GOP To The Rescue: Republicans Block Extra Tax On Oil Companies

At a time when Americans are finding they’re having to give up a host of things just to fill their gas tanks while they read news stories about record oil company profits, Republicans in Congress have moved swiftly — to protect the oil companies from extra taxes:

Senate Republicans blocked a proposal Tuesday to tax the windfall profits of the largest oil companies, despite pleas by Democratic leaders to use the measure to address America’s anger over $4 a gallon gasoline.

The Democratic energy package would have imposed a tax on any “unreasonable” profits of the five largest U.S. oil companies and given the federal government more power to address oil market speculation that the bill’s supporters argue has added to the crude oil price surge.

“Americans are furious about what’s going on,” declared Sen. Byron Dorgan, D-N.D., and want Congress to do something about oil company profits and “an orgy of speculation” on oil markets.

But Republicans argued the Democratic proposal focusing on new oil industry taxes is not the answer to the country’s energy problems.

“The American people are clamoring for relief at the pump,” said Sen. Pete Domenici, R-N.M., but if taxes are increased on the oil companies “they will get exactly what they don’t want. The bill will raise taxes, increase imports.”

A good justification — but it won’t fly with many Americans. And if the Democratic party doesn’t see this as a political opening they need some of these. In fact, two energy bills, including the windfall profits tax, stalled in the Senate:

A Democratic proposal to impose heavier taxes on big oil companies stalled in the Senate on Tuesday as Republicans and Democrats offered different ideas on how to deal with soaring energy costs.

A bill, which would have rolled back some $17 billion in tax breaks and pressured major oil companies to invest in new energy sources by hitting them with a windfall-profits tax if they did not, failed to get enough votes to move forward. Fifty-one senators voted to bring the measure up for consideration, nine short of the number needed under Senate rules. Forty-three senators, most of them Republicans, voted “no.”

The oil-tax proposal was one of two energy-related bills that failed to advance. The other was a proposal to amend the Internal Revenue Code by providing “incentives for energy production and conservation, to extend certain expiring provisions, to provide individual income tax relief, and for other purposes,” as the measure to promote new energy sources was officially described. The vote to take up that legislation was 50-44, or 10 “yes” votes fewer than necessary.

Exxon fired back on the idea of a windfall profits tax after Democratic presumptive nominee Senator Barack Obama floated the idea of more taxes for oil companies:

Exxon Mobil fired back Tuesday at a proposed windfall profit tax, after the oil giant was mentioned by name in Democratic presidential hopeful Barack Obama’s call to counteract skyrocketing energy costs by hiking levies on producers.

Exxon Mobil spokesman Tony Cudmore said in an e-mail to MarketWatch that U.S. energy companies already pay record taxes, adding that the way to keep energy costs down rests with increased supplies, which require additional investment, not higher taxes.

“Proposals to increase taxes on the industry would discourage the sustained investments needed to safeguard U.S. energy security and are not in the interests of American consumers,” Exxon Mobil said.

And indeed, without maximizing these sustained investments, how will the oil companies continue to make record profits and pay their CEOs mega-bucks at a time when many Americans are looking at bicycles — and perhaps rickshaws — with interest?

To be sure, there were other political dynamics in the vote, as Congressional Quarterly points out:

Senate Democratic leaders could not muster enough votes Tuesday to keep alive an energy bill that would impose what supporters call a windfall profits tax on oil companies.

The chamber fell short of the 60-vote threshold needed to invoke cloture and end debate on the motion to proceed to the bill. The tally was 51-43.

The result came as little surprise to either party, but the debate gave both a chance to continue trading blame for the price of gasoline. The showdown appeared driven more by politics than policy, in an election year in which the price of regular gasoline for the first time topped an average of $4 a gallon.

The bill, almost identical to one Democratic leaders introduced last month, was packed with several provisions Democrats know are non-starters for most Republicans, including a tax on profits higher than 10 percent above a past average — the so-called windfall profits tax — and language to roll back $17 billion in tax breaks for oil companies.

But Democrats brought it to the floor anyway, using it as a chance to get back at Republicans for stalling debate on a climate change bill last week.

So the Demmies were doing a bit of political posturing.

During debate on the climate change bill, Republicans pointed to what they called the high cost of the legislation and blamed Democrats for high energy prices because they have blocked efforts to drill for oil and gas in U.S. coastal waters and Alaska’s Arctic National Wildlife Refuge.

The Democrats’ latest move gave them an opportunity to focus much of the blame for high prices on the oil companies and to portray Republicans as sympathizing more with industry than consumers.

But Senate Republican Leader Mitch McConnell , of Kentucky said the Democratic package is “not a serious response to high gas process, it’s a gimmick.”

The problems for the GOP:

(1) This is happening on THEIR watch, (2) Americans viewing the administration and the GOP see few instances of the party or administration going to bat for average Americans, while corporations are constantly defended and helped, (3) Insisting on drilling in ANWAR is a solution that isn’t going to cut it with most Americans, particularly since research indicates it won’t be a quick fix or a long-term fix (and it will put more money into the brimming-with-dollars pockets of oil companies), (4) Bush talked about energy policy when he ran in 2000 in particular and just blaming it on the Democrats when his party controlled or dominated Congress for so many years simply won’t convince, (5) High gas prices is just one of several major traumas to American life that have occurred under the Bush administration — an administration in which which fingers are pointed more often than responsibility is taken.

Outlook: Look for the fact the Republicans blocked a extra taxes on oil companies to show up in Democratic campaign ads — including ads aimed at specific GOPers who are up for re-election.

The biggest problem for the GOP is that the issue of high gas prices isn’t an intellectual one but an immediate pocketbook one. If they’re not seen as doing something about it at a time when oil companies report record-high profits, they are going to pay their own high prices, at the ballot box in November.

Particularly because sky high gas prices could have soared to a new galaxy by then…

Cartoon by Wolverton, Cagle Cartoons