to tighten their belt and we are grappling with painful cuts 
because of 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 auto company executives last 
week when they testified before our Finance Committee. There are 
priorities. How many Americans would choose to give oil companies an 
extra subsidy rather than help kids who deserve to go to college pay 
for their tuition? That is what some of my colleagues are recommending. 
When I asked Mr. Mulva, the head of Conoco, one of the big five oil 
companies--I said: Well, which would you choose? He said they are two 
different things. Mr. Mulva, in all due respect, they are not. If we 
have to reduce the deficit by a certain amount, if we take the $21 
billion we are giving you, that gives us some money to play with that 
we might be able to deal--not play with but to use for good purpose--
that we could give to prevent cuts and help middle-class families 
defray the cost of tuition to send their kids to college, which is part 
of the American dream. So they are related--at least in a government-
deficit world, at least in a budget world in which we live; every 
dollar you don't spend on one thing is a dollar you might be able to 
use on something else.
  Try to wrap your head around it. Big Oil is recording record profits. 
Gas

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prices are near an alltime high and we as American taxpayers, are 
subsidizing the oil industry to the tune of $4 billion a year. You need 
the imagination of Lewis Carroll, who wrote ``Alice in Wonderland,'' to 
come up with a more ridiculous scenario.
  That is why I strongly support and am proud to cosponsor Senator 
Menendez's ``Close Big Oil Tax Loopholes Act.''
  This legislation will put an end to taxpayer handouts to the five 
largest integrated oil companies and use that $21 billion in savings to 
reduce the deficit. This $21 billion is an excellent downpayment on the 
effort to get our fiscal house in order. If we use this $21 billion, it 
will be a little easier to reach our huge goal of reducing the deficit. 
It will be a little easier to complete our dual goals of reducing the 
deficit but still growing the economy.
  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. Some thought these up a 
long time ago. They have sat in our Tax Code, but they mean lots of 
money to Big Oil.
  Small- and medium-sized oil firms are exempt. The only companies the 
legislation deals with are the big five--Shell, ExxonMobil, Chevron, 
ConocoPhillips, and British Petroleum.
  I have heard pundits from the hard right parrot Big Oil's talking 
point that repealing these giveaways would increase gas prices for 
consumers. Nothing could be further from the truth. Last week, two 
major studies--one from the nonpartisan Congressional Research Service 
and another from the Joint Economic Committee--found that ending these 
absurd subsidies would not--would not--impact the price of gas. Neither 
of these studies--these were scientific studies done by economists. 
They did not have any biases.
  In what was perhaps an inadvertent moment of candor at last week's 
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.

  Let me repeat what he said because it directly answers the argument 
that some on the other side of the aisle have made that if we repeal 
these subsidies, we will raise gas prices because that means the 
companies would decide to raise them because they are getting less 
subsidy. Here is what Mr. 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. But 
when he made that comment, Mr. Tillerson of ExxonMobil was conceding 
that repealing taxpayer-funded subsidies for the big five will not 
increase prices. Prices are set, as he says, by global supply and 
demand. That is not to say repealing the subsidies would 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 gasoline and ridding our country of its 
dependence on foreign oil requires, of course, a long-term 
comprehensive approach. It is something we must do. It is outrageous 
that our country sends $1 billion a day overseas, wealth out of 
American pockets. To whom do we send them? People we dislike 
intensely--Ahmadinejad of Iran and Chavez of Venezuela. Why are we 
doing that? Because we failed to come up with a long-term policy that 
reduces our dependence on foreign oil.
  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.
  If we are going to come together, is this not the easiest place to 
come together? We are going to have a lot of hard struggles as we 
attempt to reduce the deficit, as the debt ceiling looms over us. But 
this is an easy one, and many people on my side of the aisle are 
scratching their heads. If our colleagues on the other side cannot give 
in on something such as this, what are they going to give in on? 
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 said as much.
  At one point, he seemed to say it makes some sense to eliminate 
subsidies to the big five. Let's not forget that Speaker Boehner 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 profit of companies with taxpayer-
funded subsidies. The time to repeal these giveaways is now. No more 
should we send $4 billion this year, next year, or any year to the five 
big oil companies which have made record profits and admittedly, by the 
admission of Mr. Tillerson, if we take them away from them it would not 
raise gas prices a plug nickel.
  Our plan to cut the deficit begins with ending wasteful subsidies to 
Big Oil. The Republican plan, as embodied by the Ryan amendment, for 
which almost every Republican in the House voted 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 want us to 
make.
  I yield the floor.
  The ACTING PRESIDENT pro tempore. The Senator from Ohio.

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