What Was Behind the Oil Industry Tax Break Repeal?

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Tuesday a bill was blocked by the Senate that would have repealed about two billion dollars in tax breaks currently enjoyed by the five biggest oil companies. The majority actually voted in favor of the bill, 52-48, but because it was a procedural vote (a vote on whether to vote on the measure), it required a 60-member majority to proceed.

The voting split along predictable party lines for the most part, though three Democrats — Louisiana’s Mary Landrieu, Alaska’s Mark Begich, and Nebraska’s Ben Nelson — voted against it.  Two Republicans voted for the measure: Olympia Snowe and Susan Collins, both from Maine.

Why these Senators would cross their party on this issue seems clearer for some than for others. Landrieu and Begich represent petroleum-bearing states, of course, and naturally oppose a measure which might in anyway jeopardize the amount of revenue the industry receives. But Nelson represents Nebraska, a state with very little oil. Why would a Democrat from a non-oil bearing state oppose repealing a tax cut worth $2 billion dollars from an industry with combined revenues of $1.5 trillion last year?

Maybe because those five companies — Shell Oil Co., ExxonMobil, ConocoPhillips, BP America and Chevron Corp., all donated to his election campaign. Open Secrets shows that oil and gas industry contributions were the ninth highest giver to Senator Nelson’s campaign committee and leadership PAC. 

Here he is being portrayed as an oil-soaked pelican in the waters of the Gulf by a VoteVets.org ad.



Nelson, an extremely conservative Democrat from a conservative state, also seems to be playing to the right in an attempt to ward off future attacks. He told reporters “I’m only focused on cuts, not on raising taxes. If we start getting our attention over to raising taxes, I can assure you that many of my colleagues are going to be less interested in cuts.”

Interestingly, the bill may have been more political strategy than attempt to repeal the tax breaks. Brian Beutler of Talking Points Memo points out that the bill is actually unconstitutional, as the Constitution mandates that any bill for raising revenue (as this surely would have done) must “originate in the House of Representatives; but the Senate may propose or concur with Amendments as on other Bills.”

Possibly by forcing the Republicans to align themselves with their donors, Harry Reid’s proposed bill drove a wedge between campaign finance reality and this year’s rhetoric of fiscal responsibility.