Majority Leader Harry Reid said today that any budget deal must contain new revenue, and he specifically mentioned eliminating subsidies to Big Oil.
Here is the transcript:
HARRY REID: The American people need to understand that it’s not as if we’ve done nothing for the debt. $2.6 trillion. $2.6 trillion already we’ve made in cuts. And all those cuts have come from nondefense programs.
We– we need to k– keep our eye on the prize and continue doing something about spending. But I think that what we need to do is do some of the things that Mitt Romney talked about. He said there’s some low-hanging fruit. There are a lotta tax loopholes that should be closed. I agree with him. We haven’t done that.
GEORGE STEPHANOPOULOS: Like which ones?
HARRY REID: Well, oil subsidies. We– we– we have– issues dealing with shipping jobs overseas. Why don’t we do some of the– fill some of these—
GEORGE STEPHANOPOULOS: I think if my numbers are correct, if you do the oil and gas subsidies, I think that might save you somethin’ like $25 billion—
HARRY REID: Oh, no– no–
GEORGE STEPHANOPOULOS: –over ten years. It’s gonna extend—
HARRY REID: –oh, no. It’s– it’s—
GEORGE STEPHANOPOULOS: –the sequester by a couple months.
REID: It’s more than that, George. But — but let’s — let’s assume, because the debt ceiling doesn’t kick in until August, I believe that’s what we’ll have, but let’s add these together. Let’s say you’re right, it’s $30 billion. But let’s — jobs overseas, we can dial that however we want, because it’s a huge loss of revenue. Corporate jets, there are all kind of things that are low-hanging fruit that we…
STEPHANOPOULOS: But you’ve heard the Republicans across the board here. They’re saying they’re done with revenues for 2013.
REID: George, the American people are on our side. The American people don’t believe in these austere things. We believe that the rich should contribute. We believe we should fill those tax loopholes, get rid of them, I should say. And that’s where we need to go.
Sen. Reid was correct. The actual amount of federal subsidies to the oil industry is $4 billion per year. This means an elimination of the subsidies would net $40 billion in savings over a decade. This may seem like a drop in the bucket, but as a practical matter it makes no sense to give taxpayer money to an industry that turned an $80 billion profit last year.
President Obama has been targeting the Big Oil subsidy for elimination for years, but he has been blocked by congressional Republicans and some oil state Democrats from eliminating this waste of taxpayer dollars. Republicans always talk about closing tax loopholes and cutting subsidies, but completely freak out at the mention of cutting the subsidies for Big Oil. Reid was suggesting that Democrats use the sequester threat to leverage more revenue out of Republicans. (This is the strategy that John Boehner is counting on using to get spending cuts out of the Democrats. The difference is that public opinion is with Obama and his party.)
If President Obama and the Democrats can get rid of the subsidies to Big Oil, it will be the clearest sign yet that the politics of this country have shifted left. Congressional Republicans may not like it, but unless they want to see dramatic cuts to their favorite military pork projects that send millions of dollars back to their districts and states, they are going to have to eliminate the federal subsidies for Big Oil.