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WASHINGTON – President Barack Obama's most powerful ally on Capitol Hill said Wednesday that the Senate will turn quickly to legislation to repeal billions of dollars in government subsidies enjoyed by big oil companies every year.
Majority Leader Harry Reid, D-Nev., said the Senate will consider as early as next week Obama's proposal to repeal the tax breaks. Obama wants to use that $4 billion a year to invest in alternative energy in an effort to reduce the country's dependence on foreign oil.
"There's no necessity for these subsidies," Reid told reporters. "The companies have broken all records for profits."
Gasoline prices are at $4 a gallon in many parts of the country. Obama and his allies argue that high oil prices provide ample profit motive for producers to explore for oil and gas and that longstanding tax breaks are now simply a waste of money.
The idea of repealing tax breaks for the oil and gas industry are nothing new, but the White House and Capitol Hill Democrats redoubled their efforts in the wake of comments by House Speaker John Boehner, R-Ohio, who on Monday seemed willing to consider repealing some of the big oil tax breaks. Yet he almost immediately backed away from the idea, and other Republicans like Senate Minority Leader Mitch McConnell of Kentucky were quick to dismiss it out of hand.
On Tuesday, Obama sent a letter to congressional leaders urging them to repeal oil industry tax breaks, repeating a call he made in his 2012 budget proposal earlier this year. The White House concedes that plan would do nothing in the short term to lower gasoline prices.
It's not at all clear that Senate Democrats would be able to overcome a certain GOP filibuster of legislation to repeal the tax breaks, which include a deduction for drilling costs and oil and gas depletion allowances that give producers a tax deduction comparable to the break given manufacturers for depreciation of the value of an investment in plants and equipment.
It takes 60 votes in the Senate to crack a filibuster; Democrats and allied independents control 53.
Pro-drilling Democrats like Mary Landrieu of Louisiana can be expected to resist the idea even if some Republicans support it.
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