The budget crisis, money in politics, and the corporate welfare to the oil and gas industry

The protests in Wisconsin. The passage of the CR in the House in the dead of night over the weekend. And the continued debate over how to balance the Texas $26 billion budget gap. We kept getting told there are no sacred cows- that all have to share in the burden and pain of budget squeezing.

But realpolitik has shown exactly where the real sacred cows are, while corporate tea party crusaders use the budget crises as a reason to bust unions, raid pensions funds, and slash health services and education budgets, they are leaving intact the tax breaks for oil and gas companies.

Let’s talk Texas first:  a new study out this morning by the Texas Tribune showed that Texans want a balanced approach to fixing the budget.  The single most popular answer was a 50/50 split of revenue enhancements and spending cuts.  However, when you asked people what they wanted to cut spending on, the answer was a resounding NO! to educationTexans say no to budget cuts cuts, NO! to health services cuts, NO! to environmental reg cuts. And when asked where to increase revenue, it was equally sticky.  The single most popular options, the only ones which get over 50% support, was to legalize casino gambling and increase alcohol taxes.  But taxing vice can only get us so far.

One of the things not touched by the poll were the enormous tax breaks we give to the natural gas industry, one which the LBB has suggested eliminating, namely a $7.4 billion tax cut to oil and gas companies using “high cost” wells- which generally means one thing: hydro-fracturing. Fracking is used on areas like the Barnett Shale and has been linked to spoiled water, a cancer cluster located in Flower Mound/Dish, and natural gas turning tap water flammable, and a garden hose into a flamethrower.

At the very least, all of the drilling is producing more air pollution than all of the cars and trucks in the Dallas-Forth Worth area. So to add insult to industry, not only is the drilling on the Barnett Shale ruining families’ homes and making people sick, but we are paying the companies billions of dollars in pork to do it, robbing school children and those who need a hand from social services.

And to kick us even more when we’re down, Chesapeake Energy has the audacity to say if their corporate welfare goes away, they’re going to have to curtail drilling on the Barnett Shale.  From the Star-Telegram’s story:

An executive with Chesapeake Energy told members of the Tarrant County legislative delegation Wednesday that the company would consider curtailing activity in Texas if the exemption is discontinued.

“We’d have to look at it on an individual well basis, but I think it’s pretty safe to say that we would reduce our activity in the state of Texas,” Adam Haynes, senior government affairs director for Chesapeake, said after his appearance before lawmakers. “It certainly affects the Barnett Shale, absolutely.”

Chesapeake and other producers have relied heavily on the exemption to extract natural gas in the Barnett Shale, which lies under several counties in North Texas and encompasses the largest urban gas field in the country.


“Before we ask our schoolchildren in Texas to sacrifice in the education arena because of the budget deficit, we need to ask whether this antiquated tax exemption can be justified,” said Sen. Wendy Davis, D-Fort Worth. “If the purpose for the exemption — to stimulate investment in the oil and gas arena — no longer exists, shouldn’t it be re-examined?”

Rep. Lon Burnam, D-Fort Worth, said he believes the exemption is no longer needed. “I think that one should be closed,” he said. “They don’t need the incentive to invest.”

The Barnett Shale is currently the most productive gas field in the country. If the babies can’t produce the gas without sucking on the big government teat, maybe they ought not be in business all together. Or, what is more likely, is they can stand on their own two feet and we, the taxpayers, are subsidizing their corporate profits. According to the estimate by the LBB, the Texas tax giveaways are enough to reduce gas companies’ liabilities to zero, meaning all the money they make is pure revenue. Bottom line: we’re paying almost a billion dollars just this year (FY 2011) to have gas companies frack with Texas.And they say without it, they may stop.

Here’s a crazy idea: let’s do it. Maybe instead of paying polluters to pollute, why don’t we NOT pay polluters and see if it cleans up their act? (Not an actual policy position, just a blog musing. . .)

And now to the Feds. The House members really showed their true colors in the votes they took last week and into the dead of night to pass a Continuing Resolution late Saturday morning. No to Planned Parenthood. No to the EPA. No to Public Broadcasting. Cut, cut, cut.  Some of the cuts were to EPA’s authority to stop mountaintop removal. But the best one was the cut to stop funding EPA’s enforcement of greenhouse gas regulations. Ironically, this is going to amount to a construction moratorium on all new facilities and all major modifications of current facilities in the state of Texas. Because, by law, they will have to include CO2 in their permits. And CO2 monitors are used to help calculate all sorts of other pollutants. So when someone wants to permit a new facility, EPA can’t approve it. Because it can’t approve anything that has to do with CO2.

<irony> Which is all fine with me. Because as a liberal environmentalist, what I really want is to stop all construction and all progress and never build anything ever again. </irony>

No, what’s actually ironic is that through trying to stop the EPA from enforcing climate regs, the wackos in the House have managed to actually accomplish something no environmentalist would ever dream of trying: a multi-state moratorium on new polluting facilities.

But what is even more revealing is what they chose NOT to cut.  First, a big government sponsorship of NASCAR.  The bill to cut the $7 million the feds give to NASCAR caused death threats and cries of Marxist to the amendment’s sponsorThe amendment failed 281- 148, in favor of more gub’ment cheese to the most popular “sport” in America, showing, I guess, where our real priorities are.

Similarly, an amendment to end tax loopholes for America’s richest and most successful corporations, the oil industry, failed in the House. It would have reduced $53 billion in the deficit. Ironically, much of this is not only money we’re giving to oil companies, but we’re giving it to them to pay taxes in places like Saudi Arabia. So, yes, a triple whammy: I don’t know what’s worse- the opportunity cost of not getting that money, the fact that my tax dollars go to pad the profits of an industry already flush with cash, that they go to pay taxes to fund the government of Saudi Arabia, or that the debt we are taking out is going to pay those things.

So who are the real welfare queens? Who are the real drivers of our deficits? It’s not the poor, the sick, the children, the elderly– we’re already cutting their budgets, along with budgets to protect our air and water, to cut health care for women, and to get rid of Elmo and Mr Rogers. The sacred cows we dare not touch, the tax breaks and subsidies and direct corporate welfare we can not cut? Oil, gas, and I guess, for good measure, NASCAR.

Ronald Reagan was fond of a quote, “A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship.”

He’s right, you know. And today the people voting themselves money from the Treasury of the United States and the State of Texas are these corporate welfare queens. Their high-paid lobbyists and campaign donations loom large over everything our officials do. But who in their right mind thinks our side, the People’s Side, is getting a fair hearing when the millions of dollars spent on campaign donations, along with the billions spent by outside oil interests like the API and the Koch brothers? When our leaders call for shared sacrifice, they should mean it. And when we’re asking teachers and public employees making the median wage to cut back, and crowd more kids into a school, crowd more of our grandparents into a nursing home, crown more people into an ER because we cut funding to Medicare/Medicaid, we ought to also be asking the richest among us to share in the pain.

I know this is all distasteful, so I apologize. But, as a palate cleanser, and because it’s SO far off the mark of most of what we do here at Public Citizen, here’s a happy video of Fred Rodgers testifying in front of Congress about the importance of funding for public broadcasting. He also admonishes members of Congress on how to be kind to one another. I grew up with Mr. Rogers. He was a great American. I think we can all take something from this.


By promoting cleaner energy, cleaner government, and cleaner air for all Texans, we hope to provide for a healthy place to live and prosper. We are Public Citizen Texas.