Offset This, Sen. Coburn

Terrance Heath

Even before the winds died down in his home state, Oklahoma  Republican Sen. Tom Coburn insisted that additional disaster relief be “paid for” by cuts elsewhere in the federal budget. Coburn defended his position by invoking the children pulled from the rubble of two schools in Moore, OK.

The truth is, the federal government has about $11.6 billion in disaster aid relief.  Oklahoma will get the disaster relief it needs without offsets.

But if Coburn  believes this kind of spending should be “paid for” with cuts elsewhere, he can start in his own state.

Here are a couple of ideas.

Oil Subsidies

Oil is a huge part of Oklahoma’s economy. In fact, the energy sector accounts for 9.5 percent of Oklahoma’s gross state product, and 4.6 percent of the state’s non-farm labor force. It’s also an important source of revenue that funds everything from education to transportation in Oklahoma.

However, by the time you factor in tax breaks the state gives to the industry, big oil pays almost no state taxes in Oklahoma. According to the Oklahoma Policy institute, that’s about $645 million in tax breaks and rebates.

The oil and gas industry is unquestionably vital to Oklahoma’s economy. The energy sector accounts for nearly 9.5 percent of Oklahoma’s gross state product and employs 4.6 percent of the state’s nonfarm labor force.1 Although the state economy has diversified to some extent since the oil bust of the 1980s, our economic prosperity remains closely tied to the fortunes of the energy industry.

Revenue from oil and gas production is also a vital component of the state’s tax system. It provides the funding to educate our children, protect our communities, maintain our transportation grid, and assist those in need. Oklahoma assesses a 7 percent gross production tax on oil and gas extraction, except when prices fall below a certain floor. However, several production methods, including horizontal drilling and deep-well drilling, benefit from tax rebates and credits that lower the tax rate to just 1 percent for horizontally-drilled wells and 4 percent for deep wells.

These tax breaks were enacted when these drilling techniques were new and relatively risky. Today they are standard industry practice with far fewer risks. As a result, oil and gas production has shifted increasingly towards horizontal and deep well drilling, and the cost of these tax breaks has skyrocketed.

The state paid out or accrued $645 million in tax rebates and credits to the industry over the latest 3-year period (FY 2010 – FY 2012). Most of the credits – $537 million – went to producers of horizontal wells. Without legislative action to change course, the cost of these credits will continue to grow exponentially in coming years, reducing the resources available to fund core public services.

Cost was cited as one reason why so few homes and schools in the areas it hardest by the tornado had no storm shelters or safe rooms. The mayor of Moore, OK said that a small, sunken shelter might coast about $4,000. So, Oklahoma has given the oil industry enough in tax breaks to but over 160,000 such shelters.

Farm Subsidies

In 2010, about 27,000 people collected $81 million in farm subsidies as direct payments. Most collected less than $1,000, but six farms received more than $100,000. It’s probably a safe bet that Oklahoma legislators who rail against spending — but collect millions of dollars from the federal government — got some of the biggest checks from the government.

Roughly two dozen state lawmakers – some who have railed against government spending – have collected federal farm subsidies in recent years, either directly or through payments to spouses, a Tulsa World investigation found.

Some legislators who received payments are among the largest subsidy recipients in their communities. Others are not primarily farmers, and instead work as doctors or attorneys.

At least three state legislators apparently violated Oklahoma law by failing to report the payments to the Ethics Commission, according to statements of financial interest.

The lawmakers, Democrats and Republicans, have received a combination of crop, disaster and conservation subsidies from the U.S. Department of Agriculture.

… The USDA paid at least 22 Oklahoma lawmakers or their spouses a total of $3.8 million since the mid-1990s, the World found.

That $3.8 million is another 950 or so tornado shelters, by the way. And since Oklahoma farmers are willing to take some some federal cuts, why not take them up on it?

This is what we came up with after just a bit of research today. Digging deeper might turn up even more.

Republicans have. How much disaster aid could these cuts pay for? It’s a moot question where Republicans are concerned.  The GOP would rather coddle the rich and take food stamps away from 2 million Americans — or cancel subsidized school lunches for 200,000 low-income children, and cancel unemployment insurance for millions of Americans.

Republicans like Tom Coburn would rather tax the poor and cut away the safety net — ostensibly to address a deficit that has already shrunk considerably since the Bush era — than ask the 1 percent, and corporate “people” the oil industry, to pay their share of taxes, which would be more than enough to offset or “pay for” disaster relief and then some.

Republicans would have us believe that American can’t afford to offer relief to those victimized by disaster, and aid poor, feed the hungry, help the jobless, heal the sick, etc. Republicans want Americans to believe we have to choose between these things; that in order to do one we must do less of the other.

In a sense, Sen. Corburn does have point, there are some things we could benefit from cutting, right in Coburn’s state.

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