Democrats’ Plan Would Offset Deficit by Ending Big Oil’s Tax Breaks

 

With high gas prices and rising federal deficits in the political spotlight, senior Democrats believe that tying the two together will put pressure on Senate Republicans to support the measure or face a difficult time explaining their opposition to voters whose family budgets are being strained by fuel prices.

President Obama and some top Congressional Democrats have said they want to take some of an estimated $21 billion in savings from ending the tax breaks and steer it to clean energy projects. But the Senate’s Democratic leadership is calculating that using it to cut the deficit instead makes it a tougher issue politically for Republicans who are trying to burnish their conservative fiscal credentials.

“Big Oil certainly doesn’t need the collective money of taxpayers in this country,” said Senator Robert Menendez, Democrat of New Jersey, one of the authors of the legislation that Democrats intend to showcase. “This is as good a time as any in terms of pain at the pump and in revenues needed for deficit reduction.”

As part of the effort to build support for the measure, the Senate Finance Committee has invited multinational oil company executives to discuss the tax subsidies and other government incentives at a hearing on Thursday.

Many Republicans are certain to oppose the proposal, making it hard for Democrats to assemble the 60 votes that will be needed to break a filibuster, given the resistance from energy-state senators in their own ranks. Republicans have characterized calls by Mr. Obama and Congressional Democrats to end the breaks as backdoor tax increases that will only increase gas prices.

“Instead of returning again and again to tax hikes that increase consumers’ costs, the administration and its Democrat allies in Congress should open their eyes to the vast energy resources we have right here at home and to the hundreds of thousands of jobs that opening them up could create,” Senator Mitch McConnell of Kentucky, the Republican leader, said in a statement.

Hoping to reinforce that point, House Republicans are set to approve legislation this week that would expand the coastal areas where energy companies can explore and produce oil and gas.

Democrats say they tailored their bill to make it harder for Republicans to reject after Senator Harry Reid, the majority leader, and Mr. Menendez wrote to colleagues last week that their goal was to “proceed with a bill that maximizes our chances of garnering bipartisan appeal.”

As currently written, the bill would apply only to what Democrats have identified as the five largest and most profitable oil companies: BP, Exxon Mobil, Shell, Chevron and Conoco Phillips. Those involved in writing the measure said they restricted it to those firms by using a definition that applied to major oil companies with certain levels of revenue. Democrats say they believe that approach thwarts Republican arguments that eliminating the tax breaks could affect more than just the major oil firms.

The proposal would end a series of tax advantages for the five companies and produce about $21 billion over 10 years, Democrats say.

More than $12 billion would come from eliminating a domestic manufacturing tax deduction for the big oil companies, and $6 billion would be generated by ending their deductions for taxes paid to foreign governments. Critics suggest that the companies have been able to disguise what should be foreign royalty payments as taxes to reduce their tax liability. The bill would also deny the companies the ability to deduct some intangible drilling and development costs, producing another $2 billion.

Some Congressional Democrats, including Senator Max Baucus, the Montana Democrat who heads the Finance Committee, have proposed using the revenue from the elimination of the tax breaks to promote alternative fuels and provide incentives to purchase fuel-efficient vehicles. Mr. Obama has made similar suggestions, and in his regular address over the weekend he again called for more emphasis on the development of clean energy.

But top Democrats said that reallocating the money that way would allow Republicans to accuse Democrats of picking winners and losers in the energy industry. At the same time, the strict focus on the deficit could cause unrest among Democrats who support alternative energy projects.

Last week’s sudden dip in oil prices, which could show up at the pump soon, might also sap momentum behind the tax measure.

Don Stewart, a spokesman for Mr. McConnell, noted that Democrats typically criticize oil companies when gas prices are high. He pointed to remarks made by Democrats at a 1974 Senate hearing that echoed the current talk of soaring profits and industry bonanzas.

“These guys need a new playbook,” Mr. Stewart said.

But Democrats said they see themselves as occupying the political and policy high ground in this case. They noted that top Republicans like Speaker John A. Boehner and Representative Paul D. Ryan, the Wisconsin Republican who is chairman of the House Budget Committee, have suggested that industry subsidies might have to be curbed.

Even talk of Republican delaying tactics does not seem to disturb Democrats who are eager to engage in a fight about oil.

“I am happy to have this debate on the floor for days,” Mr. Menendez said.

 

Democrats Sue to Force U.S. Election Agency to Reveal Political Donations

 

The lawsuit seeks to close “a major loophole” that allows private companies and nonprofit groups to operate “under a veil of anonymity” in raising money for political work, said Representative Chris Van Hollen, a Maryland Democrat who brought the lawsuit along with lawyers for several liberal groups.

In another push for greater disclosure, President Obama is considering issuing an executive order that would require contractors with federal business to report their political donations. “His goal is transparency and accountability,” said the White House spokesman, Jay Carney.

A surge in corporate spending on political causes — the result of a Supreme Court decision in the Citizens United case in January 2010 — became a major issue in the Congressional races that year and promises to be important in the 2012 presidential race.

Some Democrats attributed their loss of the House majority in November to the flood of largely anonymous spending by conservative groups. They have been unsuccessful in rolling back aspects of the Citizens United decision in the courts or in Congress, where Senate Republicans last year blocked a measure known as the Disclose Act, which Mr. Van Hollen sponsored.

As a result, Democrats are turning to other regulatory and executive branch measures — tactics that conservatives said Thursday smacked of political desperation as the presidential election nears.

“This is a sign of weakness by a group that’s afraid they’re going to lose, and lose big,” said Bradley A. Smith, a conservative lawyer and former Federal Election commissioner who leads the Center for Competitive Politics, a conservative advocacy group.

“Again and again, you see evidence that their real purpose is to try to shut down their political opposition,” Mr. Smith said. He and other conservatives argue that disclosure requirements pushed by Democrats amount to a chilling of free speech.

Mr. Van Hollen said in an interview that the lawsuit reflected an effort to use “all available options” to reduce the influence of anonymous corporate money.

In his lawsuit, Mr. Van Hollen noted that a number of the most prominent conservative nonprofit groups spent a total of more than $65 million on political activities in the 2010 races without disclosing any of the donors who financed their activities.

He singled out, among others, Crossroads GPS, a conservative group tied to Karl Rove, who was a senior adviser to President George W. Bush; Americans for Prosperity, financed by the billionaire brothers who lead Koch Industries; and the U.S. Chamber of Commerce, which has increased its political spending significantly in the face of threatened regulatory restrictions on American businesses.

The chamber charged Thursday that the lawsuit, along with Mr. Obama’s consideration of disclosure rules for contractors, were part of a “witch hunt” by Democrats meant to punish their “political foes.”

Specifically, the lawsuit seeks to reverse a 2007 Federal Election Commission regulation requiring companies and groups to name only those donors who gave at least $1,000 specifically for the purpose of financing political activity. Mr. Van Hollen said the agency overstepped its authority in enacting the regulation because it “gutted” disclosure requirements that Congress had put in place in 2002.

The commission declined to comment on the lawsuit.

 

Democrats Sue to Force U.S. Election Agency to Reveal Political Donations

 

The lawsuit seeks to close “a major loophole” that allows private companies and nonprofit groups to operate “under a veil of anonymity” in raising money for political work, said Representative Chris Van Hollen, a Maryland Democrat who brought the lawsuit along with lawyers for several liberal groups.

In another push for greater disclosure, President Obama is considering issuing an executive order that would require contractors with federal business to report their political donations. “His goal is transparency and accountability,” said the White House spokesman, Jay Carney.

A surge in corporate spending on political causes — the result of a Supreme Court decision in the Citizens United case in January 2010 — became a major issue in the Congressional races that year and promises to be important in the 2012 presidential race.

Some Democrats attributed their loss of the House majority in November to the flood of largely anonymous spending by conservative groups. They have been unsuccessful in rolling back aspects of the Citizens United decision in the courts or in Congress, where Senate Republicans last year blocked a measure known as the Disclose Act, which Mr. Van Hollen sponsored.

As a result, Democrats are turning to other regulatory and executive branch measures — tactics that conservatives said Thursday smacked of political desperation as the presidential election nears.

“This is a sign of weakness by a group that’s afraid they’re going to lose, and lose big,” said Bradley A. Smith, a conservative lawyer and former Federal Election commissioner who leads the Center for Competitive Politics, a conservative advocacy group.

“Again and again, you see evidence that their real purpose is to try to shut down their political opposition,” Mr. Smith said. He and other conservatives argue that disclosure requirements pushed by Democrats amount to a chilling of free speech.

Mr. Van Hollen said in an interview that the lawsuit reflected an effort to use “all available options” to reduce the influence of anonymous corporate money.

In his lawsuit, Mr. Van Hollen noted that a number of the most prominent conservative nonprofit groups spent a total of more than $65 million on political activities in the 2010 races without disclosing any of the donors who financed their activities.

He singled out, among others, Crossroads GPS, a conservative group tied to Karl Rove, who was a senior adviser to President George W. Bush; Americans for Prosperity, financed by the billionaire brothers who lead Koch Industries; and the U.S. Chamber of Commerce, which has increased its political spending significantly in the face of threatened regulatory restrictions on American businesses.

The chamber charged Thursday that the lawsuit, along with Mr. Obama’s consideration of disclosure rules for contractors, were part of a “witch hunt” by Democrats meant to punish their “political foes.”

Specifically, the lawsuit seeks to reverse a 2007 Federal Election Commission regulation requiring companies and groups to name only those donors who gave at least $1,000 specifically for the purpose of financing political activity. Mr. Van Hollen said the agency overstepped its authority in enacting the regulation because it “gutted” disclosure requirements that Congress had put in place in 2002.

The commission declined to comment on the lawsuit.