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Obama budget boosts 'green energy,' but no olive branch to GOP

President Obama's budget calls for increased investing in clean-energy technology and the ending of tax preferences for the oil and gas industry. The 2014 budget proposal is in line with the president's 'all-of-the-above' energy policy, but does little to reach across the aisle.

By Correspondent / April 10, 2013

Copies of President Barack Obama's budget plan for fiscal year 2014 are distributed to Senate staff on Capitol Hill in Washington. The budget calls for investing billions in clean-energy technology and eliminating tax preferences for oil and gas companies – two features of the administration's energy policy that have repeatedly rankled Republicans.

J. Scott Applewhite/AP

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President Obama's proposed 2014 budget aims for a "grand bargain" with cuts to Social Security and Medicare. But on energy, the president doesn't seem interested in making concessions.

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David J. Unger is a staff writer for The Christian Science Monitor, covering energy for the Monitor's Energy Voices.

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Mr. Obama calls for investing billions in clean-energy technology and eliminating tax breaks for oil and gas companies – two features of the administration's energy policy that have repeatedly rankled Republicans.

"As we continue to pursue clean energy technologies that will support future economic growth, we should not devote scarce resources to subsidizing the use of fossil fuels produced by some of the largest, most profitable companies in the world," the budget reads.

It's like nails across a chalkboard for the oil and gas industry. They say eliminating such tax preferences would kill jobs and slow economic development.

The territory is so well worn that the American Petroleum Institute simply rehashed last year's press release to respond to the latest budget: 

"For the fifth year in a row, the president's budget singles out the leading source of American energy and jobs," API's statement reads. "Even the president's own allies in the Senate have moved away from this kind of punitive tax directed at one industry."

But many of these breaks have been in place since the 1920s, and critics say they've run their course. They were designed to spur production at time when oil prices were low. Now prices hover around $100 a barrel and the oil and gas industry rakes in billions in profits each year.  

"Generally, economists would say it’s not good to have special tax incentives – the market should decide where investors put their money," said Eric Toder, codirector of the Tax Policy Center, an independent tax-research group based in Washington. On the other hand, the breaks don't amount to much relative to the budget, Mr. Toder adds, and it can be politically difficult to remove them.

The budget aims to repeal over $4 billion per year in tax subsidies to oil, gas, and other fossil fuel producers. That's a small sliver of a $3.77 trillion budget.

With a Republican-dominated House and Democrats representing energy-heavy states in the Senate, many say Obama's proposal to end oil and gas tax preferences is a nonstarter.

But there are some new proposals that could prove more amenable to both sides of the aisle.

Paralleling the administration's approach to education reform, the 2014 budget floats the idea of a "Race to the Top for Energy Efficiency and Grid Modernization." States that implement effective policies to reduce energy consumption and improve power utility infrastructure would be eligible for funding from a $200 million award pool.  

The budget also outlines an "Energy Security Trust," an idea that Obama introduced during February's State of the Union address. The trust would take $2 billion of revenue from federal oil and gas leasing over the next 10 years to fund research into efficient transportation that reduces the country's reliance on oil.

Energy: President Obama's 2014 budget offers a roadmap for the administration's "all-of-the-above" approach to energy policy.

Environment: Funding for energy-efficiency programs and clean-energy technology help mitigate energy's impact on the environment.

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