President Obama has a new plan to avoid sequestration: kill private sector jobs. In 2011 Republicans required spending cuts to raise the debt ceiling. President Obama suggested that, in addition to freezing spending levels, broad-based spending cuts be implemented on March 1, 2013 via sequester.
Listening to Obama’s Press Secretary Jay Carney, you would never know that the sequester Obama is so eager to avoid, in fact, came from the White House. Citing estimates that 750,000 people could lose their jobs as a result of the sequester, Carney told reporters on Feb 20 that “the choice that Republicans are making is … throw these people out of work in order to protect these special tax breaks for corporate jet owners and oil and gas companies. It makes no sense and it’s bad policy.”
Republicans have passed legislation that would replace the sequester with targeted, equivalent spending cuts. Democrats and the White House are using the threat of sequestration as justification for tax hikes – surprise, surprise. Negative consequences associated with the mechanisms of sequestration, like job loss, are not caused by oil and natural gas companies’ expensing provisions, but result from an intransigent Democrat Party. According to this ideology, every problem, even the ones Democrats are responsible for, can only be solved one way: tax increases to fund more government spending.
Categorizing the oil and natural gas producers’ expensing provisions as tax breaks or subsidies makes it easier to justify raising taxes on this industry, which is why Democrats do it. Like every other industry, oil and natural gas producers are allowed to deduct some of their expenses. For example, one “subsidy” Obama wants to repeal is the Domestic Manufacturer’s Deduction known as Section 199. While all domestic manufacturers are eligible to employ Sec. 199 and deduct 9 percent of the income earned from manufacturing and extracting, oil and natural gas producers can only deduct 6 percent of the same expenses. Democrats would like to drag the already penalized 6 percent rate down to zero.