Washington - Senator Robert Menendez (D-NJ) took to the floor earlier today to insist that his "Close Big Oil Tax Loopholes Act" S. 940 be part of any budget balancing and deficit reduction compromise. He spoke to the need to end tax subsidies for the five largest oil companies to help address the nation's growing deficit in a way that is fair to all Americans. Last month, a bipartisan majority voted in favor of proceeding to the consideration of the "Close Big Oil Tax Loopholes Act". Below is a video and his full remarks as prepared for delivery.
"There are lots of ways to cut the deficit, but saving taxpayers subsidies for Big Oil, while ending Medicare and cutting student loan programs is not a solution. It makes no sense, Mr. President, to give a taxpayer funded subsidy to the Big 5 oil companies earning $12 billion a month... Why?"

VIDEO: http://www.youtube.com/watch?v=kTKo7UNbZk8

FULL TEXT AS PREPARED FOR DELIVERY:

Big Oil Subsidies -Remarks by Senator Robert Menendez

Senate Floor - June 30, 2011


Introduction - The Bill

M. President, I rise to thank the President yesterday for echoing my call to end subsidies for Big Oil. It is time our friends on the other side of the aisle put the interests of taxpayers ahead of Big Oil and allow these wasteful subsidies to finally be cut.

As the President said, strategies to reduce the deficit, like my legislation to cut oil subsidies are already introduced and ready to go. All we need to do now is pass it.

A vote on my bill presents a simple choice for everyone in this Chamber ...

Are you on the side of working class families and seniors or are you on the side of Big Oil?

There are lots of ways to cut the deficit, but saving taxpayers subsidies for Big Oil, while ending Medicare and cutting student loan programs is not a solution.

It makes no sense, Mr. President, to give a taxpayer funded subsidy to the Big 5 oil companies earning $12 billion a month... Why?

[CHART - ExxonMobil Profits vs. American Incomes]

Those on the other side of the aisle will tell a middle class student -- whose family earns median family income of $50,221 -- they can't go to college - they can't get a Pell Grant - but Exxon Mobile - a company that will earn $42.6 billion this year - needs government assistance...

...and they will come to this floor, look America in the eye, and call it common-sense deficit reduction.

Mr. President, there simply is no common sense explanation for balancing the budget on the backs of working families and letting multi-billion dollar oil companies keep billion in taxpayer dollars.

The Deficit

Clearly we all need to tighten our belts to help address the deficit - all of us - even the most powerful and wealthy among us.

We all know that oil companies are among the largest, most profitable companies in the world. But sometimes it is hard to understand the true scale of their wealth.

Provisions Explained

M. President, the provisions of my bill are not hard to understand.

It would close several loopholes for Big Oil...loopholes that, given the current budget climate, would let Big Oil get away without making any sacrifices at the very time we're asking middle class families, the disabled, and the elderly to tighten their belts and help reduce the deficit.

Foreign Tax Credit

Let me explain two provisions of my proposal in detail.

The first provision in my bill has to do with foreign tax credits.

U.S. taxpayers are taxed on their income worldwide, but are entitled to a dollar-for-dollar tax credit for any income taxes paid to a foreign government.

This makes sense because you don't want to tax the same activity twice.

But U.S. oil and gas companies have smart lawyers and accountants.

They have figured out that if you convince foreign governments like Indonesia to charge you taxes instead of royalties, then they can get a big break on their U.S. taxes.

What this amounts to is the U.S. government - American taxpayers -- subsidizing foreign oil production!

When reviewing this provision, the non-partisan Congressional Research Service found that cutting this subsidy for foreign oil production will increase production here in the United States. Not only that, but closing this particular loophole would return $6.5 billion to the Treasury.

Domestic Manufacturing Tax Deduction

In 2004, Congress created the domestic manufacturing tax deduction.

It was designed to help U.S. manufacturers who export to foreign markets.

Few would really see the extraction of oil from the ground as "manufacturing," but -- again -- Big Oil's lobbyists earned their money.

They saw an opportunity, made some phone calls, and low and behold, according to the tax code, oil companies are in the manufacturing business.

This legislation closes that loophole and saves taxpayers almost $13 billion. - That would be $13 billion more toward deficit reduction.

These two provisions combined with a few others will lower the deficit by $21 billion.

Gas Prices

Now, I know some in the industry have claimed that cutting $2 billion in annual oil subsidies to the Big 5 oil companies will somehow make oil and gasoline more expensive.

This argument is simply false.

This bill will save taxpayers $21 billion over ten years or roughly $2 billion per year.

Compare $2 billion in taxpayer subsidies to the projected $144 billion in profits the Big 5 oil companies are expected to make this year.

If the Big 5 oil companies could live with just $142 billion in profits in 2011, they could pay their fair share in taxes, help lower the deficit, and not raise the price of gasoline.

If that argument is not proof enough, then one need look no further than the definitive report by the Congressional Research Service that explains my proposal to end oil subsidies will not lower the production of oil and will not raise gasoline prices.

Conclusion - Real Deficit Reduction

M. President, it is time for those on the other side of the aisle to join in real deficit reduction and for the Big 5 oil companies to do the right thing and give up a subsidy they do not need and we cannot afford.

We simply cannot expect the average working family to shoulder the burden of lowering the deficit alone.

I hope some of the favorable comments I have been hearing from my colleagues in recent weeks means that they are ready to join this effort and lower the deficit in an equitable and effective manner.

What's fair is fair, but nothing about continuing these subsidies is fair. Those on the other side would end Medicare as we know it in the name of deficit reduction, while continuing to pump billions of dollars in corporate welfare into a hundred billion dollar industry.

That is the height of hypocrisy. It's not fair to working families. It's not a wise use of limited federal resources. And if this body does the right thing today, it's not going to continue.

There's nothing fair about ending Medicare in favor of Big Oil subsidies.

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