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GOP Proposes $1.6 Billion Cut to EPA Budget, Defends $4 Billion in Oil Subsidies

Despite arguing that the EPA should "let the market run on its own" without subsidizing different forms of power, GOP lawmakers have defended billions in subsidies to oil and gas companies.

Republicans unveiled a budget plan on Wednesday that proposed a $1.6 billion cut to the Environmental Protection Agency, an agency whose authority they have sought to curtail, while business trade groups have complained about the burden placed on them by agency regulations. Politico also reported that the GOP's proposal would hit the Energy Department hard, with a proposal to cut energy efficiency and renewable energy programs in half.

Rep. Fred Upton, chairman of the House Energy and Commerce Committee, has said he favors gutting EPA’s authority to regulate greenhouse gas emissions with a “legislative fix” rather than simply denying it funds. (See our overview of Upton’s positions on energy.) He told the Wall Street Journal that his disagreement with the EPA is: “You don't subsidize different forms of power -- you let the market run on its own.”

Energy subsidies are not a new thing, and efforts to remove them for oil and gas companies have repeatedly failed in recent years.

This week, when Senate Democrats wrote a letter challenging GOP lawmakers to end to tax subsidies for oil and gas companies—an agenda item that President Obama also referenced in his State of the Union speech—Republicans balked and equated ending those subsidies with raising taxes, which would “destroy American jobs.”

Oil companies are subsidized by approximately $4 billion each year through deductions and loopholes in the corporate tax code. The New York Times reported last year that tax breaks are “available at virtually every stage of the exploration and extraction process,” citing BP and the ill-fated Deepwater Horizon rig as one example:

BP was reaping sizable tax benefits from leasing the rig. According to a letter sent in June to the Senate Finance Committee, the company used a tax break for the oil industry to write off 70 percent of the rent for Deepwater Horizon — a deduction of more than $225,000 a day since the lease began.

The Deepwater Horizon was also registered to the Marshall Islands, which as we noted meant it received less stringent regulation than a rig registered to the United States. It also provided Transocean, the rig’s owner, with a “financial tax benefit,” the Swiss company told the Guardian.

The American Petroleum Institute, an oil and gas trade group, has called elimination of the tax subsidies “misguided” and has echoed the Republican stance that it would kill jobs and slow economic growth. The group’s president told Politico that API has been busy visiting GOP freshmen to make its pitch for the importance of the industry and feels that “the message resonates.”

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