To slash the deficit, lawmakers in Washington, D.C., need to go after the big bucks, says Sen. Al Franken.
Case in point: tax breaks for oil and gas companies.
"Over the past decade, the five largest oil and gas companies have made $1 trillion in profit," Franken said during a March 9, 2011, floor speech after the Senate rejected a bill to cut spending. "Yet they are benefiting from tax subsidies that have been in place since as far back as 1916. Eliminating these wasteful subsidies will bring in about $64 billion over 10 years."
Franken's savings estimate is off by billions, but his underlying point is on target.
In inflation adjusted dollars, it's true that the largest oil and gas companies operating in the United States made about $893 billion over the last decade. Franken said $1 trillion, but he's still in the ballpark.
It's also true that oil and gas companies benefit from a slate of tax breaks and subsidies meant to spur investment and production, some of which have been in place for many decades. If they were all eliminated, it would save the government roughly $46 billion over 10 years, according to the Office of Management and Budget. An additional $10 billion could be saved by axing a foreign tax credit that largely benefits oil and gas companies, a perk that Franken also advocates eliminating.
Still, Franken's saving estimate is high because he's also counting the nonconventional fuels credit, a tax break that's no longer available to the vast majority of oil and gas producers. Franken's office estimated it would $20 billion over 10 years; in reality, it will only cost $100 million through 2014.
Franken's numbers are off by 12 percent, but he is essentially correct. Eliminating tax breaks for oil and gas companies would save billions.
It's a close call given the bad math, but Franken's claim passes the PoliGraph test.
-- By Catharine Richert
Sen. Al Franken, floor speech, March 9, 2011
Budget of the U.S. Government, Fiscal Year 2011, accessed March 21, 2011
The Center for American Progress, Eliminating Tax Subsidies for Oil Companies, by Sima J. Gandhi, May 13, 2010
The Center for American Progress, Big Oil's Lust for Tax Loopholes: Oil Prices and Profits Rise While Big Oil Defends Its Tax Loopholes, by Daniel J. Weiss, January 31, 2011
The Environmental Law Institute, Estimating U.S. Government Subsidies to Energy Sources: 2002-2008, September 2009
The Congressional Research Service, Oil and Gas Tax Subsidies:
Current Status and Analysis, February 27, 2007
The U.S. Treasury Department, General Explanations of the Administration's Fiscal Year 2010 Revenue Proposals, February 2011
The Joint Committee on Taxation, Estimates Of Federal Tax Expenditures For Fiscal Years 2010-2014, December 2010
Interview, Ed Shelleby, press secretary, Sen. Al Franken, March 14, 2011
Interview, Daniel Weiss, senior fellow, Director of Climate Strategy, The Center for American Progress, March 14, 2011
Interview, Seth Hanlon, Director of Fiscal Reform, Doing What Works program, March 18, 2011
Interview, Lisa Goldman, senior attorney, Environmental Law Institute, March 21, 2011