2016 Caucus

December 2nd, 2015

Yes. Cruz is a Hypocrite When it Comes to the RFS and Big Oil

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Written by: Craig Robinson
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Photo by Dave Davidson – Prezography.com

Senator Ted Cruz’s presidential campaign is demanding that a radio ad being run by America’s Renewable Future be taken down because he says it’s inaccurate.

The ad, entitled “Hypocrite,” states “Politicians like Ted Cruz support subsidies for big oil, but want to end support for ethanol.” Rick Tyler, Cruz’s national spokesman, told the Des Moines Register on Tuesday, “It is blatantly false to suggest that Sen. Cruz wants to end the Renewable Fuels Standard while maintaining subsidies for oil. Cruz has repeatedly stated that he would end all energy-specific subsidies, both ethanol and oil among others.”

Blatantly false? Hardly.

While it’s true that Cruz has been consistent in his opposition to the Renewable Fuels Standard (RFS), a policy that sets the minimum amount of renewable fuels that are required to be sold in the United States, it’s the Senator’s claim that he also supports cutting off subsidies to the oil industry that doesn’t stand up to scrutiny.

Cruz was directly asked about how, in one breath he can oppose the RFS, but in the next, advocates for subsidies for the oil and gas industry. Cruz was confronted at the Iowa GOP’s Growth and Opportunity event on October 31st at the Iowa State Fairgrounds. Once again, Cruz clearly stated his position that all subsidies should be eliminated.

Cruz added, however, “When it comes to picking winners and losers, we also shouldn’t pick losers. A lot of what are called subsidies in the oil and gas industry are analogous to ordinary business deductions that every other industry gets.

Cruz was specifically asked about the Intangible Drilling Cost deduction that allows the oil and gas industry to immediately deduct the cost of preparing and drilling a new well. This special tax deduction includes everything from wages, supplies, and fuel, to site preparation. In total, it can account for over two-thirds of the cost of a new oil or gas well.

The ability to immediately deduct those expenses is a huge tax advantage that other non-oil and gas companies don’t receive. Non-oil and gas companies are only allowed depreciate capital expenses over a period of time based on the type of asset. Non-oil and gas companies are also capped on how much they can deduct, which is not the case for the oil and gas industry that has no limit on how much it can immediately deduct.

This preferential tax treatment that only the gas and oil industry receives will cost taxpayers $13.7 billion over the next ten years according to the Joint Committee on Taxation. And that’s just one of seven special subsidies the oil and gas industry receives. Taxpayers for Commonsense estimates that if subsidies for just the oil and gas industry were eliminated, taxpayers would save at least $65 billion over the next ten years.

Cruz has often referred to the RFS as a “subsidy,” but it is not. While it is a mandate on the oil industry to blend a certain amount of fuel with renewable alternatives like ethanol, it doesn’t cost federal taxpayers or the federal government a dime.

So, is Cruz a hypocrite for supporting over $65 billion in tax incentives for the gas and oil industry for the next ten years while at the same time advocating against a policy that encourages the use of a domestic fuel that’s cleaner for the environment that also doesn’t cost taxpayers anything?

Yes, clearly Cruz has a double standard.

It’s also somewhat ironic to listen to Cruz put a new twist on the argument that the government shouldn’t be picking winners or losers. In this case, he is talking about how the government should not take away something from the oil and gas industry. Ironically, this week the EPA implemented an administrative rule that subverted a law passed by Congress when it lowered the percentage of renewable fuels being blended from 15 to 10 percent.

The EPA and the Obama administration seem to be picking the oil and gas industry as a winner while Iowa farmers and the renewable fuels industry are the big losers. On this issue, Senator Cruz is standing shoulder to shoulder with President Obama, the EPA, and his home state’s special interests.

About the Author

Craig Robinson
Craig Robinson is the founder and editor-in-chief of TheIowaRepublican.com, a political news and commentary site he launched in March of 2009. Robinson’s political analysis is respected across party lines, which has allowed him to build a good rapport with journalist across the country. Robinson has also been featured on Iowa Public Television’s Iowa Press, ABC’s This Week, and other local television and radio programs. Campaign’s & Elections Magazine recognized Robinson as one of the top influencers of the 2012 Iowa Caucuses. A 2013 Politico article sited Robinson and TheIowaRepublican.com as the “premier example” of Republican operatives across the country starting up their own political news sites. His website has been repeatedly praised as the best political blog in Iowa by the Washington Post, and in January of 2015, Politico included him on the list of local reporters that matter in the early presidential states. Robinson got his first taste of Iowa politics in 1999 while serving as Steve Forbes’ southeast Iowa field coordinator where he was responsible for organizing 27 Iowa counties. In 2007, Robinson served as the Political Director of the Republican Party of Iowa where he was responsible for organizing the 2007 Iowa Straw Poll and the 2008 First-in-the-Nation Iowa Caucuses. Following the caucuses, he created his own political news and commentary site, TheIowaRepublcian.com. Robinson is also the President of Global Intermediate, a national mail and political communications firm with offices in West Des Moines, Iowa, and Washington, D.C. Robinson utilizes his fundraising and communications background to service Global’s growing client roster with digital and print marketing. Robinson is a native of Goose Lake, Iowa, and a 1999 graduate of St. Ambrose University in Davenport, where he earned degrees in history and political science. Robinson lives in Ankeny, Iowa, with his wife, Amanda, and son, Luke. He is an active member of the Lutheran Church of Hope.

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