The Times is reporting that special tax breaks that apply to exactly 5 companies, all of whom produce oil, will not be repealed, at least not now:

http://www.nytimes.com/2011/05/18/us/politics/18congress.html?partner=rss&emc=rss

What the article doesn't make clear is the way the tax break is written, it applies to exactly five companies; the law says that the break is for companies that produce so much oil, have so much revenue, produce so much gas, etc. so that only these five oil companies (BP, Exxon Mobil, Shell, Chevron and ConocoPhillips) qualify for the breaks. Apparently smaller companies like Marathon or Hess don't qualify for these tax breaks, at least according to an expert who explained the details on the radio this morning.

I completely get the idea that there are times you want to provide incentives for the private sector to do things that are good for the larger society, and I believe that there can be a rational argument made that oil drilling and exploration is one of these things (I wouldn't make it, but I respect the argument.) What I do not get is treating the largest of these companies differently than their smaller competitors and thinking that this is OK. I know, this is SOP in DC, but come on, usually when the light of day shines on the roaches they scurry, or in DC parlance, they're "shocked" and they act to correct the wrong. In this case, the Republicans, are saying, essentially, the biggest of the big deserve a publicly financed competitive advantage. How can this be justified with a straight face?

and where is the Democratic outrage over Obama wanting more drilling in the Gulf and Alaska?
Another campaign promise up in smoke, a hot button issue for the liberals even here, nobody is saying a peep now? Gee why is a promise so important at one time and not another?
Drilling for oil in the Gulf
Guantanamo
Torture
don't ask don't tell
wire taps
no lobbyists on your cabinet
waiting to sign bills after letting all know what is going on
why were these major issues that are no longer cared about?

I am for repealing ALL subsidies of ALL companies, and ALL subsidies of ALL citizens.

I guess that would make it simple...

On the face of it you'd struggle to make a case for maintaining subsidies to 5 companies that made combined profits in the tens of billions last year. I suppose that given the importance of the dividends they pay to most pension funds this is an indirect subsidy to everybody's retirement income, but there must surely be more efficient ways to do that if you're inclined to. Can't really think of any other justifications.

bbauska wrote:I am for repealing ALL subsidies of ALL companies, and ALL subsidies of ALL citizens.

Perhaps that's the right way. I dunno, it seems that so many are misused and abused, I'd like to think that important things could be encouraged with subsidies, but at what cost? What really gets me is the unfairness that is just written into the tax code. If you're big you get a break, if you're little (and mind you Marathon has a market cap of $35 billion or so) none for you! And I understand how it happens: the right to petition the gov't in the first amendment, but when it comes to light, the right thing to do is snuff it out, not defend the undefendable.

Another great reason to have the tax code simplified (or dare I say, one rate?). Let business find their niche and thrive.

GMTom wrote:and where is the Democratic outrage over Obama wanting more drilling in the Gulf and Alaska?
Another campaign promise up in smoke, a hot button issue for the liberals even here, nobody is saying a peep now? Gee why is a promise so important at one time and not another?
Drilling for oil in the Gulf
Guantanamo
Torture
don't ask don't tell
wire taps
no lobbyists on your cabinet
waiting to sign bills after letting all know what is going on
why were these major issues that are no longer cared about?

And that is relevant to geojanes point how ?

I believe that it is a Republican reflex when their party is legitimately criticised.

Another solution is to put a sunset clause on all laws. That is, the congress is duty bound to reaffirm laws after a certain date.
Why, for instance does the Cotton Farmer continue to get a 2 billion dollar a year subsidy even though it is, and has been flourishing for many years.
Subsidies may make sense at a point in time to address a specific need. But unless they are are rountinely addressed they often survive the original intent and the original conditions that seemed to make sense.
Oil subsdies and tax law have been written by the industry. Consider that foreign royalites are considered a tax, rather than a cost of extracting the oil. That means that Saudi royalites take money right out of the hands of American taxpayers and put them into Saudi hands. It also provides Saudi oil with exagerated margins over domestic production, ensuring that oil conglomerates will always favour the greater margins provided to them by the Saudis over developing domestic production.
Fundamentally it means that the 5 largest oil companies are less interested in Dril Baby drill then they let on...and why they continue to fight any changes to the byzantine construct of tax laws, subsidies, incentives and policy. They were written to maintain corporate profits not to meet the ongoing needs of the American economy. (They aren't one and the same thing.) So-called fiscal conservatives who reflexively defend this industry, rather than examine thier actions and its affect on the long term economy, do their country a disservice by playing along with the conglomerates.

I do believe I am one of the most (if not THE most) fiscally conservative on Redscape. I do not support subsidies for any oil company. Or for that matter any subsidy of any business, state, local government, person or entity. Let the people survive on their own.

Perhaps that is what Neal Anderth meant by being a "let them die in the gutter" Libertarian when describing me.

Subsidies--not really. Actually, they are tax breaks, depletion allowances, etc.--very similar to what most other companies in other fields get.

Should the oil companies get them? Maybe not, but this is a sideshow. The Democrats are merely distracting the American people from examining their failures: no energy policy (that works), no budget, out of control spending, unemployment at 9% despite massive government spending, nearly $4 a gallon gasoline, not just two wars, but three, etc.

So, they go after a relatively small amount of money--but also go after a politically popular target: Big Oil. It may work short term, but it will do nothing to help any of the above situations and it won't decrease gas prices and may even increase them (because some oil exploration may be too high risk without subsidy).

The Senate last passed a budget 750 days ago.

The President has produced only the broadest of outlines to reduce the deficit.

So, the Democrats engage in a nice game of three card monte (with apologies to Monte), hoping we'll look at the cards instead of everything else.

Re: subsidies

I know that is how it works. Just using Rickyp's words. All the more reason to take all the tax breaks, allowances etc. away from everyone. The debt is WAY too large, and to spend the time picking and choosing who gets what is silly. Nobody gets them. Fix the debt, and then take a look at what benefits we can begin again (if any).

Subsidies--not really. Actually, they are tax breaks, depletion allowances, etc.--very similar to what most other companies in other fields get.

You can call a turd a rosebud. Its still smells the same.
Other industries pay for production costs but they aren't called foreign taxation. But oil corporations can pay royalties for extraction and deem them to be taxes. Depriving the US state of taxes evey other industry pays due to this preferential treatment.
And what does it mean? that foreign oil production is more profitable than domestic to the corps.
Now, you say that there is no energy policy Steve. But you're wrong. This preferential treatment of taxes and expenses IS policy. (And its been policy for a very long time...)
And it works to the detriment of the domestic oil industry, the American taxpayer and to American foreign policy and trade accounts.

Should the oil companies get them? Maybe not, but this is a sideshow. The Democrats are merely distracting the American people from examining their failures: no energy policy (that works),

Its hardly a side show Steve. Its a key reason why domestic energy production is lower than it would be if the "subsidy" (call it what ever you want it is effectively a subsidy) didn't exist. Its a key reason why the balance of payments is higher than it would be ...a key reason why US foreign policy bends to the will of the Saudis more than it would...
This is typical conservative inability to look a subsidy in the eye and call it what it is...Preferential treatment to a corporation that acts to the detriment of the average American and the nation at large.

My point was simple, where is the outrage?
No outrage here, none over the other issues, none when it's Obama.

Bush would blow his nose and the Democrats would cry foul. Those same democrats are now silent and accepting, funny thing how they see what they want to see.
and why is this a conservative issue per Ricky? please enlighten me how this is conservative in any way, the Democrats controlled things for how long and refused to change anything.

rickyp wrote:

Subsidies--not really. Actually, they are tax breaks, depletion allowances, etc.--very similar to what most other companies in other fields get.

You can call a turd a rosebud. Its still smells the same.
Other industries pay for production costs but they aren't called foreign taxation. But oil corporations can pay royalties for extraction and deem them to be taxes. Depriving the US state of taxes evey other industry pays due to this preferential treatment.

You can demonstrate that every other industry pays them?

And what does it mean? that foreign oil production is more profitable than domestic to the corps.

So, the fact that corporations receive tax breaks to drill domestically means that it costs more to drill here? That "truth" is not immediately intuitive to the casual observer.

Now, you say that there is no energy policy Steve. But you're wrong.

No, subsidies don't make a "policy." And, if they do, as you insist, who is responsible? Obama and the Democrats. They had complete, unassailable control of government and did . . . nothing.

There is no "plan" meaning there is no meaningful means on the planning board of expanding energy production. We live in an energy-driven economy and there is no plan for expanding the supply.

Its hardly a side show Steve. Its a key reason why domestic energy production is lower than it would be if the "subsidy" (call it what ever you want it is effectively a subsidy) didn't exist. Its a key reason why the balance of payments is higher than it would be ...a key reason why US foreign policy bends to the will of the Saudis more than it would...

First, it absolutely is a sideshow. We are talking a few billion. The problem facing the US is tens of TRILLIONS. Eliminating subsidies, while politically cool, would be like spitting on a forest fire.

Second, pardon me if I don't take the great Ricky's word on this. I would submit the Administration's drilling moratorium and restrictions on coal and coal mining are doing more to reduce domestic energy production than anything else. How would taking money from oil companies cause them to produce more oil domestically?

From API (reader alert):

Here are a few of the items which are being incorrectly identified as “subsidies” inside the beltway:

Intangible Drilling Costs – Companies which engage purely in energy exploration and discovery can recover their costs related to exploration at tax time at a rate of 100%. This lessens the burden on energy providers for the number of “dry holes” which may be found in the process. Integrated companies (i.e. “big oil”) can recover these exploration costs at 70%. Not a subsidy.

Domestic Manufacturer’s Deduction (Section 199) – A deduction (not a credit) equal to 9% of income earned from manufacturing, producing, growing or extracting in the United States, is available to every single taxpayer who qualifies in the U.S. The oil and gas industry, and only the oil and gas industry, is limited to a 6% deduction.

Percentage Depletion – The percentage depletion deduction is a cost recovery method that allows taxpayers to recover their lease investment in a mineral interest through a percentage of gross income from a well. This depletion method is not available to companies that produce oil as well as refine and market it (i.e. “Big Oil”.) This is available to all extractive industries (gold, iron, clay, etc) in the US and is in no way unique to the oil and gas industry.

Third, what has OBAMA done in 2+ years to increase domestic energy production? He's spent my money (and that of every American taxpayer) on things that may, some day, have some impact, potentially. In the meantime, what we have (coal, natural gas, oil, shale, etc.) is not being used to its fullest.

This is typical conservative inability to look a subsidy in the eye and call it what it is...Preferential treatment to a corporation that acts to the detriment of the average American and the nation at large.

Interestingly, I didn't support the subsidies. That doesn't matter to you.

The key thing is this: Congress is throwing dirt into the air to convince us they are busy. However, they are failing to tackle the big issues: debt, spending, a budget. If you think this will go a long way toward solving those problems--prove it.