An important, mid-June test of the post-Macondo political mood favored the oil and gas industry.
By a vote of 61-35, the US Senate rejected an effort to implement tax-code changes President Barack Obama has included in each of his two federal budget proposals.
The vote was a welcome sign that senators are maintaining their senses despite national anger over the oil spill in the Gulf of Mexico.
Bernie Sanders (I-Vt.) offered the proposal as an amendment to a package of tax changes called the American Jobs and Closing Tax Loopholes Act.
The measure would have repealed percentage depletion, expensing of intangible drilling costs, and other tax preferences on which many US producers depend to raise capital and sustain cash flow.
Sixty-one senators saw through the populist malarkey Sanders spouted when he introduced the amendment on June 15.
“Sanders Amendment Would End Big Oil Tax Breaks,” promised a news release from the senator’s office.
In fact, half the supposed tax savings would come from timing preferences “Big Oil” can’t use.
Apparently, that morsel of insight doesn’t matter to Sanders, a self-described socialist who seems to dislike large oil companies because they’re—well—large.
“Over the last decade, the five largest oil companies...made more than $750 billion in profits,” he complains. “These profitable companies simply don’t deserve tax relief.”
But what about the independent producers who can use the timing preferences Sanders would repeal and who drill most oil and gas wells in the US?
Sanders doesn’t mention them.
That the Senate wasn’t fooled by his mischief is encouraging and bodes ill for Obama’s attempt to turn public ire over the gulf catastrophe into support for a government takeover of energy.
Obama’s program would use booty from the massive tax hike on oil and gas companies to subsidize noncommercial energy produced by entrepreneurs who make the right political contributions.
The Sanders clone met its fate just hours before the president, in an Oval Office speech about the spill, tried to revive his state-centered energy ambitions by linking them to the tragedy.
So the warning has been delivered. But was it received?
(Online June 18, 2010; author’s e-mail: email@example.com)