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Charlie Melancon: Congress should pause before rushing to spend $3.5 trillion

Charlie Melancon
| Sunday, October 10, 2021 7:00 p.m.
AP
Sen. Joe Manchin, D-W.Va., speaks to a reporter at the Capitol in Washington Sept. 30.

Underway in Washington is a debate surrounding Congress’ $3.5 trillion reconciliation bill. The bill removes important industry tax deductions and establishes a new natural gas tax, essentially making it punitive to produce resources here at home. With rapid decarbonization goals driving the Biden administration’s agenda, some policymakers overlook the reality that these punitive tax measures will likely result in higher energy prices passed onto the consumer. Additionally, significant tax revenue contributions from industry operations to the federal and state governments could be at risk.

As a former Democratic member of Congress, I am sensitive to the importance of taking action to address climate change. Nevertheless, Democrats must keep in mind this laudable goal should not sacrifice the accessibility and affordability of Americans’ daily energy use as they review the current reconciliation bill.

One prominent feature of the environmental agenda is to target U.S. fossil-fuel producers with about $120 billion of new taxes over 10 years by repealing so-called “tax breaks.”

Another would be a newly established methane fee that would fundamentally act as a tax on domestic natural gas development. If this bill is passed, it will have an enormous impact on many states, even those without a large energy footprint. The oil and gas industry, which supports nearly 11 million domestic jobs and generates billions of dollars in revenue for federal and state governments, is an integral part of our economic foundation and pays its fair share.

According to a recent report by the Tax Foundation, the oil and natural gas industry paid $7.2 billion in state and local taxes and licenses in 2018, or 89.7% of net income, compared to 16.5% on average for all other industries. Yet, Congress is proposing to penalize this sector with punitive tax treatment.

What is also not accounted for is the significant environmental progress our country has already made in lowering emissions that domestically produced natural gas has enabled through less coal use. This transition has contributed to a decline in power sector-related carbon emissions by 33% since their peak in 2007.

According to the same Tax Foundation report, a more effective way to protect the environment and avoid serious impacts to American producers would be to tax consumption or demand for fossil fuels. Taxing consumption of fossil fuels is more beneficial than taxing production, because it is more environmentally effective, while raising revenue for the federal government at minimal cost to the economy.

More moderates across the country need to recognize these realities. Take Pennsylvania for example. According to a PwC study, the oil and gas industry supports more than 480,000 jobs and provides $40.5 billion in labor income for the Keystone State. To say the Pennsylvania economy is dependent on the energy sector is an understatement, as it ranks second, only to Texas, in natural gas production. Pennsylvania’s delegation, including Reps. Susan Wild, Chrissy Houlahan, Matt Cartright and Conor Lamb, who all represent energy-producing districts, should consider the impact the bill would have on their districts before moving forward.

My fellow Democrats should voice their concerns on harmful energy measures in this reconciliation bill and instead help defend our nation’s energy sector. By discriminating against U.S. oil and natural gas, American jobs and our country’s energy security will suffer.

Charlie Melancon, a former Democratic member of Congress and Louisiana Secretary of Wildlife and Fisheries, works with the pro-infrastructure group Grow America’s Infrastructure NOW (GAIN) Coalition.


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