From The Hill:

The Senate will hold a test vote Tuesday evening on a Democratic plan to repeal several tax breaks for the big five oil companies.

The plan would repeal an estimated $21 billion worth of incentives over a decade from Exxon, Shell, BP, ConocoPhillips and Chevron.

The vote on a motion to formally proceed to the bill will require support from 60 senators, and it faces big hurdles amid widespread opposition from Republicans and Democrats from oil producing states.

Because, as is noted, Republicans and several Democrats oppose the legislation, the measure could well fail.

However, Sen. Menendez, Sen. McCaskill and others up for re-election in 2012 have been pushing hard for it, apparently unworried about angering voters and aiding their eventual opponents by generating a steady stream of attack ad material.

Known as Section 199 relief, the deduction in question has been available to companies engaged in energy production, as well as manufacturing, for several years as an incentive to encourage operations and employment.

However, under an amendment introduced by Baucus, which could be voted on in the Senate next month, that deduction would be eliminated for certain players in the energy industry.

According to a memo obtained by Capitol Confidential and written by Senate Finance Committee staffers Scott Mulhauser and Erin Shields, the Baucus amendment is intended as a substitute to another introduced by Sen. Mike Johanns (R-Neb.).  The Johanns amendment is itself intended to modify the Small Business Jobs Act.

The memo states that “the Democratic alternative… would repeal Section 199 of the tax code, which currently allows these corporations to deduct six percent of their income from oil and gas production from their tax liability, effective December 31, 2010.”

While the amendment is aimed at the biggest energy producers, opponents say that the amendment is still dangerous.

LSU business professor Joseph R. Mason, who has been studying the effects of the Obama administration’s moratorium on drilling on the Gulf Coast community, recently wrote in an op-ed in the Wall Street Journal that according to some research, “this repeal would cause the U.S. to increase its reliance on imported oil from politically unstable nations, cost the economy 637,000 jobs, and reduce household earnings by nearly $35 billion over the next decade.”  Dr. Mason further noted that according to the Congressional Research Service, repeal would “adversely affect domestic production and increase imports.”

The Institute for Liberty, known to comment on misperceptions of energy industry profitability and subsidization similarly noted in earlier in July— when tax hikes including this one were first being mooted— that such changes would “increase taxes on energy companies and consumers.”

The Mulhauser-Shields Baucus Finance Committee memo does not address this point, focusing instead on the claimed benefit to small businesses of other provisions in the amendment.

However, opponents of the measure say they intend to raise the profile of the Baucus amendment, and all its content, ahead of any forthcoming vote.

“They can’t claim to be pro-job while being anti-business,” said one energy industry representative quoted above, “and November is just around the corner.”

However, the demise of cap-and-trade does not mean Democrats have put what some dub “plans” to target energy companies on hold completely, or placed them on the back burner.

The Obama administration has worked hard to impose a moratorium on deepwater drilling, which one prominent expert says could directly result in a loss of $2.1 billion in output, nearly $100 million in forfeited tax revenue, and close to 10,000 mostly middle-class job losses.

In addition, the agency responsible for issuing new permits to drill in the Outer Continental Shelf (“OCS”) has issued just four permits during the last three months, as compared to 56 permits in the three months prior to that.

Furthermore, Democrats are reportedly targeting energy companies with higher taxes.

Tax experts say the Obama administration and congressional Democrats want to make two changes to the tax code that, ironically, opponents claim would end up hurting domestic producers and benefiting foreign companies like BP—the company on whose throat the Obama administration was previously claiming to have its boot.

President Obama’s 2011 budget proposal reportedly recommends repealing certain tax credits available to companies who pay taxes on income earned abroad.  Currently, such foreign tax credits are available to companies with overseas operations, having originally been extended to diminish discrepancies in competitiveness between foreign companies, which are taxed only by jurisdictions in which they earn money on income earned within them, and US companies with operations abroad, which are taxed both by such foreign jurisdictions on income earned within them and by the US government, on all income.

Separately, however, observers say the President and congressional Democrats  want to exclude energy companies from Section 199 tax relief, which allows companies to take a deduction in respect of a certain proportion of domestic production each year.  Section 199 relief was originally introduced in order to spur job creation in the manufacturing sector.

Ironically, not only could excluding energy companies from being able to rely on Section 199 indirectly result in companies like BP or Venezuela’s Citgo benefiting, critics say that like the foreign tax credit proposal, if implemented this proposal could result in further job losses, just as a moratorium is predicted to do.  That, combined with fears that a shutdown in domestic drilling could lead to oil companies relocating to, among other countries, Cuba, could turn such proposals virtually toxic for Democrats running both in states affected by the BP oil spill and in which the energy sector is a big employer.

According to one Republican political consultant with whom we spoke, “The more sunlight is shone on the administration’s actions already with regard to drilling, and the more that shines on these tax proposals, the more I think you will see candidates from Charlie Melancon to Charlie Crist diverge from the administration and congressional Democrats.”

To the extent that Florida Sen. Bill Nelson and other Gulf Democrats currently in office also parts ways with their colleagues and President Obama, that could force a change in the administration’s posture, and the approach being taken by congressional Democrats, overall.

However, many of those who stand to be affected by these various policies are reportedly not leaving anything to chance.  “More and more, I think folks in DC should expect to hear from ordinary people who stand to be affected by these things,” said that political consultant.  “To borrow from Joe Biden, this is a BFD for a lot of people.”

Given these numbers, the last thing Washington politicians should be doing is supporting legislation that would cost thousands more jobs. But that is exactly what my very liberal opponent, Congressman Joe Sestak, is doing.

Not only did Congressman Sestak sponsor and vote for a cap-and-trade energy tax, he argued that the tax did not go far enough!

A cap-and-trade energy tax would impose an onerous indirect tax on the production and consumption of carbon-based energy. It would cap the amount of carbon dioxide businesses could emit, impose a penalty when the cap is exceeded, and would require that carbon emissions be cut by 20 percent of 2005 levels by 2020.

Independent studies have found that this would cost the country millions of jobs, but in an industrial state like Pennsylvania, the cap-and-trade tax would be even more harmful than elsewhere. Our state’s coal, natural gas and manufacturing industries would be especially hard hit.

Pennsylvania is the fourth-largest coal-producing state in the country and coal plays a major part in the commonwealth’s economy and electricity production. Coal accounts for more than half of all electricity produced in Pennsylvania. According to a National Association of Manufacturers’ study, coal production would fall by about 85 percent and electricity production by about 21 percent as a result of a cap-and-trade bill voted for by Joe Sestak and passed in the House.

Pennsylvania is also home to the Marcellus Shale, one of the largest unconventional natural gas reserves in the world. It has the potential to turn our state into a major producer of clean energy and create thousands of jobs. But the new energy tax could doom this budding industry before it has a chance to develop.

The manufacturers’ study finds the House cap-and trade bill would cost Pennsylvania more than 70,000 jobs in the years ahead. But that’s not all. In just six years, it would increase gasoline prices by 6 percent to 8 percent, oil prices by 6 percent to 12 percent and natural gas prices by 14 percent to 21 percent.

The cap-and-trade energy tax is so devastating, it has garnered bipartisan opposition across Pennsylvania and the country.  In Pennsylvania alone, a majority of the congressional delegation – including both Republicans and Democrats – are opposing this disastrous tax.

We can and must support commonsense policies that protect our environment, but that goal can be achieved without abandoning 70,000 or more Pennsylvania jobs and imposing higher gas and electricity prices on all Pennsylvanians. A focus on renewable energy, conservation, low-carbon energy like natural gas, nuclear energy and cleaner-coal technology are all part of the solution. But as unemployment climbs toward 10 percent, protecting our hard-working families must be our first priority.

A study released last month, which draws positive conclusions regarding CARB’s favored “feebates” program, cost a whopping $796,641 according to a document found at CARB’s own site.  That has some observers scrutinizing CARB’s activities thinking it could come under renewed and sustained criticism.

California is currently mired in a fiscal morass that seems almost intractable, with many in the Golden State blaming overspending by government for the state’s fiscal woes.  Assembly Democrats have proposed plugging the state’s budget hole via $9 billion in loans, whereas Senate Democrats want to suspend $2 billion in corporate tax reductions, among other measures; the state budget deficit, meanwhile, is reportedly as big as $19 billion.

The “feebates” program is a CARB priority, however.  The agency sees slapping a tax on new, higher-emissions cars purchased by Californians, while offering a rebate on new, lower-emissions cars, as a key to combating climate change.

But California’s steps to curb climate change, including AB 32, have recently been taking a lot of incoming fire with the state’s finances, and economy, in the hole.  “There is a sense, even among some Californians who generally do consider themselves ‘green,’ that they’ve gone too far,” a California political source told Capitol Confidential.  “CARB in particular has come in for a lot of criticism, and their dropping this sort of money on a study that seems designed to validate their pre-existing conclusions is probably not going to help, especially when voters are angry about 12 percent-plus unemployment and the budget situation.”

Moreover, the substance of the “feebates” program is likely to anger fiscal conservatives, as well as automakers.

Anti-tax advocates say it will raise taxes both directly—i.e., for purchasers of less efficient cars—and indirectly.  In France, where “feebates” have also been used, critics say rebates wound up exceeding taxes paid, and the result, says one individual tracking the proposal with whom we spoke, has been generalized taxpayer subsidization of the program.  In Canada, meanwhile, the “fees” arising under their “feebates” program have reportedly been kept in place, but expensive rebates were ended.

Automakers, for their part, seem to see the proposal as unnecessary and redundant.  According to Dave McCurdy, President and CEO of the Auto Alliance, “automakers are [already] investing heavily in more fuel-efficient autos” which should mean that what some describe as government coercion is not in fact necessary to get consumers to purchase more fuel-efficient vehicles that emit less.

Still, CARB is expected to pursue the “feebates” program, relying on its costly survey to justify its actions.

That was global warming, of course. Or George Bush.

But here is essentially the rejoinder that you would have heard:

Obama’s argument made in Pittsburgh goes that, with BP having been reckless and the administration incompetent…if you carry the 1 and tally it up it means a massive new tax increase on all of us to make energy more expensive.

This just makes sense in the land of never letting a crisis go to waste.

Which should remind us how to know there’s no good reason for an agenda: when the reason for the agenda, or rather the excuse, keeps changing. Now the global warming tax, which was then a climate change tax, then somehow a job-creation energy tax is now an energy tax to show how engaged and angry President Obama is at BP’s oil spill.

But in his Pittsburgh remarks announcing this new logic, the president failed to note the disconnect in lashing out at BP by… passing a light-switch tax that John Kerry admits BP helped write, and is the most aggressive lobbyist for. Yeah, take that BP!

Instead, he said “The next generation will not be held hostage to energy sources from the last century.” No. That would be too good for them. Instead, he seeks to hold them hostage to his beloved windmills, which are technology of, at best, the century before that.

And if decades of eight dollar gas and windmill schemes would prompt invention of pixie dust or flying cars and our final victory over those stubborn laws of physics, wouldn’t that sort of happened in Europe after decades of such nonsense? Instead, all it has brought them is chronic double-digit unemployment, flight of manufacturing jobs (including steel jobs to Carroll Country, KY)  and now bankrupt nations, as even the Spanish socialist government has admitted.

But none of this takes away from the disconnect between one company’s negligence and one administration’s incompetence meaning we get stuck with a huge energy tax, killing jobs and harming seniors and the poor while driving us closer to Europe’s disastrous model.

The truth of course is that this is just a cynical Power Grab using whatever excuse they can find to repeat Europe’s economic disaster here as part of their fundamental transformation of America.

With a Cap-and-Trade law in place, the government would set a yearly greenhouse gas emission target (carbon dioxide is the most common man-made greenhouse gas, you are exhaling right it now) and would reduce that yearly ceiling over time.  This is the “Cap” of Cap-and-Trade.

The “Trade” part of this scheme comes in when the government (read: politicians) gives out greenhouse gas emission credits, valued at billions of dollars, to favored industries.  So, industries with greater credits than emissions would be able to sell their valuable credits (basically, a right to emit greenhouse gases) to those industries (such as the coal industry or the oil and gas industries) which would need the credits to stay in business.

Over time, the government makes money, commodities traders make money, such as those on the Chicago Climate Exchange (yes, it exists, they make money trading carbon dioxide credits), politically favored industries make money (such as those former Vice President Al Gore has invested over $100 million in), and the rest of us get hit with the bill – up to $2,000 per family per year of higher energy costs. Thus, Cap-and-Trade is actually a huge energy tax on working Americans.

Senator Barbara Boxer is in charge of pushing the Cap-and-Trade energy tax scheme through the Senate.  She says that Cap-and-Trade will create American jobs and reduce global greenhouse gas emissions. She is wrong on both counts.

Let’s take jobs first.  Recent studies from Spain show why.  In March of 2004, an al-Qaeda affiliate launched a terror attack on the Spanish transit system, killing 191 people.  Days later, the conservative Spanish government was defeated by the Socialists who pulled Spanish troops out of Iraq and launched an aggressive “green jobs” program.  The results of this experiment are now in and it doesn’t look good for Sen. Boxer and her allies.  Juan Carlos University in Spain completed a study in March, 2009 of the effectiveness of the effort to create a large amount of solar and wind energy green jobs.  Their findings: each “green” job created with a government subsidy caused the loss of 2.2 regular jobs; each “green” job cost about $800,000 to create; while 110,000 other jobs were lost due to higher energy costs in metallurgy, mining, and other industries.  The net result: some 60 percent of the Eurozone’s newly unemployed are Spaniards.  This makes sense: increasing the cost of energy makes any energy-intensive industry less competitive with companies located in lower energy cost areas such as coal-powered China.

Now, let’s examine emissions, will they be reduced under a Cap-and-Trade scheme? They might be – in America only.  To the extent that politicians reduce the emissions cap and don’t give out too many credits, the cost of emitting greenhouse gases will go up in America.  As this cost of doing business soars, energy-intensive industries will be under increasing pressure from their lower cost competitors overseas. The net result will be a shifting of jobs from the U.S. to China, India and other low-cost regions.  The irony here is that these nations will produce the same products we used to, but will do so with less efficiency and with far higher emissions because they are more reliant on coal to produce energy.  The net result will be a drop in U.S. emissions, but an overall rise in global emissions.

The bottom line: Sen. Barbara Boxer’s Cap-and-Trade energy tax will cost your family up to $2,000 per year, will destroy about 2.4 million American jobs and will actually increase global greenhouse gas emissions.

If we were really serious about reducing emissions and creating jobs, we would look to modern nuclear power as the best way to achieve both.