Sen. Menendez's Oil Tax Bill Fails to Grasp Causes of Energy, Debt Crises
With average gas prices hovering around $4.00 per gallon, Democrats in Washington are proposing dramatic solutions to the current energy crisis. Surprise! They want to raise taxes. Senator Robert Menendez [D-NJ] is leading the Democratic charge with the Close Big Oil Tax Loopholes Act of 2011 (S. 258).
The bills supporters argue that it is necessary for two reasons:
1. Gas prices are too high
2. Washington needs more money
The bill fails to recognize the simple fact that our country’s debt problems are a product of over-spending, not under-taxing. Meanwhile, Congressional Republicans have, with the support of ATR, passed a series of three bills designed to expand American energy development.
So what exactly would Menendez’s bill do to address skyrocketing costs at the pump? First, it would repeal Section 199- the domestic manufacturing tax deduction - for oil and gas companies only. It would eliminate the tax deduction for intangible drilling costs, as well as several other drilling related deductions. Finally, it would limit the credit that U.S. oil companies employ on taxes paid abroad.
All of this is supported in the name of eliminating “subsidies” for oil and gas companies. Despite the strongest assertions of Democratic politicians, such as Rep. Steve Israel [D-NY] in this interview with MSNBC, the oil and natural gas industries do not receive a dime in federal subsidies. Arguing that they do requires flawed logic- that the government not taking someone’s money is somehow the same thing as spending money. Instead, the bill will eliminate tax deductions and credits enjoyed by countless other industries in an exact or similar manner. Section 199, a domestic manufacturing deduction first put into place in 2004, applies to all forms of domestic manufacturing. Democrats want to eliminate it for oil companies. The tax deduction for intangible drilling costs that would be eliminated is remarkably similar to the research and development credit enjoyed by, for example, pharmaceutical companies.
The elimination of these deductions and credits is nothing less than a massive tax hike on a vital sector of American industry. The facts are simple: raising the cost of exploration will only raise the price of oil and gas. This puts the 9.2 million domestic jobs supported by the oil and gas industry at risk. It directly harms the many Americans who rely on oil stocks through individual investment, pension funds, or IRAs. It does nothing to kick start America’s energy economy to spur economic development and job growth.
Finally, support for this bill requires a mistaken understanding of the root of the nation’s fiscal troubles. We face massive and growing debt not as a result of under-taxation, but because of over-spending. The choice, as Rep. Israel would have you believe in this same interview, is not between raising taxes on oil companies and eliminating Medicare entirely. Raising taxes on oil companies by eliminating deductions and credits, however fair or unfair that may be, will not make a dent in the country’s ever growing deficit. The numbers simply do not add up. It will, however, destroy countless American jobs and make oil and gas production more costly.
This is the choice being presented to the American people. We can support the demonization of successful industry along with higher taxes and more pain at the pump. Or, we can support serious solutions to get the American energy economy moving.
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ATR President Encourages Opposition to H.R. 1380, the NAT GAS Act
Click here to read the full letter.
Today, Americans for Tax Reform sent a letter to U.S. Representatives regarding H.R. 1380, the New Alternative Transportation to Give Americans Solutions Act, or NAT GAS Act. The letter encourages members to strongly oppose the legislation for its compilation of new rules, grants, and tax policies that only further skew the marketplace towards the energy sources favored by the federal government rather than consumers. An excerpt from ATR President Grover Norquist's letter:
Over the years, Congress and regulatory agencies have piled on rules and regulations in an attempt to nudge, or force, Americans to use lawmakers’ preferred energy sources. This compounding effect has skewed today’s energy market to the point where our most efficient energy sources are being phased out and replaced with unreliable, expensive alternatives.
Americans for Tax Reform believes that an energy market which most benefits consumers is one largely absent of government intervention. In order to achieve this goal, conservatives must begin peeling back the numerous duplicative regulations and laws that facilitate or impeded certain types of energy. Unfortunately, HR 1380 takes the opposite approach instead piling more rules, grants, and tax policies onto America’s already encumbered energy sector.
Congresspersons with a desire to cut taxes, a sentiment all Republicans should have, should not feel compelled to support HR 1380. There are any number of tax cuts which would reduce the government’s burden on Americans while not distorting our energy markets.
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Boston Globe Attacks Senator Scott Brown's Pro-Growth Agenda
Given Senator Scott Brown’s [R-Mass] success in supporting conservative solutions while representing one of the most historically liberal states in the nation, it is no surprise that he has become the target of disingenuous attacks by the Boston Globe in their recent editorial, “For Brown, A Sad Turnaround on Environmental Issues.” In it, the paper laments Brown’s supposed flip flop because of his vote for the McConnell Amendment (S.AMDT.183) to the SBIR/STTR Reauthorization Act of 2011 (S.493), prohibiting the Environmental Protection Agency (EPA) from singlehandedly regulating greenhouse gasses. Although the amendment ultimately failed, the editorial article misses many key points regarding this important issue.
The legislation Senator Brown voted for has nothing to do with scientific questions about global warming. The Energy Tax Prevention Act was written to rein in federal overreach; it was about who will dictate this country’s energy policy—unelected bureaucrats or the United States Congress. Even with a strong Democratic majority in the 111thSenate, the chamber outright rejected cap-and-trade. Unable to pass this legislation through Congress, Democrats pivoted, enlisting the EPA to do their dirty work.
Standing on legally precarious grounds, the EPA co-opted the archaic Clean Air Act to achieve its ends. As Marlo Lewis points out, neither the terms “greenhouse gas” nor “greenhouse effect” appear in the Clean Air Act. When the act was amended in 1990, adding, among other things, one use of the word “carbon dioxide,” that particular section ended by stating that, “‘Nothing in this subsection shall be construed to authorize the imposition on any person of air pollution control requirements.’” So no, Boston Globe, this amendment was not intended to “strip the Environmental Protection Agency of the authority to regulate any greenhouse gases” Rather, it was correctly asserting that no such authority existed in the first place.
In fact, Scott Brown is doing exactly what he promised to do, spur economic growth and roll back federal overreach. As ATR has previously reported, EPA’s newfound understanding of the Clean Air Act would take a devastating toll in this regard. Estimates by the Manufacturers Alliance found that these rules would reduce GDP by 5.4 percent and kill 7.3 million jobs as soon as 2020. Supporting these regulations would be the real “sad turnaround.”
Perhaps most entertaining is the Globe’s implicit acknowledgement of the current unfeasibility of so many “alternative energy” projects. The editorial notes that passage of the amendment would have destroyed the Northeast’s budding “clean energy” sector. Apparently, these projects cannot succeed without the EPA eliminating all competition unless proven, reliable energy sources are suffocated by permitting restrictions and arbitrary regulations. New energy technology will certainly play a part in America’s technological future, but we will never develop truly workable cleaner energy sources if the main tactic of environmentalists is to use government power to destroy competition. Henry Ford never asked the government to slaughter horses; Alexander Graham Bell never petitioned to shut down the Postal Service.
Finally, according to the Globe, not supporting a potential 5.4 percent GDP reduction and the loss of 7.3 million jobs would actually put the U.S. at a comparative disadvantage with Asian and European countries. On the contrary, competing with emerging economic powerhouses like China will require robust economic expansion, brought about by pro-growth policies supported by courageous Senators like Scott Brown.
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ATR Encourages Passage of Chairman Hastings' Energy Legislation
Americans for Tax Reform sent a letter to members of Congress urging the passage of three energy related bills sponsored by House Natural Resources Committee Chairman Doc Hastings [R-Wash], the Putting the Gulf Back to Work Act, the Reversing President Obama's Offshore Moratorium Act, and the Restarting American Offshore Leasing Now Act.
In the letter, ATR President Grover Norquist wrote:
"Despite public pressure to combat both rising energy costs and historic levels of unemployment, the Obama Administration has refused to address these problems in any meaningful way. The combination of the President’s offshore drilling moratorium and a deliberately sluggish offshore leasing process has contributed to higher costs at the pump and hindered a robust economic recovery."
Urging swift passage, Mr. Norquist also had this to say:
"The combination of these three bills would have a tremendous impact on America’s energy economy, spurring job creation and economic expansion while lowering costs for the American people. Americans for Tax Reform encourages speedy passage of these crucial pieces of legislation."
Click here for a PDF copy of the letter, including more details on the recently proposed legislation.
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Miami-Dade Voters Recall Tax-Hiking Mayor
Voters in Miami-Dade County, Florida went to the polls last week and rejected the tax-hiking and corporate welfare policies of Mayor Carlos Alvarez, recalling him from office by the shocking margin of nearly 9 to 1. County Commissioner Natacha Seijas was also removed from office in what has become one of the largest recalls in U.S. history.
This stunning vote is nothing less than further indication of the American people’s rejection of government policies that tax the majority of people in order to redistribute wealth to the politically connected. Despite the fact that Mayor Alvarez had been granted sweeping new powers to clean up county corruption and budget problems only four years ago, the citizens of Miami-Dade County grew weary of the crony favoritism taking place at the expense of the taxpayers.
In 2009, according to the Miami Herald, Alvarez granted an 11% pay hike to his Chief of Staff, bringing his salary over $206,000 at a time when the Mayor was calling for shared budget sacrifices. Earlier in the same year, he had pushed through a deal to take on nearly $409 million in loans to help fund a new stadium for the Florida Marlins, complete with an aquarium backstop, a $2.5 million home run decoration, and one of the lowest attendance figures in Major League Baseball. This is the same team, of course, that hid its $50 million dollars in profit over the last two years from County Commissioners to avoid committing more of their own funds to the project.
The final straw for voters, however, was Mayor Alvarez’s push for a 12% property tax hike. This tax increase would have hit Miami-Dade residents in the gut at a time when they are still suffering in an area that was one of the hardest hit by the recent recession. To top it all off, this attempted tax hike came at the same time the Mayor agreed to increase pay and unfreeze benefits for unionized public workers.
Mayor Alavarez demonstrated time and again that he was more committed to securing handouts for public sector unions, shady baseball team owners, and personal friends than he was to closing the county’s $444 million budget gap. His proposed tax hikes would have further crippled the South Florida economy in the name of closing that budget gap, when simply asking for a few financial documents from the people for whom you are borrowing $400 million would have made tremendous strides in that direction. Miami-Dade voters’ stunning rejection of these public officials is proof that the American people are fed up with liberal tax and spend policies. Perhaps recall organizer Norman Braman should take his talents away from South Beach and help the rest of the nation accomplish what Miami-Dade County has.
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Wisconsin Budget Repair Bill Could Save Workers $72 Million
Wisconsin Governor Scott Walker’s recently signed budget repair bill could save government workers over $72 million, according to a release recently issued by his office. Despite the fact that government workers will contribute increased levels to their pension and healthcare plans (although the new amount is still small in comparison to other states, not to mention their private sector counterparts), “workers could make up much of the increased costs because their union dues would be optional.”
These dues are often staggering amounts. Here are some of the totals paid by state workers for the privilege of belonging to a public sector union:
- AFSCME- 23,000 workers pay $420 per year
- AFT Wisconsin- 17,000 workers pay $510 per year
- Professional Patient Care branch of the SEIU- 15,000 members pay between $192 and $864 per year
- Milwaukee Public School Teachers- 6,000 members pay $995 per year
The freedom to opt out of these ridiculous union dues grants Wisconsin’s workers greater control over how their hard earned dollars are spent, while simultaneously putting the state back on the path towards fiscal responsibility. It also ends the destructive cycle of the state taking workers’ money against their will to fund Big Labor political operations that use coercive tactics to elect those too afraid to confront a radical agenda head on. This cycle only further increases the cost of state government, making it like robbing Peter (the worker) to pay Paul (the union boss) to kick Peter while he is down and has already been mugged. Thanks to Governor Walker’s budget repair bill, Wisconsin’s public sector workers have reclaimed control over $72 million of their own money.
Democrat Congressman Abandons Civility in Union Debate
News of the nation’s fresh return to a golden age of civility in public discourse has apparently not yet made its way to the isolated north Boston district of Massachusetts Democrat Michael Capuano. Speaking to a group of Boston area union workers about the battles over public sector unionization currently being waged throughout the country in places like Wisconsin, Rep. Capuano [MA-8], had this gem to toss into the collection of civil discourse already shaping the debate:
“I’m proud to be here with people who understand that it’s more than just sending an email to get you going. Every once and awhile you need to get out on the streets and get a little bloody when necessary.”
Apparently abandoning school children to line the halls of the state capitol with the aid of a faked doctor’s note or shirking one’s legislative duties by hiding away in a neighboring state are not sufficient means of protesting some of the same beliefs towards public sector labor unions once held by infamous union buster Franklin Delano Roosevelt. No, Rep. Capuano prefers that protestors take things a few steps further, and “get a little bloody.”
One would certainly expect that all people, no matter their political affiliations, would meet such violent and incendiary rhetoric with scorn in this new era of civility. How about the union members gathered to listen to Rep. Capuano’s remarks? “The crowd cheered and hooted for each Congressman as they spoke - the tougher the talk, the louder the reception.”
Click here for an artist’s rendition of Rep. Capuano’s speech.
Congress Should Fight Increased Funding for NLRB
In a move likely to surprise very few, President Obama’s proposed 2012 budget contains an increase in funding for a government agency whose prerogative over the past several years has been to advance the business-killing agenda of organized labor. In the proposed budget, the National Labor Relations Board (NLRB) has requested an increase in funding to nearly $300 million.
ATR and the Alliance for Worker Freedom (AWF) have closely followed the pro-labor agenda that the NLRB has embraced under the Obama Administration. Among them are moves such as the nomination of Craig Becker (a former union lawyer who once remarked that “workers should not be able to choose against having a union as their monopoly-bargaining agent”), a decision which penalizes businesses for not promoting union activity, and another which allows union organizers free access to employers’ private property.
While these actions raise enough questions on their own, what is most baffling about the requested funding levels for the NLRB is the fact that their actual case load has plummeted over the last ten years. A recent post from RedState.com dug into the President’s 2012 budget, as well as the numbers reported by the NLRB itself, and found some shocking results:
"From 2001 to 2010, the number of petitions filed at the NLRB dropped nearly 43%, from 4145 to 2380. Meanwhile, the number of elections over the same period dropped approximately 40%, from 2645 in 2001 to 1571 in 2010."
These numbers are certainly reflective of the fact that total private sector labor union membership has been declining as of late. As AWF reported, in 2010, that number was at 6.9%, down from 7.2% in 2009. As private sector union membership continues to decline, and the actual amount of work for the NLRB to do falls with it, what justifies the $71.2 million (33%) increase over 2001 levels? Further, what justifies the addition of the nearly 100 NLRB employees being requested?
In response to this request, Representative Tom Price [R-GA] has proposed a remarkable alternative. As an amendment to the Continuing Resolution currently being debated in the House, Rep. Price has proposed completely defunding the NLRB through FY 2011. House Republicans should aggressively pursue this measure (C.R. 578) as a substitute for the Obama Administration’s blatant organized labor favoritism. The fact that taxpayer money is being used to unashamedly push the agenda of organized labor should bring pause to all of those seeking to justify the explosion of Federal spending being proposed in President Obama’s budget. House Republicans, and Democrats who will join them, should continue to stay strong in their efforts to fight organized labor’s job-killing agenda.
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House CR a Positive Development for the Nation's Energy Economy
This week, the House of Representatives is beginning debate on House Republican’s newly proposed Continuing Resolution for 2011 funding. Among the nearly $100 billion in spending cuts that this bill includes (a number that could potentially grow under open floor rules) are significant steps towards reigning in the Federal government’s role in regulating our nation’s energy economy. A recent New York Times article laid out many of the energy related cuts included in the CR. Importantly, the CR targets several of the Obama Administration’s favorite burdensome regulatory measures currently being undertaken by the Environmental Protection Agency (EPA). The CR includes a $3 billion overall cut in the agency’s budget.
One area of the EPA’s budget facing elimination for the remainder of the year is their effort to singlehandedly regulate carbon dioxide emissions, despite the Administration and Congressional Democrat’s repeated inability to pass the same type of regulations through Congress. In late 2010, the EPA announced plans to regulate the emission of greenhouse gasses from stationary sources, including power plants and oil refineries. This project has been a cornerstone of the Obama Administration’s energy policy, to such a large degree that the President has previously threatened to veto any legislation that would take away the EPA’s authority to regulate carbon dioxide emissions.
Protecting the American people from the onerous regulation of carbon dioxide emissions is not the only benefit that comes from slashing the budget of the EPA. Cutting their overall budget will hopefully slow their ability to dictate access to energy development through the revocation of permits in West Virginia and Alaska. Among several other cuts to the EPA budget, as laid out in a New York Times article, are $7 million from the Global Change climate research program, and $10.5 million from the Energy Star program. It also prevents the President from filling the position of “climate and energy czar.”
The CR does not stop with the EPA when it comes to slowing the Federal government’s stifling interference in the energy sector. Some other positive developments include preventing the Bureau of Land Management (BLM) from controlling energy access by placing protections on public lands that have not received a formal “wilderness” designation. It cuts $500 million of American taxpayer money from the President’s 2011 request to fund World Bank projects sending money to developing nations in hopes of promoting “clean energy” economies. Finally, it would trim $893.2 million from the Energy Department’s Office of Science, which directs funding towards energy research projects favored by Federal bureaucrats rather than the free market.
The recently proposed Continuing Resolution is a complete step in the right direction when it comes to ending Federal intrusion in the energy economy. It not only saves the taxpayers billions of dollars, but allows for a larger role to be played by the free market in determining America’s energy future.
Alliance for Worker Freedom Supports Restoring Democracy in the Workplace Act
The Alliance for Worker Freedom has issued a letter to U.S. Representatives urging them to support Rep. Phil Gingrey's [R-GA] H.R. 548, the Restoring Democracy in the Workplace Act. If passed, this bill would invalidate the National Mediation Board's (NMB) "minority rule" ruling (95 Fed. Reg 26062) allowing unions to organize transportation industries with less than a majority of employees voting for representation. AWF Executive Director, Christopher Prandoni, said the following:
"Unable to advance its radical agenda in Congress, the current administration has made use of various federal agencies to implement these harmful initiatives via regulatory fiat. Making no attempt to mask his intent, President Obama appointed two former union lawyers to the NMB—effectively giving unions a stranglehold over the agency.
It is evident that the National Mediation Board will not change course unless their decision is explicitly challenged by Congress. The "minority rule" ruling reveals a contempt for workers’ preferences, as well as a clear bias towards union interests. The Restoring Democracy in the Workplace Act is necessary and appropriate legislation which looks to reinstate longstanding union election rules."