WASHINGTON – Senate Democrats announced a plan Tuesday to eliminate federal tax breaks to the five biggest oil companies and use those savings, estimated at $21 billion over the next 10 years, to help cut the deficit.

Facing pressure from cash-strapped voters to do something about surging gas prices, Democrats want to put a spotlight on highly profitable oil companies and to cut off taxpayer subsidies to the firms.

The proposal, which the Democratic Senate leadership endorsed, would close several longtime tax loopholes, such as the domestic manufacturing tax deduction that could yield roughly $2 billion a year in savings to be applied to lowering the deficit.

“We should all agree: The answers to fairness are in saving taxpayers money, and we cannot continue with this corporate welfare to big oil companies,” Senate Majority Leader Harry Reid, D-Nev., said from the floor. He said removing those subsidies is “a no-brainer.”

Republican leaders quickly dismissed the Democrats’ plan, saying it amounts to a tax increase on oil companies and would do nothing to alleviate the pain at the pump. Senate Minority Leader Mitch McConnell, R-Ky., in a floor speech Monday, called the proposal “completely counterproductive.”

“That is the Democrat response to high gas prices: a tax hike,” McConnell said. “Well, the first thing to say about this proposal is that it won’t do a thing to lower gas prices.”

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Indeed, even some Democrats said their proposal would not change gas prices.

“It is dishonest for any of us to say that there is some magic wand that could be waved and bring down gas prices,” Sen. Claire McCaskill, D-Mo., told reporters.

Standing before a poster showing the most recent quarterly profits from the five largest oil multinationals — Exxon Mobil, Shell, BP, Chevron and ConocoPhillips — totaling $35.8 billion, Sen. Robert Menendez, D-N.J., said the bill is a matter of fairness.

Menendez, in a news conference, said: “Do you think the wealthy and powerful should pay their fair share to help balance the budget, or should we simply let their high-priced lobbyists shield them from their responsibilities?”

“We all need to tighten our belts to help address the deficit,” he added, “even oil companies.”

President Obama and some congressional Democrats initially said they wanted to steer the savings from ending tax breaks toward clean energy projects. But Senate Democratic leaders believe using the savings to reduce the deficit would make the proposal more politically viable for Republicans.

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“To those members on both sides of the aisle who’ve given impassioned speeches on reducing the deficit, here’s your chance,” Senate Majority Whip Richard Durbin, D-Ill., said from the floor Tuesday. “It’s a put up or shut up moment.”

Said McCaskill: “If we cannot end subsidies to the five biggest, most profitable corporations in the history of the planet that come from the federal taxpayer, then I don’t think anyone should take us seriously about deficit reduction.”

In response to rising gas prices, Republicans have called for expanding domestic oil exploration and decreasing government regulation and fees on energy companies that Republicans argue drive the firms overseas and help foreign competitors.

“Democrats need to throw away the old playbook and face this crisis with the kind of creativity, independence and common sense that the American people are demanding,” McConnell said.

 


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