Tag Archives: subsidies

Billions for Big Oil, Nothing for the Unemployed

04 Sunday Jul 2010

Posted by in budget, Congress, Deepwater Horizon, economy, Gulf Oil Spill, lobbyists, Obama administration, oil exploration, Politics, special interests, Unemployment

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We can’t afford to extend unemployment benefits, but:

“…an examination of the American tax code indicates that oil production is among the most heavily subsidized businesses, with tax breaks available at virtually every stage of the exploration and extraction process.”

Take, for instance, two of the major players in the Gulf oil spill—Transocean and BP:

“When the Deepwater Horizon drilling platform set off the worst oil spill at sea in American history, it was flying the flag of the Marshall Islands. Registering there allowed the rig’s owner to significantly reduce its American taxes.

The owner, Transocean, moved its corporate headquarters from Houston to the Cayman Islands in 1999 and then to Switzerland in 2008, maneuvers that also helped it avoid taxes.

At the same time, BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.”

Congress and the Obama administration are working (allegedly) on legislation that would cut $20 billion in oil industry tax breaks. The response from the oil companies? One wrong move and the economy gets it:

“Jack N. Gerard, president of the American Petroleum Institute, warns that any cut in subsidies will cost jobs. “These companies evaluate costs, risks and opportunities across the globe,” he said. “So if the U.S. makes changes in the tax code that discourage drilling in gulf waters, they will go elsewhere and take their jobs with them.”

What are the chances of Congress eliminating these subsidies? Slim and none:

“Efforts to curtail the tax breaks are likely to face fierce opposition in Congress; the oil and natural gas industry has spent $340 million on lobbyists since 2008, according to the nonpartisan Center for Responsive Politics, which monitors political spending.”

An example is Sen. Robert Menendez (D-NJ) who is co-sponsoring the legislation that would end the tax breaks, but:

“While the legislation would cut many incentives over the next decade, it would not touch the tax breaks for oil refineries, many of which have operations and employees in his home state, New Jersey.”

“Villain Rotation” in the Senate

24 Wednesday Feb 2010

Posted by in Congress, Democrats, health care, Obama, Politics, special interests

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I hesitate to even comment on the health care reform charade any more because that’s exactly what it is and has been from the get-go, a charade. But Glenn Greenwald had a piece in Salon yesterday which nailed the situation perfectly. The bottom line is this–there will be no real reform for one reason–those in power don’t want it. Sure they, meaning the president and Democrats in the Senate, want to give the appearance of being for substantial reform, but the fact is they all benefit too much from the status quo. They aren’t about to kill the corporate goose that lays the golden campaign contribution eggs, and especially now that the Supreme Court has allowed corporations, like the insurance industry, to spend unlimited amounts on advertising for and against candidates.

Greenwald cites Sen. Jay Rockefeller as the latest example of what he calls “Villain Rotation.”

“They always have a handful of Democratic Senators announce that they will be the ones to deviate this time from the ostensible party position and impede success, but the designated Villain constantly shifts, so the Party itself can claim it supports these measures while an always-changing handful of their members invariably prevent it.”

From Politics Daily on October 4, 2009:

“Jay Rockefeller has waited a long time for this moment. . . . He’s a longtime advocate of health care for children and the poor — and, as Congress moves toward its moment of truth on health care, perhaps the most earnest, dogged Senate champion of a nationwide public health insurance plan to compete with private insurance companies.

“I will not relent on that. That’s the only way to go,” Rockefeller told me in an interview. “There’s got to be a safe harbor.”

Jay Rockefeller Monday:

“Sen. Jay Rockefeller (D-W.V.) threw a wrench into Democratic efforts to get a public option passed through reconciliation, saying that he thought the maneuver was overly partisan and that he was inclined to oppose it. . .

“I don’t think the timing of it is very good,” the West Virginia Democrat said on Monday. “I’m probably not going to vote for that.”

Greenwald:

“In other words, Rockefeller was willing to be a righteous champion for the public option as long as it had no chance of passing (sadly, we just can’t do it, because although it has 50 votes in favor it doesn’t have 60) But now that Democrats are strongly considering the reconciliation process — which will allow passage with only 50 rather than 60 votes and thus enable them to enact a public option — Rockefeller is suddenly “inclined to oppose it” because he doesn’t “think the timing of it is very good” and it’s “too partisan.”  What strange excuses for someone to make with regard to a provision that he claimed, a mere five months ago (when he knew it couldn’t pass), was such a moral and policy imperative that he “would not relent” in ensuring its enactment.

The Obama White House did the same thing…[B]ack in August the evidence was clear that while the President was publicly claiming that he supported the public option, the White House, in private, was doing everything possible to ensure its exclusion from the final bill (in order not to alienate the health insurance industry by providing competition for it).  Yesterday, Obama — while having his aides signal that they would use reconciliation if necessary–finally unveiled his first-ever health care plan as President, and guess what it did not include?  The public option, which he spent all year insisting that he favored oh-so-much but sadly could not get enacted:  Gosh, I really want the public option, but we just don’t have 60 votes for it; what can I do?.”

The problem was, and is, that the president and the Democrats in Congress are getting exactly what they wanted to start with. The backroom deal with PhRMA is intact. The individual mandate remains, forcing people to buy from private insurance companies. The president’s plan also raises the subsidies, which shovels taxpayers dollars to the same private companies, which in turn keeps the corporate contributions flowing and away from the Republicans.

If this plan passes, I would suggest buying stock in Aetna, WellPoint, United Health Care, et al. Maybe the dividends will help cover the cost of the premiums.