Senate Majority Leader Harry Reid (D-Nev.) suggested Tuesday that the Democrats' bill eliminating tax breaks for the big five oil companies could be the first step in helping bring down "exorbitant gas prices.”
“We have to do something about the exorbitant gas prices, and the best way to start with that is to do something about the five big oil companies getting subsidies they don't need,” Reid said on the Senate floor Tuesday morning.
But two different studies concluded the bill would have no affect on gas prices.
A report from the nonpartisan Congressional Research Service found that eliminating the $21 in tax breaks would affect gas prices neither positively nor negatively.
"The price of oil is determined on world markets and tends not to be sensitive to small cost variations experienced in regional production areas," the CRS said last week.
A different study published by Congress’s Joint Economic Committee also found that eliminating tax breaks “will not affect the output or price of crude oil or natural gas.”
SEN. CHUCK SCHUMER (D-NY):
“This was never intended to talk about lowering prices.” (CNN’s “The Situation Room,” 5/11/11)
SEN. HARRY REID (D-NV): “So this is a question of fairness and a question of priorities. Certainly a question of economics. But it is not a question of gas prices.” (Sen. Reid, Floor Remarks, 5/16/11)
SEN. MAX BAUCUS (D-MT): “You know, this is not going to change the price at the gasoline pump. That’s not the issue. I don’t see that as an issue at all. The issue I see is who shares.” (U.S. Senate, Finance Committee, Hearing, 5/12/11)
SEN. MARY LANDRIEU (D-LA): “It will not reduce gasoline prices by one penny.” “I would just like to add my strong voice to urging my colleagues to read this bill, to look at it and understand the inherent unfairness in it, the lack of significant deficit reduction, and the fact that it will not, although it is being touted as, it will not reduce gasoline prices by one penny.” (Sen. Landrieu, Floor Remarks, 5/11/11)
SEN. MARK BEGICH (D-AK): “It won't decrease prices at the pump.”
“There is a lot of talk right now about ending tax incentives for oil and gas industry, but the high profits right now of these companies are easy targets. But one thing Alaskans know, just because you have an easy target doesn't mean it is the right thing to shoot. It won't decrease prices at the pump for our families and small businesses. It will discourage companies, especially the independents, from domestic investment and job creation.” (Sen. Begich, Floor Remarks, 5/11/11)
[Reid] and most of the Dem caucus couldn't be happier that their Republican counterparts are circling their wagons around big oil companies to protect their multi-billion dollar annual tax subsidies. And they'll have great fodder for attack ads starting Tuesday night, when a Senate bill that would rescind those subsidies is expected to fail along party lines.
But even if by some miracle it passes, it would have to be shelved. In their zeal to put Republicans on the spot, Democrats neglected one key technicality: eliminating tax loopholes raises revenues, and any legislation that raises revenues must, according to the Constitution, originate in the House of Representatives.
UPDATE II - For a more complete account of how wrongheaded Reid's unconstitutional legislation is, read Jazz Shaw's thorough post at HotAir.