The monstrous corporate tax legislation that recently sailed through Congress — passing in the Senate 69-17 last Monday, only days after it passed in the House — has given the environmental community a terrible case of Coulda-Been-Worse Syndrome.
“We’re well aware that this bill reflects the kind of sausage-making, vote-building, pigs-at-the-trough mentality that Capitol Hill, at its worst, is known for,” said Kevin Curtis, vice president of government affairs at National Environmental Trust. “But the fact is that enviros in Washington have put every ounce of our energy into keeping this bill from becoming substantially worse in terms of bad energy policy and industry handouts than it is now.”
Sen. John McCain (R-Ariz.), however, could spare no kind words for the pork-laden package, which President Bush is expected to sign into law within days. “[A]t 633 pages and $148 billion, [this legislation] serves as a sad example of the way business is done around here,” he said in a lengthy, withering statement submitted on the congressional record. He complained about “billions and billions of dollars in tax breaks for big corporations” and lamented that “special interests continue to rule at the expense of the hardworking American taxpayer.”
Among the biggest corporate winners in this great special-interest giveaway are — surprise, surprise — energy interests.
At one point, Rep. Joe Barton (R-Texas) tried to attach to the corporate tax bill the entire much-maligned energy bill (modeled on the Bush-Cheney energy plan, and long stuck in Congress) and its roughly $15 billion of corporate tax breaks — a move that enviros fought tooth and nail. When that failed, due to its formidable cost and divisiveness, there were still efforts to include a raft of tax breaks for the fossil-fuel industries, many of which came straight out of the energy bill. Thankfully, these efforts had only marginal success.
“We were uncomfortably close to having a bill that would include at least $10 billion more in fossil-fuel and nuclear handouts [than what we ended up with],” said Erich Pica, an economic policy analyst at Friends of the Earth who worked to derail some of the worst proposed provisions in the bill, “so it feels in that sense like a relief. Reducing the amount of fossil-fuel tax breaks is a victory for environmentalists and sustainable-energy advocates.”
But if that battle ended in victory, it’s hard not to think the larger war was lost when you consider the dizzying list of planet-harming provisions that did manage to piggyback on the bill, which was initially intended solely to repeal an export tax that the World Trade Organization said violated free-trade agreements. “This was must-have legislation,” said Pica. “And like all must-have legislation, it became a Christmas tree for everything that hadn’t been passed in the last four years.”
While direct tax breaks for fossil-fuel development were kept from ballooning totally out of control, the bill included a wily maneuver that will allow energy and utility companies to reclassify energy production as a “manufactured good,” enabling those companies to partake in the staggering $76.5 billion in tax breaks that the bill allocates to manufacturing industries with the stated aim of boosting job creation.
In his statement, McCain called the reclassification a “golden parachute,” arguing that “this change in the tax code may not create manufacturing jobs … Other industries that will now be considered to be ‘manufacturers’ are movie studios, real estate development, and construction companies. But the greatest share of this tax break will go to the oil and gas industry and electric utility companies,” he wrote.
A legislative assistant to McCain told Muckracker that this reclassification “is huge. It’s much more of a boondoggle for the oil and gas industries than anyone I know anticipated. According to Standard and Poor’s estimate, published on Oct. 12, this manufacturing provision could allow oil companies to reap more than $60 billion under the reduced tax rate. ExxonMobil alone would get $22 billion and Chevron would get $10.5 billion.”
More troubling is an even farther-fetched reclassification in the bill. A tax credit of $2 billion over nine years has been allocated for industries producing electricity from alternative-fuel sources — a picture that looks sunny at first, but quickly turns smoggy. The bill classifies both refined coal and waste incineration as alternative-fuel sources.
This waste incineration includes not just the burning of residential and business garbage — with all its unsorted batteries, plastics, and who knows what else — but the burning of cow, pig, and chicken turds. “No matter how you look at it, chicken droppings simply are not a clean alternative fuel,” wrote McCain. “[J]ust how, exactly, does the public benefit from the subsidies provided for the burning of municipal trash and poultry waste, both which create significant air pollution?”
And how much, exactly, does the public stand to gain from the ethanol provision in the bill? It allocates $77 million for manufacturers of ethanol, a biofuel hotly contested among environmentalists because, some say, it requires more energy to produce than it actually provides to consumers.
Still another low blow to environmentalists and anyone concerned about energy security is the bill’s reauthorization of the infamous provision offering a tax break to “small businesses” that purchase luxury SUVs — known to critics as the “Hummer in Every Home” provision, because this measure has been abused by small-scale entrepreneurs and self-employed folks to buy personal Escalades and Hummers. The new bill at least cuts the tax credit to $25,000 from its current level of $100,000. Another “victory”?
Among the dozens of other stomach-churning tax breaks in the bill is $18 billion in loan guarantees to three big oil companies for the construction of the Alaska gas pipeline, as well as an additional $445 million in associated tax breaks. There’s also $231 million in so-called “green bonds” allocated for four real-estate corporations to build huge commercial facilities using environmentally sound construction. “We’re all for sustainable building practices, but these are big commercial real-estate ventures — there is no reason that taxpayers should be subsidizing it,” said McCain’s staffer. As McCain himself summed it up in his statement, “Pork called ‘green bonds’ is still pork.”
It is a measure of the beleaguered status of the environmental community in Washington these days that a bill like this, larded with incentives for all manner of environmentally destructive practices, could elicit a sigh of relief. And worst of all, enviros are right — it really could have been worse.
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