[Congressional Record (Bound Edition), Volume 157 (2011), Part 5]
[Senate]
[Pages 7123-7124]
[From the U.S. Government Publishing Office, www.gpo.gov]




                    CLOSE BIG OIL TAX LOOPHOLES ACT

  Mr. SCHUMER. I rise today in support of the legislation authored by 
my good friend from New Jersey, Senator Menendez. As you know, the 
Democrats here on our side of the aisle are focusing on this 
legislation this week and next. But Senator Menendez has been 
championing this legislation for quite a while. He was prescient to 
focus on this idea. I am glad we will have a vote on it. I hope the 
vote will pass. I have heard a few of our Republican colleagues now 
have said they would consider voting for it. Nothing would be better in 
terms of showing some bipartisanship and giving us some hope that we 
can come to a fair agreement on the budget than to pass this 
legislation.
  In the last election, voters who gave those of us who have the 
privilege of serving in this Chamber two distinct mandates. They told 
us to do two things at once. First, perhaps foremost, make the economy 
grow. Create good-paying jobs. Make sure that American dream burns 
brightly, the dream that says to the average middle-class family: The 
odds are pretty good that you will be doing better 10 years from now 
than you are doing today, and the odds are very good that your kids 
will do better than you.
  For that dream, which has burned so brightly in this country for 
hundreds of years, the candle began to flicker a little bit in this 
decade, because median income went down even before the recession, 
which meant that even if you had a job--and we know that millions are 
out of work despite the fact that they look--I think of all of the 
people whom I have met who are struggling because they do not have 
jobs. But even people who do have work have a difficult time when they 
sit down at that dinner table Friday night after dinner, figuring out 
how they are going to pay the bills. The cost and needs keep going up. 
And even when you have a job, the income does not seem to keep up.
  So that is one obligation voters sent us, and it is a very justified 
one. Second, they said in no uncertain terms, rein in the out-of-
control Federal deficit. Rein it in. And they are right. Because in a 
certain sense, I have said this before, but I think it is worth 
repeating: The debt--the symbolic nature of the debt is as follows: We, 
the U.S. Government, are a blindfolded man, and we are walking toward 
the cliff. Once we fall off that cliff, there is no getting back up.
  Now the debate is whether we are 20 feet from that cliff or 200 yards 
from that cliff. But we know sooner or later if we keep walking 
straight, we are going to fall off. So that means try to rein in this 
out-of-control Federal deficit. It would be hard enough to accomplish 
one of these goals. To try to do both at once is a Herculean task. It 
is why we are having such divisions here, and it is why everyone is 
grappling.
  I think everybody is trying to do the right thing regardless of their 
ideology. But there are strong feelings. So when we can come to issues 
that seem to have an easy common ground, because things are so 
difficult, we ought to jump at them. That is what the Menendez 
amendment is. It is a choice that is not a tough one, not a mile, 
because it is obvious that at this time, when there are so many needs, 
to continue to give the oil companies the kinds of tax break we do 
makes no sense. Getting rid of these corporate subsidies to Big Oil is 
a no-brainer. Decades ago these were passed. Oil was $17 a barrel. 
Maybe it made sense in those days to give companies an incentive to 
explore, to produce.
  One of the subsidies the Menendez legislation repeals, the Oil 
Depletion Allowance, dates back to 1913. That is the same year a man 
named William Burton patented a new oil extraction process called 
``thermal cracking.'' Well, Big Oil no longer cracks for petroleum 
using Mr. Burton's method. It is an outdated process, decidedly. But 
the outdated tax subsidy still remains on the books, amazingly enough. 
With oil hovering at $100 a barrel, Big Oil reaping record profits, it 
defies logic for this government to spend billions of dollars, for 
these taxpayers to give dollars out of their pocket every year when 
they are struggling, to tax giveaways to Big Oil which is making record 
profits.
  Believe me, the free market gives the oil companies enough of an 
incentive to produce. When oil is $100 a barrel, they do not need an 
extra subsidy from the government to produce. They are going to produce 
every bit of oil they can.
  They make huge profits, so they do not need a financial nudge from 
Washington. At the same time, middle-class Americans get hit with a 
double whammy. They are paying $70 or more to fill up their gas tanks, 
and then some of their hard-earned tax dollars are being used to line 
Big Oil's pocket.
  In my home State of New York, the price of gas is up 35 percent on 
average compared to this time last year. Economists estimate the 
typical family will pay almost $1,000 more on gas this year than last. 
Families across the country are still struggling to make ends meet. As 
the economy slowly recovers, they cannot afford to get gouged at the 
pump.
  With billions of dollars worth of tax subsidies and gas prices at 
near record highs, it is no wonder that the top five oil companies just 
announced mind-boggling profits. These companies are not only among the 
most profitable businesses in the United States, they are among the 
most profitable in the whole world. In the first quarter of this year 
alone, the Big Five brought in $36 billion in profits. In the past 
decade, they took home nearly $1 trillion--not a billion, a trillion 
dollars in profits.
  There is nothing wrong with these profits in and of themselves. In 
America we celebrate success, we want the private sector to thrive. But 
at a time when the government is looking to tighten its belt, and we 
are grappling with painful cuts because we have the dual goal of 
growing the middle class but also reducing the deficit, it boggles the 
mind that we continue to subsidize such a lavishly profitable industry.
  There are priorities. I said this to the oil company executives today 
when they testified before the Finance Committee. I want to salute 
Chairman Baucus for holding such outstanding hearings. There are 
priorities. How many Americans would say, if we had to choose, that we 
should give oil companies an extra subsidy rather than help kids who 
deserve to go to college pay for college?
  That is what many of my colleagues are recommending. That is what the 
House budget recommended. How many of my colleagues would say we ought 
to cut cancer research but still continue to give the oil companies the 
subsidies we do? Again, the Ryan budget does that.
  I understand they say we have to cut spending. We do. But we also 
have to cut out wasteful giveaways such as tax breaks for Big Oil. I 
would do that before I cut aid to college students who are struggling 
to pay for college, which is more and more expensive, before I cut 
cancer research, which has saved millions of lives, including people we 
know and love. I would do that before I cut money for veterans or cut 
money to keep our homeland secure. But the budget Mr. Ryan has 
proposed, and many of the budgets I have seen come from colleagues on 
the other side of the aisle, choose these subsidies to Big Oil over 
money to help kids pay for college, over cancer research, over helping 
our veterans, over keeping our homeland secure.
  Hardly any American would agree with that. Hardly any American, 
Democratic or Republican, liberal, conservative, North, East, South, or 
West.
  Try to wrap your head around it. Big Oil is reporting record profits, 
gas prices are near an all-time high, and we the American taxpayers are 
subsidizing the oil industry to the tune of $4 billion a year.
  You do not need the imagination of Lewis Carroll to come up with a 
more ridiculous scenario. That is why I strongly support and I am proud 
to cosponsor Senator Menendez's Close Big

[[Page 7124]]

Oil Tax Loopholes Act. This legislation will put an end to taxpayer 
handouts in the five largest integrated oil companies, and use the $21 
billion in savings to reduce the deficit. This $21 billion is an 
excellent downpayment on our effort to get the Nation's fiscal house in 
order. The bill repeals a host of Byzantine tax provisions that only a 
lobbyist could love, such as the deduction for tertiary injectants and 
the deduction for intangible extraction costs.
  Small and medium-sized oil firms are exempt. The legislation only 
deals with the Big Five: Shell, ExxonMobil, Chevron, ConocoPhillips, 
and BP. I have heard pundits from the hard right parrot Big Oil's 
talking point that repealing these giveaways would increase gas prices 
for consumers. Well, nothing could be further from the truth. 
Independent analyses have repeatedly found that ending these absurd 
subsidies would not impact the price of gas. In what was perhaps an 
inadvertent moment of candor at this morning's Senate Finance Committee 
hearing, ExxonMobil's CEO Rex Tillerson said: ``Gasoline prices are a 
function of crude oil prices, which are set in the marketplace by 
global supply and demand--not by companies such as ours.''
  That does not seem like an objectionable comment. It is true. And 
when he made that comment, Mr. Tillerson of ExxonMobil has conceded 
that repealing taxpayer-funded subsidies for the Big Five will not 
increase prices. Prices are set, as he said, by global supply and 
demand.
  That is not to say that repealing the subsidies will necessarily 
bring down prices. We are not making that claim. All along we have been 
clear that the purpose of this bill is to make a dent in the deficit by 
repealing tax breaks for the five companies that are the least in need 
of help from Uncle Sam.
  Lowering the cost of gas and ridding our country of its dependence on 
foreign oil requires a long-term, comprehensive approach. In the months 
ahead, I expect the Democratic caucus will unveil a thorough and 
forward-thinking plan to do just that.
  In the meantime, if Republicans in the House are serious about 
deficit reduction, the Menendez bill is their chance to show it now. 
There is no good reason not to support this sensible legislation. 
Speaker Boehner said earlier this week he wants to make trillions of 
dollars in cuts. Here is a good place to start. Indeed, the Speaker 
himself has previously said as much. Let's not forget he was in favor 
of repealing oil subsidies before he was against it. The bottom line is 
this: At a time of sky-high oil prices, it is unfathomable to continue 
to pad the profits of oil companies with taxpayer-funded subsidies. The 
time to repeal these giveaways is now.
  Our plan to cut the deficit begins with ending wasteful subsidies to 
big oil. The Republican plan begins with ending Medicare as we know it. 
That is a bright-line difference between our side and theirs. We know 
what choice the American people will make.
  Mr. President, I ask that the Presiding Officer report the 
nomination.

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