Obama Seeks to Slash Oil Subsidies in 2012 Budget
The Obama administration released its 2012 budget today, highlighting a series of spending cuts and revenue increases that the White House says could save the country $1.1 trillion over the next decade. Included in the proposal are the elimination of so-called “tax preferences” to oil and gas companies that are set to cost taxpayers more than $43 billion over the next ten years. Meanwhile, Democrats in the House of Representatives introduced parallel legislation seeking even an more drastic cutback in support to the fossil fuels industry. The “Ending Big Oil Tax Subsidies Act” would eliminate 10 subsidies and tax breaks currently offered to oil companies, saving the government $40 billion over the next five years.
Though similar attempts to reduce taxpayer support for the industry have failed to get out of congress, Democrats seem to be targeting the newly elective wave of “deficit hawk” conservatives—many of whom are aligned with Tea Party movement—in an effort to force them to prove that they are consistent in their promise to cut spending wherever possible.
“It makes no sense that we are borrowing money from China to subsidize the most profitable industry in the world and corporations like ExxonMobil that earn billions every year,” said Rep. Earl Blumenauer in a press release. “It’s time for us to have a serious, rational discussion about cutting the budget.”
Fearing that the tactic might actually pick up steam with small-government Republicans and moderate, industry-friendly Democrats, the oil lobby is said to gearing up for a fight on the issue. “In the current dynamic, we can’t take anything for granted,” said the American Petroleum Institute’s Marty Durbin, to the Houston Chronicle on Sunday. “Given the strong desire for new members of Congress to want to show they are really doing something on cost cutting and deficit reduction, you never know what could get thrown in the mix.”
In the past, the industry has said that any cuts to the subsidies would simply be passed on the consumers, effectively acting as a “backdoor” gas tax. But with prices already higher at the pump and a flood of new fuel-efficient vehicles on the market, Americans now have the option to cut their fuel consumption instead of being held hostage by industry threats and rapid fluctuations in the energy market.