by Faiz Shakir, Benjamin Armbruster, Zaid Jilani, Alex Seitz-Wald, Tanya Somanader, Travis Waldron, and Brad Johnson – ThisProgress.org
Top executives from the Big 5 oil companies — ExxonMobil, BP, Shell, Chevron, and ConocoPhillips — flew into Washington, D.C. on their corporate jets to defend their industry at a U.S. Senate hearing yesterday. The Associated Press reports that “Motorists are paying nearly $4 for a gallon of gasoline as the oil industry reaps pretax profits that could hit $200 billion this year.” The oil industry is not only benefiting from spiking gas prices, but also from over $4 billion in taxpayer subsidies they receive every year. With those subsidies and loopholes, Exxon’s federal tax rate for the last three years was 17.6 percent, lower than what the average American pays. “Voters’ anger over high gas prices is directed squarely at the oil companies and the politicians who defend them,” according to a recent national survey by Greenberg Quinlan Rosner Research for the Center for American Progress Action Fund, the League of Conservation Voters and the Sierra Club. “Voters are furious with oil companies, according to our polling, and overwhelmingly support ending their subsidies.” Senate Majority Leader Harry Reid (D-NV) “wants to bring a bill to the floor next week” Wednesday to repeal tax breaks for the major oil companies, “to help ease the deficit by about $21 billion over 10 years.”
PROFITING FROM PAIN: “Given profits of $35 billion in just the first quarter alone, it is hard to find evidence that repealing these subsidies would cut domestic production or cause layoffs,” Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, said yesterday. “After all, based on first-quarter profits, these tax breaks represent less than 2 percent of what these companies are on pace to make this year. Even without these tax breaks, these companies would clearly be highly profitable.” In his opening statement, Baucus argued that the most vulnerable in society shouldn’t have to suffer for the benefit of oil companies. “We should use this money to reduce our deficit instead of putting the burden on seniors and our children’s future. The oil executives were unmoved. “Do you think that your subsidy is more important than the financial aid that we give to students to go to college?” Sen. Chuck Schumer (D-NY) asked. ConocoPhillips CEO Jim Mulva said the question was “very difficult” to answer. “Not once during this hearing have I heard any semblance of a willingness to share unless every company also has to,” Rockefeller concluded. “I haven’t heard anybody talk about what they are doing — what they would be willing to do — to share in our budget problem. The total concept of what keeps America together…is a sense of fairness, that everybody has to lose at some point, everybody has to give something up to be a real country.”
‘UN-AMERICAN’: On Wednesday, ConocoPhillips CEO Jim Mulva outraged many on Capitol Hill when he released a statement calling it “un-American” to end subsidies to the Big 5 oil companies. At yesterday’s Senate Finance Committee hearing with the oil CEOs, Sen. Chuck Schumer (D-NY) repeatedly pressed Mulva for an apology, but the ConocoPhillips CEO refused to give one, claiming “nothing was intended personally” by his press release. Sen. Robert Menendez (D-NJ) summed up, “So the bottom line is you’re unwilling to apologize for a company’s statement. Okay, so I’ll continue to take offense to it.” Sen. Pat Roberts (R-KS) rushed to Mulva’s defense and echoed his claim that it was “un-American” to end tax breaks for big oil companies. The executives actually used the hearing to argue for increased drilling subsidies. “A much better solution lies in permitting our industry to increase energy supplies,” said Exxon CEO Rex Tillerson. “We have shackles on us,” cried Mulva. “Put us back to work.” The idea that oil companies need taxpayer subsidies to drill for oil is nonsense. “The price of oil is so high that removing these tax breaks would probably have little to no effect on domestic oil production,” the Associated Press reports, corroborated by an analysis from the Congressional Research Service. By the end of the hearing, Baucus was reduced to pleading with the executives. “How about a trade here? More leases, give up the tax breaks.” “I don’t think I came to negotiate a trade with you today, Senator,” Tillerson responded mockingly.
‘YOU ARE LIKE SAUDI ARABIA’: “I get the feeling that it’s almost like you’re — like the five of you are like Saudi Arabia,” Sen. Jay Rockefeller (D-WV) told the Big Oil executives. “That you’re caught up in your profits, you’re highly defensive, you yield on nothing,” he said. “I think you’re out of touch. Deeply, profoundly out of touch. And deeply and profoundly committed to sharing nothing.” Throughout the hearing, the millionaire executives proved Rockefeller’s point. “Don’t punish our industry for doing its job well,” said Chevron CEO John S. Watson. Watson did not elaborate on the consequences to the United States of the “job well done” by the oil industry. “I don’t think American people want shared sacrifice,” he rebuked Rockefeller. “I think they want shared prosperity.” Watson’s compensation in 2010 was nearly $9 million, about 300 times the median American income. The executives felt comfortable that their friends in Congress would protect their extravagant lifestyles. Watson, Tillerson and Mulva “have made a combined total of $258,870 in political donations since 1990. Of that amount, $237,670, or 92 percent, was contributed to Republicans.” Finance committee members have received $5.1 million in oil industry contributions since 1999, going by a four-to-one ratio to Republicans. “You have a great sense of assurance. I don’t think you feel threatened by anything that’s going on here,” Rockefeller said. “You always prevail in the halls of Congress.”
Republicans on the House Judiciary Committee killed an amendment by Rep. Mike Quigley (D-IL) that would have closed the so-called “terror gap” — preventing firearm sales to suspected terrorists. GOP members want to protect the right of people on the FBI’s terrorist watch list to purchase firearms, arguing that preventing sales would “steal the Second Amendment rights of those placed on the list by mistake.”
In testimony before a U.S. Senate committee, the head of Exxon Mobil said that, based on supply and demand, oil should actually be currently priced at between $60 to $70 a barrel. “When we look at it, it’s going to be somewhere in the $60 to $70 range if you said: ‘If I had access to the next marketable barrel, what would it cost,” said Exxon CEO Rex Tillerson.
The IRS is beginning to crack down on nonprofit advocacy groups that play a big role in American politics, the New York Times reports. Billionaires like David Koch and George Soros could owe millions in “gift taxes” if their political contributions exceeded tax limits. However, it’s unclear how much impact these IRS investigation will really have given the Supreme Court’s ruling in Citizens United.
In a “surprise move” yesterday, President Obama asked Congress to allow Robert S. Mueller III to remain the FBI director for two more years. The FBI Director is currently term-limited to 10 years. Obama’s proposal — which was endorsed by “leading lawmakers of both parties” — would keep Mueller on past his current end date of Sept. 4 without going through a new confirmation process.
A new poll finds 48 percent of global investors rate Obama as “stronger than Bush on terrorism.” “The Obama administration improved the reputation of the U.S.A — i.e., the soft power of America — which will make it more difficult for terrorists to recruit new terrorists,” said one respondent, adding “That is probably, in the long term, the most efficient way to fight terrorism.”
The conservative National Review slammed potential president candidate Mitt Romney’s “Illogical, Terrible Health-Care Address” in a blog post yesterday, writing he “gave a more articulate defense of Obamacare than President Obama ever has.” The magazine followed up with an editorial today attacking the former governor, even though it had endorsed Romney in 2008.
Senate Minority Leader Mitch McConnell (R-KY) yesterday demanded “significant” changes to Medicare in exchange for raising the debt ceiling, but he will not insist on the Medicare overhaul proposed in the House GOP budget. Instead, McConnell said any deal must include benefit reductions and tighter Medicare eligibility requirements.
The South Carolina Senate yesterday passed a restrictive voter ID bill, drawing the condemnation of civil liberties and civil rights groups. “We hope that Gov. Haley will veto this bill and tell South Carolina lawmakers that we should be seeking ways to encourage more voters, not inventing excuses to deny voters the ability to cast their ballots,” said South Carolina ACLU Executive Director Victoria Middleton.
And finally: Somewhere in New Hampshire a child is crying because Donald Trump stole their vacation. “Trump chipped in $100 for raffle tickets for the Greater Nashua Chamber of Commerce and ended up winning the contest’s grand prize: a trip to the Bahamas.” Trump actually donated the trip, but the “ironic twist” prompted one man to quip, “The guy probably owns an island in the Bahamas somewhere.”