It is getting close to crunch time in the federal debt negotiations going on in Washington, DC.
This summer’s Congressional debt negotiations created a Congressional bipartisan Supercommittee of 12, tasked (by Thanksgiving) with coming up with proposals for reducing the US debt by at least $1.2 trillion.
If Congress is unsuccessful in passing a debt bill before Dec. 23rd, the default position (agreed to during this summer’s debt discussions) is that Congress would make across-the-board cuts targeting Medicare and Pentagon spending.
Where can the Supercommittee quickly come up with the big chunks of money that will get it to the $1.2 trillion target? The answer seems to be energy revenues, expenditures, tax credits, and subsidies.
Some $37 billion in tax incentives for oil, natural gas, nuclear, renewable energy, and coal companies are under the microscope, despite the Oil Lobby’s constant PR campaign of the last few weeks that seeks to portray a less regulated energy industry as the savior of America’s economy and an instant creator of jobs.
On the one hand, the Obama administration and some Democrats see Big Oil as fat cats, with an excess of federal financial incentives being handed out to a robustly successful industry. On the other hand, the Oil Lobby and some Republicans such as West Texas Rep. Mike Conaway from the oil town of Midland, see the incentives as crucial to supporting independents, the small-business “mom-and-pop shops and royalty owners” all over the country that are the bedrock of the industry. (Independents focus primarily on domestic exploration and drilling).
So there you have it. Another crucial economic issue shaping the future of this country riven by polar opposite perspectives, largely based on political party affiliation.
Meanwhile, the Oil Lobby has been applying pressure. There has been flurry of prophylactic TV advertising by Big Oil companies in recent weeks (with the general theme of “we are ConocoPhillips, Exxon Mobil, Chevron, etc….. and we share your concerns about a more energy efficient and cleaner energy future”) which has been matched by numerous print and online articles and tweets about the crucial role of the industry in growing the US economy.
What will the Supercommittee do? My guess is that given the higher commodity prices and current strong financials of the oil and gas industry, the Supercommittee will recommend that most of the industry tax breaks and subsidies be taken away. Let’s face it, if Congress cannot take away federal incentives from financially successful industries, it has little hope of cutting anything.