Wonky

Obama Seizes On Boehner's Openness To Ending Big Oil's Tax Breaks

President Obama with Sheikh Mohammed bin Zayed Al Nahyan of the United Arab Emirates, Tuesday, April 26, 2011. i i

President Obama with Sheikh Mohammed bin Zayed Al Nahyan of the United Arab Emirates, Tuesday, April 26, 2011. Carolyn Kaster/AP hide caption

itoggle caption Carolyn Kaster/AP
President Obama with Sheikh Mohammed bin Zayed Al Nahyan of the United Arab Emirates, Tuesday, April 26, 2011.

President Obama with Sheikh Mohammed bin Zayed Al Nahyan of the United Arab Emirates, Tuesday, April 26, 2011.

Carolyn Kaster/AP

House Speaker John Boehner opened the door and President Obama has leaped through it.

In an interview with ABC News correspondent Jonathan Karl that aired Monday Boehner, an Ohio Republican, said he was open to considering reducing tax breaks like the depletion allowance received by the nation's largest oil and gas companies.

Boehner said:

"It's certainly something we should be looking at. We're in a time when the federal government's short on revenues. They ought to be paying their fair share."

On Tuesday Obama, who Republicans have blamed for high gas prices, used Boehner's words as a springboard. The president sent a letter to congressional leaders welcoming the speaker's statement and essentially urging Congress's top Republican to put his political clout where his mouth is.

Obama wrote in part:

In fact, in the past CEO's of the major oil companies made it clear that high oil prices provide more than enough profit motive to invest in domestic exploration and production without special tax breaks. As we work together to reduce our deficits, we simply can't afford these wasteful subsidies, and that is why I proposed to eliminate them in my FY11 and FY12 budgets.

I was heartened that Speaker Boehner yesterday expressed openness to eliminating these tax subsidies for the oil and gas industry. Our political system has for too long avoided and ignored this important step, and I hope we can come together in a bipartisan manner to get it done.

When gas prices rise, it's Democrats who typically go after Big Oil, calling for price-gouging and antitrust probes and talking about re-instituting a windfall profits tax.

Republicans typically refrain from such calls to raise oil-industry taxes.

But with many Americans barely recovered from the Great Recession when gas prices began to soar, the political calculus has for Republicans has obviously shifted enough for at least Boehner to appear open to the idea of the largest oil companies paying higher taxes.

The oil industry has criticized the desire to end the depletion allowance and other tax breaks.

John Felmy, chief economist for the American Petroleum Institute, said on Fox Business:

"We're just being singled out as an industry for no good reason. The fact of the matter is the oil industry is nine million Americans working to supply fuel for consumers and it's owned by tens of millions of other Americans...

"... The practical effect of the matter is you're just raising taxes. You can call it whatever you want in Washington but it's raising taxes. We tried this back in the era of Jimmy Carter. It resulted in reduced production, increased imports and then they poured the money down the drain on things that didn't work. So let's not repeat the mistakes of the past."

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