The Simplest Multi-Billion Dollar Budget Cut of All: Oil Subsidies


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If you're looking for compelling evidence that GOP power brokers don't really care about reducing the deficit -- beyond purporting to do so in order to push their anti-government spending narrative, of course -- look no further than the party's stance on oil subsidies. For all the Republicans' bellowing about cutting government spending, when Democrats had the audacity to suggest that we stop the practice of sending taxpayer money to some of the most profitable companies on the planet, they fought tooth and nail to preserve the status quo.

Now, with a committee being appointed to trim some $1 trillion from the budget -- and knowing that we could reduce the deficit by $100 billion simply by edging out a tax cut that lines the pockets of the likes of Exxon and Chevron -- will they have the chutzpah to continue to fight to preserve what should be the simplest budget cut of all?Of course they will. The GOP will misleadingly brand the prospect of ending the subsidies a 'tax increase' -- their tactic last time, which no Democrat or member of the mainstream media bothered to challenge them on -- and protect their pals in the oil industry. Instead, the GOP will fight to make deep cuts to social programs that help the poor and the elderly.

The New York Times recently dedicated some op-ed space to the issue, wondering whether the GOP might be amenable to such cuts:

If only. The oil industry's well-paid defenders -- lobbyists and lawmakers in unison -- will surely scream "tax hike" and claim that ending $4 billion a year in sweetheart subsidies will decrease production and increase prices at the pump. All of which is nonsense.

In 2005, with oil nearing $60 a barrel, James Mulva, the head of ConocoPhillips, told the Senate that his industry did not need these breaks to keep exploring for oil. They need them even less when oil is $100 a barrel.

According to the Congressional Research Service, ending the subsidies would have no effect on gas prices and a trivial effect on profits. The Big Five -- Exxon Mobil, BP, ConocoPhillips, Chevron and Shell -- reported combined profits of $35.1 billion for just the second quarter. Yes, you read that right.

Even many of the most supposedly hardcore libertarian Tea Partiers (voted to extend oil subsidies to these companies. So here's my challenge to anyone who actually believes the Republican party is out to find and make smart cuts to government spending -- watch them as they try to justify their support for handing your tax dollars (which, in total, are actually over $20 billion a year) over to the biggest, most profitable private companies in the world.

And then look me in the eye and tell me that they're honestly all about cutting government spending.

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Tags: Barack Obama | Congress | Oil | United States