Pro vs Con

Oil companies can build refineries now if they want. But they don’t, because they make more money when they dictate supply and keep prices high.

As the Natural Resources Defense Council explains: "Although refinery capacity is a factor in today's higher gasoline prices, environmental regulations are not the reason for tight refinery capacity, according to the DOE, the Environmental Protection Agency, the General Accounting Office, and even oil industry executives. Consider the market fundamentals: refiners reap higher profits when capacity is tight, so they actually have a disincentive to significantly expand production. In fact, oil executives have stated that the reason they did not expand refining capacity in the 1990s is that the low profitability of the business did not justify the investment."

Bush greatly misstates the Energy Department's conclusion. The AP reported in 2004: "Opening an Alaska wildlife refuge to oil development would only slightly reduce America’s dependence on imports and would lower oil prices by less than 50 cents a barrel, according to an analysis released Tuesday by the Energy Department ... if Congress gave the go-ahead to pump oil from Alaska’s Arctic National Wildlife Refuge, the crude could begin flowing by 2013 and reach a peak of 876,000 barrels a day by 2025. But even at peak production ... the United States would still have to import two-thirds of its oil..."

During the Bush presidency, crude oil prices have risen from about $30 a barrel to $117. Shaving off 50 cents per barrel, more than a decade from now, is meaningless as far as price at the pump.

Here are the facts:

• Between March 2001 and March 2008 the nation lost almost 3.3 million manufacturing jobs, and only gained 5.3 million jobs overall—just slightly more than half the number of jobs needed to keep pace with the 9.8 million people added to the labor force during that period. That's why the unemployment rate is 15.7 percent higher in March 2008 than it was in March 2001. (Bureau of Labor Statistics)
• The share of the population with jobs declined from 64.3 percent of the population in March 2001 to 62.6 percent of the population in March 2008. It's the first time on record that a period of "economic recovery" has been marched by an actual decline in the employment rate. (Bureau of Labor Statistics, Economic Policy Institute)
• Hourly wages rose 3.6 percent over the past year, the slowest growth rate in two years, and well behind recent inflationary readings, which have been around 4 percent. What's worse, employees on average have been keeping their workers on the job for fewer hours in the past year, so weekly earnings are up only 3.3 percent over the past year. (Economic Policy Institute).
• Since the late 1990's, average incomes fell by 2.5 percent for those in the bottom fifth of the income scale and rose by just 1.3 percent for those in the middle fifth. Meanwhile, incomes climbed 9 percent for those in the top fifth, not counting income from capital gains. (Economic Policy Institute)
• At the same time, the consumer price index from March 2001 to March 2008 has increased 17.5 percent. (Inflation Data.com)
• People in the top 1 percent of the income bracket captured about half of the overall economic growth between 1993 and 2006. (Emmanuel Saez, University of California, Berkeley)

Doing away with federal gasoline taxes for even a short period of time will do serious damage to the economy as we head into a recession and as high gas prices affect our commuting patterns. Federal gasoline tax dollars go into a trust fund that helps pay for roads, bridges and mass transit. According to the federal government's own calculations, every $1 billion spent of the gasoline tax revenues creates nearly 35,000 jobs. A summertime "gas tax holiday" could cost the nation almost 350,000 jobs and would halt work on vital improvements to roads and bridges, as well as mass transit systems stressed by new riders leaving their cars at home. According to the Congressional Budget Office, we're already falling behind in our ability to pay for our transportation needs. The bigger issue is this: An economy that depends on the efficient interstate movement of goods and services can't afford to continue starving the maintenance and growth of our transportation network. But that's what we've done under the Bush administration, which opposed moves even from within its own party to increase transportation spending enough to match actual needs. Dumping the burden on already-strapped and unevenly equipped states won't solve the problem. A transportation system that allows the economy to operate efficiently and save precious fuel is a national priority; we should all share in the costs and the benefits.

"...growing trade deficits with Mexico and Canada have displaced production that supported roughly 660,000 (manufacturing only) and 1.0 million (total) U.S. jobs since the agreement took effect in 1994." -- Revisiting NAFTA, Economic Policy Institute, 9/28/06

"With an effective date of August 1st, this means that not one troop will benefit from this deployment reduction until August 2009--seven months into the next Presidential administration." -- VetVoice's Brandon Friedman, 4/10/08

Most middle class Americans aren't doing "fine" in this economy. Household incomes are stuck in 1999, while American families pay 2008's prices for the basic necessities. As a result, more of them are going deeper into debt. That's why more than 79% say that it's more difficult to maintain their standard of living now than just five years ago. That's because the economy isn't working for them, and they know it. A majority, 58% say the Republican Party favors the rich. For middle class Americans, it's not a question of whether the economy is working. It's a question of who it's working for, and why it's not working for them.

Conservatives have no legitimacy when they complain on one hand about pork-barrel spending while squandering money on “bridges to nowhere,” on crony corporations like Halliburton and on subsidies for their political contributors. Meanwhile, the American Society of Civil Engineers estimates we need to spend $1.6 trillion over the next five years to fix our roads, bridges, water lines and other essential public resources. These are real needs, not "pork." Plus, it's a matter of global competitiveness: Countries like China and India are making massive investments in public transportation, schools and broadband, while too many of our children study in crumbling schools, workers lose productivity on crowded roads, and Internet commerce suffers under some of the slowest and most overpriced broadband connections in the industrialized world. The more-than-$100 billion a year spent on the war in Iraq would go a long way to funding these investments, which would enhance our economic security..

What the House actually did was vote to repeal tax breaks worth $18 billion that the oil companies received from the Republicans in 2004. The need for the tax breaks was highly questionable then, when these companies were profiting hugely from oil that had not yet reached $50 a barrel. Now that oil is above $100 a barrel, there's clearly no justification for those breaks. For example, Common Cause notes that just one company, ExxonMobil, spent more of its profits in 2007 buying back its own stock ($31.8 billion) than on its entire exploration and drilling operation ($20.9 billion). The top five oil companies are already sitting on $53 billion in cash that they can use if they want to discover and bring more oil to market. By restoring the tax code for oil companies to essentially when it was before oil lobbyists, armed with campaign cash, got their friends on the Republican-controlled Congress to change it , the federal government can put the subsidies where they are truly needed—into research and seed money for renewable technologies that promise domestic, green-collar jobs and a pollution-free environment. And no, Mr. President, ending a giveaway that never should have happened is not a "tax increase."

"Some people mistakenly believe that funding for domestic discretionary programs has exploded since 2001," says a February 2008 report by the Center for Budget and Policy Priorities. The reality is that funding for domestic discretionary programs outside homeland security is lower as a share of the economy in 2008 than it was in 2001. And, between 2002 and 2008, the overall funding level for domestic discretionary programs outside homeland security declined 2.6 percent in real per capita terms. In other words, spending on dozens of important and widely supported programs has not kept pace with inflation the past few years.

The real threat to our fiscal health is continued government disinvestment in vital education, health, safety net and infrastructure programs, as well as the continuation of the disastrous war in Iraq.