[Congressional Record (Bound Edition), Volume 152 (2006), Part 5]
[House]
[Pages 6917-6922]
[From the U.S. Government Publishing Office, www.gpo.gov]




    MOTION TO INSTRUCT CONFEREES ON H.R. 4297, TAX RELIEF EXTENSION 
                       RECONCILIATION ACT OF 2005

  Mr. LARSON of Connecticut. Mr. Speaker, I offer a motion.
  The SPEAKER pro tempore. The Clerk will report the motion.
  The Clerk read as follows:
       Mr. Larson of Connecticut moves that the managers on the 
     part of the House at the conference on the disagreeing votes 
     of the two Houses on the Senate amendment to the bill II.R. 
     4297 be instructed--
       (1) to agree to the following provisions of the Senate 
     amendment: section 461 (relating to revaluation of LIFO 
     inventories of large integrated oil companies), section 462 
     (relating to elimination of amortization of geological and 
     geophysical expenditures for major integrated oil companies), 
     and section 470 (relating to modifications of foreign tax 
     credit rules applicable to large integrated oil companies 
     which are dual capacity taxpayers), and
       (2) to recede from the provisions of the House bill that 
     extend the lower tax rate on dividends and capital gains that 
     would otherwise terminate at the close of 2008.

  The SPEAKER pro tempore. Pursuant to clause 7 of rule XXII, the 
gentleman from Connecticut (Mr. Larson) and the gentleman from Texas 
(Mr. Sam Johnson) each will control 30 minutes.
  The Chair recognizes the gentleman from Connecticut.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I rise today on behalf of my Democratic colleagues to 
offer a motion to instruct the House conferees on the tax cut 
reconciliation conference committee.
  This motion has two simple yet important provisions. First, it closes 
over $5 billion in unneeded tax loopholes and subsidies for oil 
companies. It eliminates the ``last in/first out,'' LIFO, accounting 
method for oil companies, which amounts to $4.3 billion over the next 
10 years. It prohibits oil companies from writing off costs associated 
with oil and gas exploration, which is about $292 million over the next 
10 years. It limits the foreign tax credit that companies receive for 
the taxes they pay to oil-producing countries.
  This rollback amounts to, for oil companies, a mere $540 million a 
year and $135 million each quarter.
  To put this in appropriate perspective, this represents approximately 
1.6 percent of Exxon's first-quarter profits in 2006 alone. Second, it 
ends the extension of lower capital gains and dividends tax rates.
  We offered this motion last week. The distinguished gentleman from 
Washington State put forward the amendment in the motion because of the 
way that Americans are being hit this time both at the gas pump and 
again because we hoped that the other side would join us in this 
effort. Unfortunately, only nine Republicans voted for the motion, and 
it failed 190-232.
  We offer this again because the American people simply cannot 
understand why their government would hand billions in tax breaks and 
subsidies to an oil industry that by all measures is enjoying an 
unprecedented level of success. In fact, last week, President Bush 
discussed his plan to address the rising price of gas and oil.
  During his remarks the President stated, ``Record oil prices and 
large cash flows also mean that Congress has got to understand that 
these energy companies do not need unnecessary tax breaks. I am looking 
forward to Congress to take about $2 billion of these tax breaks out of 
the budget over a 10-year period of time. Cash flows are up, taxpayers 
do not need to be paying for certain of these expenses on behalf of 
energy companies.''
  Now, if the President of the United States can call for this, it just 
seems logical to those of us on this side of the aisle that Congress 
ought to be able to join with the other body. This body ought to 
embrace what the Senate has already done and concluded, and be in 
harmony with the Senate and the President of the United States.
  Mr. Speaker, I reserve the balance of my time.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, you know, talking about helping our companies, the 
energy bill that my opponent referred to was equally divided among oil, 
among chemical, among hydrogen, among all those renewable-type fuels so 
that we could bring this Nation into self-sufficiency. Today's Democrat 
motion to instruct conferees is just as bad as it was last week when it 
failed by a vote of 190-232.
  Yes, gas prices are high, and I can't name anyone I know who is happy 
about having to pay $3 a gallon for fuel. But this motion is the wrong 
policy on any number of fronts. It is bad energy policy. It is bad 
economic policy, and it is bad tax policy.
  The Democrats just do not want to understand the law of supply and 
demand. When supply is low and demand continues to rise, the price goes 
up. We are seeing continuing demand for gasoline both here in the 
United States and around the world. The demand for gasoline is growing 
leaps and bounds in developing economies such as China and India. We 
are not the only consumers of gasoline in the world, and we are sure 
not the ones in charge of supply. In the world, crude markets, the 
price of oil is bumping along at record prices. The worldwide demand 
for oil is chasing up the price of the basic commodity. This basic law 
of supply and demand is something that the Democrats think Congress can 
repeal, but they are sadly mistaken. This motion to instruct conferees 
is a reflection of this mistake.
  The law of supply and demand for gas also has another component that 
my friends just want to complain about; that is on the supply of 
refined oil in the form of gasoline. They talk out of both sides of 
their mouth on the issue of price because they have refused to allow 
new refineries to be built since 1976. There are 148 refineries in 
America today, down from 324 in 1981. And last year, during the 
hurricane season, we saw that refining capacity damaged. This creates a 
choke point in supply regardless of the rising cost of crude. The 
ability to refine oil is itself a problem and a demand problem. We have 
a problem with refineries running close to capacity and some of them 
shut down due to damage and basic maintenance.

                              {time}  1900

  At this point in the year, refineries also have to start blending 
niche fuels due to clean air requirements.
  I support clean air. We all do. We like to breathe clean air. My 
grandchildren like to breathe clean air. But the blending of special 
fuels for 17 particular markets hampers the ability of refineries to 
keep running at capacity as they switch from one fuel to another.
  The pipelines that move fuel to terminals, the trucks that run from 
terminals to stations are not carrying generic fuel. They have to move 
boutique fuels. All of that adds costs and, more importantly, causes 
disruptions in supply so we end up seeing some gas stations without any 
fuel at all.
  Yet our Democrat friends just want to complain about some big 
conspiracy and own up to no responsibility for creating these supply 
problems that then

[[Page 6918]]

drive the price to $3 a gallon. It is easier to send out press releases 
that claim they are attacking Big Oil than it is to take a semester of 
Economics 101.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I certainly think that the President of the United 
States understands the laws of supply and demand and has prevailed upon 
this Congress to take action with regard to this.
  More importantly, back in my hometown, John Mitchell, the former 
Republican mayor of South Windsor, Connecticut, and past president of 
the Independent Connecticut Petroleum Dealers, says there is no 
correlation between what is going on in this country between the laws 
of supply and demand and what is happening with home heating oil and 
what is happening at our gas pumps. He says the only thing that is 
happening here is a matter of fear, speculation and greed.
  Mr. Speaker, I yield 3 minutes to the gentlewoman from Connecticut 
(Ms. DeLauro), someone who understands that and someone who has 
represented the State of Connecticut with distinction.
  Ms. DeLAURO. Mr. Speaker, might I say to my colleague on the other 
side of the aisle on the issue of refineries, ExxonMobil has said that 
they will not build refineries, that it was not part of their business 
plan.
  The issue of switching from MTBE to ethanol was something that was 
known a year and a half ago or more, and the decision, they knew it, 
they could prepare for it, they wanted it to happen, and they did not 
make the preparations to make that switch-over.
  Mr. Speaker, as Americans struggle with $73 barrels of oil and gas 
prices that could reach $4 a gallon in the coming months, we have heard 
every excuse in the world for why these prices have skyrocketed.
  We have been told that refineries are being victimized by overbearing 
environmental regulations and that Americans simply do not understand 
the laws of economics and that the market is simply responding to high 
demand.
  Well, it does not take an economist to recognize that the oil 
companies are making out like bandits. In 2005 alone, ExxonMobil, the 
Nation's largest oil company, earned more than $36 billion in profits, 
profits that were 31 percent higher than the year before. Not far 
behind is Shell, with $22.9 billion of profit; BP, with $19.3 billion 
of profits; and Chevron, which took in $14.1 billion.
  So what is this Republican majority proposing? To usher through more 
tax cuts for oil companies in their next round of corporate tax 
giveaways. This only hours after this House finally relented and voted 
to give the FTC the authority to investigate price gouging, something 
Democrats have been calling for for the last 8 months.
  Why on earth we would be offering still more tax cuts to an industry 
that is enjoying record profits is beyond me.
  Even the President has acknowledged that we should be paring these 
gifts to industry back. It is interesting to note that he did not know 
in the energy bill that he signed that they had $9 billion in the 
energy bill that he signed; and, in fact, his administration gave a $7 
billion windfall to the oil companies by waiving their royalty payments 
to the Federal Government.
  This majority is not doing what it should be doing in this bill. What 
they are providing is more tax cuts.
  With the Larson motion, which would prohibit oil companies from using 
an accounting gimmick to reduce their tax obligations, we have an 
opportunity to say enough. No more financing $400 million executive 
retirement packages with taxpayers' dollars. With soaring budget 
deficits, war and a host of needs here at home, we have better things 
to do with the taxpayer money than to line the pockets of this 
majority's political friends and an industry reaping historic profits 
from American families. Let us get that process started by passing the 
Larson motion.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I wonder how many people in this country have stocks in 
gas companies, ExxonMobil, for example. You are making a profit, too. 
Stop and think about it.
  Ms. DeLAURO. If the gentleman would yield, I have no stock in oil and 
gas companies.
  Mr. SAM JOHNSON of Texas. Well, I didn't understand her.
  You claim you want to tax away the profits of oil companies, and yet 
they do not even come here with their tired old windfalls profit tax 
because they know it is a bogus policy that doesn't pass the laugh 
test. Instead, they come here convoluting tax items that sound 
intriguing in a 15-second sound bite.
  The first of the items is to switch the way that oil companies 
account for their inventory. They claim to pick up on a Senate idea to 
move away from long-standing accounting rules for inventory. Well, what 
this motion would propose to do is go back in time to the 1930s to 
theoretical inventories still held by oil companies. We know darn well 
there is no oil inventories held by oil companies since the 1930s, yet 
the Democrats here propose that we go back that far to tax theoretical 
inventory, propose a one-time retroactive tax back to the 1930s.
  Such a proposal is scary even for my friends on the other side of the 
aisle. They did not use some economic policy that was developed by a 
PhD. No, they simply decided how many billions of dollars they wanted 
to raise in taxes on oil companies, and with some simple division it 
came out to $18.75 for each layer of theoretical inventory for every 
oil company back to the 1930s.
  This provision has no real policy behind it. It simply is a big ATM 
withdrawal from oil companies to punish them for following the laws of 
supply and demand. They couldn't pass the laugh test on the windfall 
profits tax, so instead they came up with a tax that is retroactive to 
the 1930s. We have to defeat this proposal.
  Mr. Speaker, I reserve the balance of my time.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield myself such time as I 
may consume.
  Mr. Speaker, I say to my distinguished colleague and good friend and 
learned man who everyone respects in this Chamber, it is the 
Republican-controlled Senate that passed these initiatives. It is the 
Republican President that has called for these rollbacks.
  I said last week that the administration's policy seems to be ``leave 
no oilman behind.'' Or as Thomas Freeman has pointed out in the New 
York Times, from an international perspective, it seems like the policy 
is ``leave no mullah behind'' because of what we end up exporting 
abroad and how that money in turn is used against us.
  Mr. Speaker, I yield 5 minutes to the gentleman from Washington (Mr. 
McDermott), who articulated this position last week.
  Mr. McDERMOTT. Mr. Speaker, I sometimes wonder when I am out here on 
the floor whether anybody ever listens to anybody.
  The distinguished gentleman from Texas who opposes this motion acts 
like some kind of wild-eyed liberal. Left-wing bunch of 
environmentalists come up with this idea all by themselves. This came 
out of the Senate, I would tell my distinguished colleague. This came 
out of the Republican Senate. This is an idea that sprang from 
conservative Republican minds who understand that there is some reason 
to think that the oil companies have enough.
  Now, as Yogi Berra used to say, ``It's deja vu all over again.'' We 
are running the same script tonight as we ran about a week ago.
  A week ago, the Republicans voted down my motion to stop the oil 
companies from legally cooking their books to avoid paying their fair 
share of Federal taxes. My distinguished colleague from Connecticut 
comes tonight with his motion.
  The price tag for the oil industry is $5 billion, not by raising 
taxes, just by closing loopholes. But they would rather keep the money, 
inflate their profits and earn more money for buying bonds to finance 
our Federal deficit and charge the American people more at the pumps.

[[Page 6919]]

  Now, for Big Oil, too much is not enough. That is all fine and good 
with this Republican leadership in the House, but it is not right with 
many of my Republican colleagues who know it. In fact, last week a 
handful of them were brave enough to vote with the Democrats and voted 
in favor of this motion. Now here we are, and we are going to give you 
a second chance.
  Do we pave a road with gold for Big Oil? Do we allow them to continue 
to cook their books, to keep $5 billion that rightfully belongs to the 
American people? Even the Senate Republicans cannot buy that. My 
goodness, guys, come on. Even the Senate Republicans.
  But, of course, the House Republicans are different. Your gas tank is 
empty. Your wallet may be empty. Your credit card debt may be rising 
with gas prices, but the party of 1 percent, which is really what the 
Republican Party is, does not care. Because Big Oil is part of the 1 
percent of America that the House Republicans reward. They are going to 
pay for it by taking it out of the hides of 99 percent of the rest of 
America, the middle class.
  I join gladly with my esteemed colleague from Connecticut to ask the 
House Republicans to act on the Senate Republican proposal which we 
support. They offered to buy you a tank of gas. That is what the leader 
in the other body said: we are going to give you a $100 rebate. Even 
industry turned that down. What good is it giving people two tanks of 
gas? That is simply not enough.
  The American people deserve more than a Republican handout. They 
deserve a prescription to end America's addiction to oil. And in the 
weeks since the Republicans first voted down this motion, the price of 
gasoline has risen again.
  You cannot seem to get the message. There is no surprise here. Net 
income of oil companies has nearly tripled since 2002, and the margins 
for oil refining have risen 700 percent. The answer to date from this 
administration and House Republicans is to give them all they want, and 
they want it all.
  The American people are becoming a wholly owned subsidiary of Big 
Oil, and the House Republicans are going along for the ride. But with 
the enthusiastic report of the President, House Republicans are showing 
what their energy strategy really looks like. It is not about 
extracting oil. It is about extracting every dime from the American 
people for the oil companies. They are drilling in your wallet, and a 
gusher of consumer debt is paving a road of gold for Big Oil. That is 
the solution for our energy price for the party of 1 percent: supersize 
the price of a gallon of gasoline and let Big Oil get fat on the 
profits.
  Their idea of energy independence is to dig deeper into your wallet. 
Democrats believe it is time to govern for the 99 percent of Americans 
that the Republicans have simply forgotten. It is time to stop Big Oil 
from cooking its books and frying the American people in the process. 
It is time we supersize renewable resources like wind and solar. It is 
time energy independence became a national policy, not a national 
advertising campaign by Big Oil paid for by the American people.
  We can start now. We can pass this motion to instruct. We need to 
restore rational fiscal policy. The $5 billion would give us some money 
to do some of that and not endorse reckless financial tax holidays for 
Big Oil.
  When Republicans talk about shared sacrifice, they have to prove they 
mean more than offering up the American people on the altar of 
corporate greed.
  I urge all my colleagues to support the Larson motion. Just because 
the Democrats have the right policy on this issue does not mean the 
Republicans have to vote against it. You can vote with us once in a 
while. You will not die, nothing terrible will happen to you, and the 
American people will win. I urge adoption of this motion.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  Last week, my colleague from Washington State submitted for the 
Record an article describing a draft economist paper that claims to 
find no positive effects from the 2003 dividend and capital gains tax 
cut. There is solid evidence to the contrary.
  I would like to submit a column from Business Week magazine written 
by Robert Barro, an economist at Harvard University and nominee for the 
Nobel Prize in Economics. He sums up a paper published in the Quarterly 
Journal of Economics by saying the 2003 tax cuts enhanced incentives 
for work effort, saving and investment. The paper shows that tax policy 
can have substantial and rapid effects on economic behavior.

                              {time}  1915

  I submit for the Record a list of seven academic papers that offer 
support that a dividend tax cut of 2003 had a positive effect on 
capital markets and the economy. These papers were written by a diverse 
group of prominent academic economists from such institutions as the 
University of California at Berkeley, the University of Michigan, the 
University of Illinois and the Federal Reserve Board, and they directly 
contradict the papers submitted by my colleagues across the aisle, that 
the dividend tax cut had no effect. In fact, according to the IRS, 
dividend income by taxpayers went up 22 percent in the year after the 
tax cut, and qualified dividend income went up 30 percent.

                  [From Business Week, Jan. 24, 2005]

              How Tax Reform Drives Growth and Investment

                          (By Robert J. Barro)

       Not since 1986, during President Ronald Reagan's second 
     term, has the atmosphere in Washington been so promising for 
     basic income-tax reform. Proposals are likely to include 
     making permanent the tax changes of 2001 and 2003, flattening 
     the tax-rate structure, and moving toward taxing consumption 
     rather than income. The 2003 law gave a taste of what is to 
     come by advancing the effective date for the 2001 marginal 
     tax-rate cuts and by reducing rates on dividends and capital 
     gains. The 2003 tax cuts enhanced incentives for work effort, 
     saving, and investment. So I think it is no accident that the 
     U.S. has enjoyed rapid growth rates in gross domestic 
     product, investment, and productivity since early 2003. 
     Employment also grew, albeit with a lag.
       Because the sharp cut in dividend taxation was a 
     centerpiece of the 2003 law, it is particularly interesting 
     to see how companies' dividend policies changed. The 
     anecdotal evidence suggests a strong positive response, 
     highlighted by Microsoft Corp.'s initiation of a regular 
     dividend in 2003. Other large companies that started regular 
     dividends in 2003-04 include Analog Devices, Best Buy, Clear 
     Channel Communications, Costco, Guidant, Qualcomm, and 
     Viacom.
       A broader picture comes from the recent National Bureau of 
     Economic Research working paper, ``Dividend Taxes and 
     Corporate Behavior: Evidence from the 2003 Dividend Tax 
     Cut,'' by Raj Chetty and Emmanuel Saez, economics professors 
     at the University of California at Berkeley. The Chetty-Saez 
     study analyzes dividends paid by the universe of publicly 
     listed corporations from the first quarter 1982 through the 
     second quarter 2004. The sample, designed for statistical 
     reasons to include the same number of companies in each 
     period, comprises roughly the 4,000 largest companies by 
     market capitalization in each quarter.
       The study documents a surge in initiations of dividends 
     after the dividend tax cut was proposed in January, 2003, and 
     enacted in May, 2003. The percentage of companies in the 
     sample that paid dividends increased from 20% in fourth 
     quarter 2002 to 25% in second quarter 2004. This increased 
     propensity to pay dividends reversed a long-term decline.
       The 2003 reform was also followed by increases in payouts 
     by dividend-paying companies. In the Chetty-Saez sample, the 
     number of companies that raised regular dividends by at least 
     20% rose from 19 per quarter in the period before the tax 
     reform was implemented to 50 in the post-reform period. 
     Another response was a surge in special, one-time dividends. 
     This number rose from 7 per quarter pre-reform to 18 post-
     reform. The most celebrated special dividend was Microsoft's 
     payout of $32 billion, announced in July, 2004.
       The post-reform increases in dividends--new dividends, 
     larger dividends, and special dividends--still apply when 
     Chetty and Saez control for profits, assets, market 
     capitalization, and cash holdings. In other words, the tax 
     reform made companies more likely to pay a dividend and to 
     pay a larger dividend.
       In addition, dividend initiations did not increase among 
     companies for which the largest institutional investor was a 
     pension fund or other entity not affected by the tax change. 
     Neither did dividend initiations rise for Canadian companies, 
     which are not affected by U.S. tax changes.

[[Page 6920]]

       The study also revealed the relationship between the 
     concentration of company ownership and the propensity to pay 
     dividends. After the reforms, dividend initiations were more 
     likely if share ownership was heavily concentrated among 
     executives or taxable institutions. The desire of these 
     players to have larger dividends when the tax rate falls is 
     particularly likely to be translated into corporate dividend 
     policy.
       There's also evidence that the tax cut particularly 
     heightened the propensity to pay dividends among companies 
     with low forecasted earnings growth. So tax reform may have 
     efficiently taken cash out of companies with below-average 
     prospective returns on investment.
       The dividend study shows that tax policy can have 
     substantial and rapid effects on economic behavior. The data 
     highlight the importance of the current deliberations on tax 
     reform. The Bush Administration should seize the moment and 
     deliver a tax system that promotes economic growth.
       The following seven academic papers offer evidence of the 
     positive impact of the 2003 tax relief:
       Hassett (AEI), Auberbach (UC Berkeley), The 2003 Tax Cut 
     and the Value of the Firm: An Event Study, NBER Working Paper 
     No. 11449, July 2005, http://elsa.berkeley.edu/users/
auerbach/03divtax.pdf.
       Chetty (UC Berkeley), Rosenberg (UC Berkeley), Saez (UC 
     Berkeley), The Effects of Taxes on Market Responses to 
     Dividend Announcements and Payments: What Can We Learn From 
     the 2003 Dividend Tax Cut?, NBER Working Paper No. 11452, 
     July 2005, http://papers.nber.org/papers/w11452.pdf.
       Chetty (UC Berkeley), Saez (UC Berkeley), Dividend Taxes 
     and Corporate Behavior: Evidence from the 2003 Dividend Tax 
     Cut, Quarterly Journal of Economics, Vol. 120 issue 3, August 
     2005, http://elsa.berkeley.edu/saez/chetty-
saezOJE05dividends.pdf.
       Chetty (UC Berkeley), Saez (UC Berkeley), The Effect of the 
     2003 Dividend Tax Cut on Corporate Behavior: Interpreting the 
     Evidence, American Economic Review (forthcoming), Papers and 
     Proceedings, Vol 92, issue 2, January 2006, http://
elsa.berkelev.edu/saez/chetty-saezAEA06.pdf.
       Brown (University of Illinois at Urbana-Champaign), Liang 
     (Federal Reserve Board), Weisbenner (University of Illinois 
     at Urbana-Champaign), Executive Financial Incentives and 
     Payout Policy: Firm Responses to the 2003 Dividend Tax Cut, 
     Presented at 2006 Boston American Finance Association 
     meeting, http://papers.nber.org/papers/w11002.pdf.
       Richard Kopcke (Federal Reserve Bank of Boston), The 
     Taxation of Equity, Dividends, and Stock Prices, Federal 
     Reserve Bank of Boston Public Policy Discussion Paper No. 05-
     1, January 2005 http://www.bos.frb.org/economic/ppdp/2005/
ppdp051.pdf.
       House (University of Michigan) and Shapiro (University of 
     Michigan), Phased in Tax Cuts and Economic Activity, NBER 
     Working Paper No. 10415, April 2004, http://papers.nber.org/
papers/wl0415.pdf.
       Selected quotations from outside. independent academic 
     papers offering evidence of the positive impact of the 2003 
     tax relief:
       ``The immediate tax rate cuts under the 2003 law provided 
     incentives for production and investment to rise 
     substantially . . . These incentives likely contributed to 
     the stronger economic performance in late 2003.''--
     Christopher House, Matthew Shapiro, ``Phased-In Tax Cuts and 
     Economic Activity,'' NBER Working Paper 10415.
       ``We find strong evidence that the 2003 change in the 
     dividend tax law had a significant impact on equity 
     markets.''--Alan Auerbach (DC Berkeley) and Kevin Hassett 
     (AEI), ``The Dividend Tax Cut and the Value of the Firm: An 
     Event Study,'' NBER Working paper 11449, July 2005.
       ``An unusually large number of firms initiated or increased 
     regular dividend payments in the year after the (2003 tax) 
     reform. As a result, the number of firms paying dividends 
     began to increase in 2003 after a continuous decline for more 
     than two decades.''--Raj Chetty and Emmanuel Saez (UC 
     Berkeley), ``Dividend Taxes and Corporate Behavior, Evidence 
     for the 2003 Dividend Tax Cut,'' Quarterly Journal of 
     Economics, August 2005.
       ``Fiscal policy along with monetary policy was an important 
     factor in helping to restart the economic engine in this 
     latest episode.''--Federal Reserve Chairman Ben Bernanke, 
     Testimony before the Joint Economic Committee, April 27, 
     2006.

  Mr. Speaker, I reserve the balance of my time.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield 3 minutes to the 
gentleman from Missouri (Mr. Carnahan), whose State leads this Nation 
in ethanol production and certainly understands the importance of the 
need for energy and the need for us to roll back these costs.
  Mr. CARNAHAN. Mr. Speaker, Republican policies continue in this 
Congress to favor the wealthy over middle-income Americans and without 
regard to the budget deficit that is expected this year to reach $370 
billion.
  In the Senate late last year, they had the good sense, common sense 
to block extension of special tax cuts. The argument was that they 
should not be extending these cuts to benefit the wealthy while our 
lawmakers were advancing a broad budget-cutting bill that mainly 
targeted programs for the poor such as Medicaid and welfare.
  Our ranking Democrat on the Senate Budget Committee said, ``You talk 
about completely detached from reality. That's this place.''
  Well, Mr. Speaker, on Tuesday, the AP reported that the average cost 
of unleaded gasoline was $2.92, up 35 cents from a month ago. Moreover, 
U.S. drivers are now paying about 14 percent more to fill their tanks 
than a year ago.
  The energy bill passed by this Congress last year was a multibillion 
dollar giveaway to big oil companies. It picked the pockets of the 
American people and helped line the pockets of Big Oil. Those taxpayer 
funded special breaks for Big Oil could have much better been used for 
funding alternative fuels and getting us weaned off our dependence on 
foreign fossil fuels.
  Despite the failure of this policy, the Republican tax bill gives 
even more to the big oil companies. It is time we stopped subsidizing 
the big oil companies who have made not just record profits but the 
biggest profits in the history of the world. This is why I rise in 
strong support of the motion to instruct, and I commend my colleague, 
Mr. Larson from Connecticut, for offering it.
  This motion would make three very important changes to close tax 
loopholes that are lining the pockets of Big Oil. First, it would 
eliminate accounting gimmicks that allow Big Oil to artificially 
inflate costs and reduce profits, thus reducing their tax liability, 
and continue on this course of record profits at the American public's 
expense.
  Second, it would close the loophole that gives oil companies a tax 
break for taxes they pay for doing business in foreign countries.
  And finally, the motion also eliminates the tax break for 
accelerating depreciation for oil companies that was given to them in 
the energy bill.
  The Larson motion would eliminate a 2-year amortization treatment for 
certain expenditures, treatment that is wholly inconsistent with the 
way this type of expenditure would be treated by other businesses. It 
is not fair to other American businesses, Mr. Speaker. Even the Bush 
administration has acknowledged this is excessive.
  It is time we end the Republican policy of giveaways to Big Oil, and 
I urge my colleagues to support the Larson motion.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I continue to reserve the 
balance of my time.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield 6 minutes to the 
distinguished gentleman from Michigan (Mr. Stupak), who has put forward 
legislation of his own and is here to speak and address this issue as 
he so often does and articulates it with such conscience and with such 
articulation.
  Mr. STUPAK. Mr. Speaker, I rise in strong support of the Larson 
motion to instruct conferees on H.R. 4297. The motion to instruct 
conferees is to adapt the three Senate provisions affecting large 
integrated oil companies and would raise over $5 billion in additional 
revenue over 10 years.
  Basically, what the Larson motion is doing is saying the same thing 
the President has said, once oil gets over $40 a barrel. Right now it 
is at $73 a barrel; why do we have to continue to give oil companies, 
big gas companies more tax breaks?
  Look at these record profits. 2005: this is just ExxonMobil. It was 
like $36 billion, the most ever by a U.S. company. The whole industry 
in the last year was over $110 billion. But yet the policy of this 
country is, give them more tax breaks.
  We have Mr. Higgins from New York who has the bill to say, take away 
the tax breaks. Take away those subsidies. If you are making this kind 
of money, why do you have to gouge us again? It is bad enough you gouge 
us at the pump. Now you are going to gouge us on April 15 and every day 
we pay taxes, and you are not paying any, with those record profits.

[[Page 6921]]

  Or take Mr. Markey's legislation. You know, when they drill for oil 
and gas on Federal lands, you are supposed to pay a royalty. But they 
get suspended. They can't even pay a reasonable royalty to the American 
people for drilling on the lands you properly own. Why can't we have 
the Markey bill before this House? Why can't we have the Higgins bill 
before this House? Because we will cut into these record profits, that 
is why. Because the American people are with the Democrats on the issue 
in support of the Larson motion to take away these tax subsidies for 
the richest companies in the world.
  Or how about the bill that we have been talking about for the last 
couple of weeks now, which is the PUMP Act that we have introduced, 
which is, prevent unfair manipulating of prices. Look, these old 
futures, as these prices go up, how do they get up there? How did we go 
from $40 a barrel to $73 or $75 a barrel? Through speculation, through 
greed and through fear.
  So we start speculating on the price of oil, add a little fear, like 
we have lately. That is called Iran because they might suspend oil 
supplies, so that is going to have to bring it up, and then we can get 
more profit out of it.
  Underneath the PUMP Act, what we are saying is, and currently, under 
current situation, only 25 percent of the oil futures are traded under 
NYNEX, the New York Mercantile Exchange. That means 75 percent are 
traded off-market. OTC they call them, over-the-counter.
  All the experts tell us if we would only regulate the trading of oil 
futures through the Commodity Future Trade Commission, we could cut the 
price of a barrel of oil by $20. That would be one-third off at the 
pump. That would be like 90 cents off a gallon of gas if we could just 
regulate it.
  If it is good enough for 25 percent of the oil traders to be 
regulated under the Commodities Future Trade Commission, why can't we 
do all of them? Just a fair question.
  That is our legislation. Democrats came up with that one. Again, we 
can't bring it to the floor. Look, price gouging, that is what we have 
been getting right here. And here today we passed the so-called price 
gouging bill, the Wilson bill. I even voted for it, as weak a bill it 
was on price gouging. And it is at least a start. The Republicans 
acknowledge that there is gouging going on, so at least they brought a 
bill today; that was a start. But we want to improve it.
  Why do we have to improve the Wilson price gouging bill that was 
passed by the House today? Just take a look at it. If you are going to 
start getting at the cost of energy, you have to start from the ground 
all the way to the gas pump. We know that, during September 2004 to 
September 2005, the cost of refining a gallon of gasoline went up 255 
percent. That is price gouging. Of course, the Wilson legislation 
doesn't take that into consideration.
  The Wilson legislation, the so-called price gouging legislation, 
doesn't consider natural gas, doesn't consider propane.
  See what happens here with the Republican Party and the special 
interests; only special interests are given freeness. We don't tax oil 
companies. We don't tax gas companies. We don't include all types of 
energy in price gouging, even if it does go up 255 percent in 1 year. 
That is not price gouging. Let's give them a break.
  Look, people are tired of being gouged at the pump or when they heat 
their homes. I have been for 8 months trying to bring up a reasonable 
piece of legislation on price gouging. It takes in all forms of energy 
from the ground to the pump.
  We had the PUMP legislation, which will actually cut $20 off a barrel 
of oil. Why can't we do that? Why can't we take away the tax subsidies? 
Why can't they pay a royalty when they drill on Federal lands? Why are 
we protecting these record profits that you see right here? I think the 
American people know.
  So I have been on this for the last 8 months. I am on the Energy and 
Commerce Committee. I have written to the chairman to have a hearing on 
my bill, because this winter, the Escanaba Senior Center got their 
bill. $7,000; next month it was over $13,000. Their energy assistance, 
LIHEAP, Low-Income Heating Energy Assistance Program, only gives $6,000 
a year. They used it all up in 1 month.
  And after they get done gouging us at the gas pump, they will be 
gouging us this winter as we heat our homes. Therefore, let's use 
common sense. Let's give something back to the American people who are 
being gouged at the pump, at the thermostat and every day by these oil 
and gas companies.
  Pass the Larson motion. It is the least we can do to try to bring 
some sanity back to this industry which is totally out of control and 
being protected by the Republican majority.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, can I ask the gentleman, how 
many more speakers do you have?
  Mr. LARSON of Connecticut. I don't believe we have any more speakers. 
I believe I have the right to close. I will reserve that right, and the 
gentleman can proceed.
  Mr. SAM JOHNSON of Texas. Mr. Speaker, I yield myself such time as I 
may consume.
  You can talk about price gouging all day, but it costs money to get 
oil out of the ground and get it delivered, and we have an excellent 
delivery system. And that oil doesn't come from just this country, 
because some of my friends over there have blocked us from drilling for 
oil or gas in the major parts of our country.
  I think that another provision that our Democrat friends propose in 
their effort to repeal the law of supply and demand by reducing foreign 
tax credits, they are proposing to increase the capital cost of 
American oil companies when drilling in other countries. And they think 
this will somehow reduce the cost of oil.
  Well, if you are scratching your head and wondering how increasing 
capital costs will then somehow be able to reduce the cost of a final 
product, join me in voting against this motion. This motion simply 
doesn't make sense.
  The Democrat proposal to take away foreign tax credits when American 
oil companies are drilling in far off places like Africa, South America 
or Central Europe, the last time I looked, that is where a lot of oil 
is. Yet the part of the Democrat motion on the foreign tax credit does 
increase the cost of drilling in those countries.
  Perhaps our Democrat friends would rather have China National 
Offshore Oil Company or Venezuelan companies winning these drilling 
contracts rather than American companies. I can assure you that the 
president of China National Offshore Oil Company and Hugo Chavez in 
Venezuela really don't care about the cost of a gallon of gasoline in 
suburban America.
  To handicap American oil companies when drilling offshore would be to 
disadvantage American oil companies in these global drilling contracts 
and will ultimately harm Americans at the pump.
  Again, Mr. Speaker, our friends on the other side of the aisle are 
aiming to repeal the law of supply and demand. Just like they can't 
repeal the laws of physics and have pigs fly, they can't repeal the law 
of supply and demand in the oil market. We should defeat this motion to 
instruct conferees.
  Mr. Speaker, I yield back the balance of my time.
  Mr. LARSON of Connecticut. Mr. Speaker, I yield myself such time as I 
may consume.
  And to my distinguished colleague from Texas, apparently, pigs have 
taken flight in the United States Senate because the Republican-
controlled Senate has sponsored this very straightforward legislation 
that calls for these rollbacks.
  And no one less than the President of the United States, and I will 
reiterate again, said ``record oil prices and large cash flows also 
mean that Congress has got to understand that these energy companies 
don't need unnecessary tax breaks.''

                              {time}  1930

  ``I am looking forward to Congress to take about $2 billion of these 
tax breaks out of the budget over the next

[[Page 6922]]

10-year period. Cash flows are up. Taxpayers do not need to be paying 
for certain of these expenses on behalf of energy companies,'' the 
President of the United States.
  But, you know, the real test here, I like to call it the Augie & 
Ray's test. Augie & Ray's is a little diner in my hometown of East 
Hartford. I go there frequently, and I have an opportunity to meet with 
people that are baffled by what is going on here in the United States 
Congress but surely astounded by the greed that exists in corporate 
America, especially as it relates to energy prices.
  These are people, regular people, in the Northeast who have seen 
their moneys cut for low energy assistance to heat their homes. These 
are people that are paying huge prices at the gas pump that is chewing 
up all of the profits that a small businessman makes, and they are 
wondering aloud what the United States Congress is going to do about 
it. So the President of the United States, a Republican, and the 
Republican-controlled Senate call for this rollback that is modest at 
best; and yet our colleagues on the other side of the aisle persist in 
saying, oh, no, this is much-needed relief for oil companies that 
receive tax cuts on top of record-breaking profits, while we cut 
assistance to the poor.
  People that have to make a decision between the food that they eat, 
heating and cooling their homes, and the prescription drugs that their 
doctors tell them to take want relief from their government. We have 
already made them refugees from their own health care system by sending 
them to Canada to get the kind of prices on their prescription drugs 
that they can afford, and now we are squeezing the middle class 
throughout the Northeast and senior citizens who have nowhere else to 
turn.
  This is a modest, modest proposal that Mr. McDermott submitted last 
week and I submit this week, that the Republican-controlled Senate has 
already passed.
  We implore you to embrace this straightforward rollback in a time 
when oil companies and their executives have made unprecedented profits 
so that we can provide basic relief to American citizens. I implore my 
colleagues to vote for this motion.
  Mr. LEVIN. Mr. Speaker, I rise in strong support of the motion by 
Representative Larson that calls for rolling back $5.4 billion in 
unjustified tax subsidies and loopholes for the oil industry. The 
Senate has voted to close these loopholes, and the House should do the 
same. We are here to represent the interests of American consumers, not 
the interests of the oil companies.
  The average U.S. price for self-serve regular gas is $2.91 a gallon, 
or nearly 70 cents higher than it was at this time last year. This is 
the average cost. In many areas, the price of a gallon of gas is much 
higher. Some of this is due to higher oil prices and strong demand for 
petroleum, but some of the price hikes we are seeing simply cannot be 
explained away by supply and demand.
  At the same time that consumers are facing pain at the pump, the oil 
companies are raking in record profits. Last week, the world's largest 
oil company, Exxon Mobil Corp., announced first-quarter profits of $8.4 
billion, up 7 percent from a year ago. This gave Exxon the fifth-
highest quarterly profits ever recorded by a publicly-traded company. 
Marathon Oil's profits more than doubled in the first quarter to $784 
million. ConocoPhillips, the Nation's third-largest oil and gas 
producer, reported last week that its first quarter profit rose 13 
percent. All told, the country's three largest U.S. petroleum companies 
posted combined first-quarter income of almost $16 billion, an increase 
of 17 percent from the year before.
  Further, Exxon Mobil recently was able to give its former CEO one of 
the most generous retirement packages in history: nearly $400 million, 
including pension, stock options and other perks. The people I 
represent simply do not understand how the energy companies can keep 
posting sky-high profits, award $400 million golden parachutes to their 
executives, and keep raising the price of gasoline.
  The very least Congress can do is to close some of the unjustified 
loopholes in the tax code that unfairly benefit big oil companies. 
Americans are watching what we are doing here. I am sure they noticed a 
plan floated by Senate Republicans last Friday to give consumers a $100 
rebate check, paid for by a tax change on oil company inventory 
accounting. For most people, that would come out to about two or three 
tanks of gas. Consumers want us to fix the problem, not buy them off 
with a $100 check. But what's interesting here is how the proponents of 
the rebate plan quickly shelved their proposal just a few days later 
after oil companies waged an intense lobbying effort to block the 
closure of the inventory accounting loophole. This speaks volumes about 
who the Republican leaders of Congress listen to.
  The motion before the House would roll back $5.4 billion over 10 
years in tax subsidies and loopholes for the oil industry. That comes 
out to about $135 million a quarter, which comes out to be about 1.6 
percent of Exxon's first-quarter earnings in 2006.
  So there is a clear choice before the House today. We can stand with 
consumers who are struggling with these sky-high gas prices, or we can 
stand with the oil companies that are posting some of the highest 
profits in the history of the world.
  The SPEAKER pro tempore. Without objection, the previous question is 
ordered on the motion to instruct.
  There was no objection.
  The SPEAKER pro tempore. The question is on the motion to instruct 
offered by the gentleman from Connecticut (Mr. Larson).
  The question was taken; and the Speaker pro tempore announced that 
the noes appeared to have it.
  Mr. LARSON of Connecticut. Mr. Speaker, on that I demand the yeas and 
nays.
  The yeas and nays were ordered.
  The SPEAKER pro tempore. Pursuant to clause 8 of rule XX, further 
proceedings on this question will be postponed.

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