by Collin Corbett
Part One: Combating the Liberal Spin
There is perhaps nothing more aggravating than when conservative candidates and Republican officials are confronted by liberal activists who chastise them for their “support of Big Oil,” and the only response they can muster is a stammered slur of equivocations. In the past month I’ve seen this situation replayed over and over, with only a single official handling the situation with anything resembling deftness. In today’s political climate, there is no excuse for this being a “gotcha question.” It’s time we messaged this issue properly.
Democratic lawmakers in Washington have called for an end to energy subsidies such as those given to “Big Oil” companies operating in the United States, pointing to $4 billion in subsidies the five largest oil companies receive each year. Their reasoning has emotional appeal: with a lagging economy, rising national debt, and worsening unemployment levels, subsidies to rich oil magnates are simply enriching “fat cats” at the expense of hard-working Americans. So how can we compete with this picture? It’s easy: stick to the facts.
1. There’s no such thing as a “Big Oil subsidy.”
The subsidy in question is part of a tax provision available to several industries and not simply oil companies. The provision benefits those in the manufacturing sector who are dedicated to research and job creation in the United States. Removing the tax provision would narrow the ways that American companies in the manufacturing industry could receive tax breaks, resulting in an additional drag on the entire manufacturing sector, which is already one of the slowest sectors in job creation.
2. Abolishing these subsidies would increase our reliance on foreign oil.
These tax breaks result in increased American energy exploration and production. Consequently, in 2010, the Congressional Research Service found that removing these tax breaks “may have the effect of decreasing exploration, development, and production, while increasing prices and increasing the nation’s foreign oil dependence.” The removal of these tax breaks would result in an increased reliance on foreign oil to meet the county’s unrelenting demand. On the other hand, maintaining them would allow for domestic oil companies to pursue new sources of oil reserves in the United States, which would create jobs and bolster US revenues (obviously other government regulations currently stand in the way, but the point is still valid).
3. There will be serious consequences to the US economy should these subsidies be removed.
Joseph Mason, LSU’s Endowed Chair of Banking in the Department of Finance, stated in September of 2010 that the elimination of these subsidies would result in "extensive economic losses to the U.S. economy for the next decade, including $341 billion in decreased economic output, almost $68 billion in wage cuts, and initial losses of over 154,000 jobs in 2011." Taking into account that nearly every sector of our economy relies on energy sources such as gas and oil, increased energy prices and decreased availability would result in a drag on the entire economy.
4. The oil industry employs Americans at a time when jobs are scarce.
Those who bash the industry ignore the fact that the oil industry supports over 9 million jobs, and removing incentives for domestic energy production would encourage that production elsewhere, effectively “shipping jobs oversees” as our liberal friends like to say. Last year, Daniel Yergin of IHS CERA concluded, “The unintended consequences of proposed changes would likely accelerate the shrinking position of U.S. companies internationally, which would be bad both for the U.S. economy and for energy security.”
5. The Left’s spin ignores government inefficiency and simple economics.
Supporters of the elimination of these subsidies insinuate that this money, if not given to oil magnates, would instead go to help hurting families. This ignores two very important points. The first is that the government has proven it is better at wasting taxpayers’ money than it is at spending it in ways that truly benefit average Americans. The second point is that the major oil companies pay more in taxes and contribute more to the US GDP than the amount “saved” by purging the subsidies, so it seems foolish to hurt that sector of the economy and jeopardize those funds since such an action would not occur within a vacuum.
6. Punishing sectors of the economy based on inflated statistics is a risky game.
It never ceases to amaze me when liberals use percentages to claim that “wealthy Americans are not paying their fair share,” pointing to their increases as only a few percentage points while ignoring the overall numbers that show that the top 1% already pay roughly 40% of the tax burden in this county. Yet when attacking “Big Oil” they point to the overall revenues, ignoring the fact that their profit margin is 6.5% ranking them 104th out of 215 industries (as of June 29th, 2011). Maybe the government should go after industries making much higher profits, like publishers, wireless communications providers, personal product manufacturers, medical suppliers, agricultural chemical suppliers, drug manufacturers, brewers and distillers, etc. If we’re going to punish companies for being successful, we should at least be fair about which companies we target, right? You want to really throw their argument for a loop, show them how much the government is making off of each gallon of gas we purchase.
The best way to fight liberal spin is with facts. As a former client of mine used to say, “They don’t like it when facts get in the way of a good story.”
Part two of this piece will focus on positive solutions that can be presented, putting us on the offensive rather than continuing to play this defensive game.
Collin Corbett is a co-founder and principle of CorStrategies.
