Mojo - January 2013

Big Oil's Billions in Tax Perks Survive Fiscal Cliff Deal

| Wed Jan. 2, 2013 5:43 PM EST

Everything was supposed to be "on the table" in the crafting of deal to avert the so-called fiscal cliff. But in the end, congressional Democrats and Republicans skipped over some of the most glaring tax perks and giveaways. Case in point: Congress didn't touch billions of dollars a year in freebies to the oil and gas industry that pad the profit margins of companies such as ExxonMobil and BP.

The final fiscal cliff deal does not touch oil and gas subsidies, confirms Rory Cooper, a spokesman for House Majority Leader Eric Cantor (R-Va.). Ending the costliest tax breaks for oil and gas companies would have raised tens of billions of dollars in revenue. Trimming just a handful of these breaks for the big five companies—BP, Chevron, ConocoPhillips, ExxonMobil, and Shell—would've raised $24 billion over the next decade. President Obama's 2012 budget proposal called for ending 13 breaks benefiting oil and gas companies of all sizes; it would have saved $46 billion over 10 years.

There was a window of time around the November elections when it looked as if these subsidies might, just might, face even the slightest cuts. At the first presidential debate, Mitt Romney, whose closest allies included the head of the oil lobby, said oil subsidies were on the table if corporate taxes were lowered. Rep. Fred Upton (R-Mich.), chair of the powerful House energy and commerce committee, said in a debate that he'd end all energy subsidies, including those for oil and gas. And a week after the election, House Speaker John Boehner (R-Ohio) refused to rule out trimming oil and gas subsidies as part of a fiscal cliff deal.

But oil and gas giveaways have a knack for surviving even the fiercest fiscal showdowns. (See: Congress' 1986 tax-reform battle.) Because they're baked into the tax code, the industry and its lobbyists only have to defend their billions in perks; the wind and solar industries, by contrast, must fight and claw to extend the breaks they receive, which include expiration dates. The fiscal cliff deal also preserved tens of billions of dollars in tax credits for renewable energy production and research.

"We're certainly not asking for anything on Capitol Hill," a staffer with the American Petroleum Institute, the oil industry's top lobbying shop, told the AP in late November. And he wasn't lying: the industry doesn't necessarily want anything new from Congress. It just wants to keep what it already has.

Which is exactly what happened in the fiscal cliff drama. The oil and gas industry preserved its bountiful status quo so that the billions in breaks continue to flow. Game, set, match, Big Oil.

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Stop Making Fun of the Chinese Drywall Bill

| Wed Jan. 2, 2013 12:16 PM EST

It was an easy target. With Washington at its most dysfunctional (well, almost), Congress took a break this week from doing nothing about the fiscal cliff to hold a critical vote on a bill to...regulate drywall. Drywall! "Tomorrow the house will vote on the drywall safety act of 2012," Buzzfeed's John Stanton tweeted on Saturday. "THANK GOD OUR LONG NATIONAL DRYWALL NIGHTMARE IS OVER." "Things more urgent than #Sandy relief: Drywall Safety, Frank Buckles WWI monument & "Conveyance of certain property in Kotzebue, AK," tweeted the Daily Beast's John Avlon on Wednesday.

Congress, or at least certain factions within, deserves a lot of the flack it catches. But as it happens, drywall safety is actually pretty serious business—and was the subject of a massive investigation by our friends at Pro Publica:

ProPublica and the Sarasota Herald-Tribune began examining in May 2010 what was—or wasn't—being done to help people whose homes had been built with contaminated drywall. The problematic drywall, much of it imported from China, emitted foul odors and frequently caused mysterious failures of new appliances and electronics. Worse yet, some residents complained of serious respiratory problems, bloody noses, and migraines.

What ProPublica's Joaquin Sapien and the Herald-Tribune's Aaron Kessler discovered: that despite an investigation by the U.S. Consumer Product Safety Commission (CPSC), most of the primary issues remained unresolved; that some builders and suppliers knew early-on that some Chinese-made drywall was problematic but continued using it anyway; that health and structural complaints from people who lived in homes built by Habitat for Humanity in the post-Katrina "Musicians' Village" were virtually ignored; that a family-owned German company was closely involved in the operations of a Chinese subsidiary that produced some of the tainted drywall; that a proposed settlement for customers who bought bad drywall from Lowe's offered small payouts to victims and big fees to attorneys; and that bad drywall might be related to 12 infant deaths at an Army base in North Carolina.

In addition to taking steps to make Chinese companies abide by American court decisions, the new law requiring drywall manufacturers to label their products and to limit the amount of sulfur (which can corrode homes).

That's not to excuse House Republicans for not passing the Sandy relief bill or for basically just setting up a sequel to the fiscal cliff in two months—it's just that not everything that comes out of Washington is awful.

So we've got that going for us, anyway.

We're Still at War: Photo of the Day for January 2, 2013

Wed Jan. 2, 2013 11:00 AM EST
A CH-53E Super Stallion flies over properties outside of El Centro, Calif., on the way to a weapons training range Dec. 20.
U.S. Marine Corps photo by Lance Cpl. Christopher Johns.