CBS Early Show Interview with Dennis Kucinich - Transcript

Interview

MS. STORM: Well, with gas prices sky high at over $3 a gallon, you might expect that the oil companies are making a lot of money, and you would be absolutely right. Exxon, Shell, BP and Conoco-Phillips have earned huge profits in April, May and June, a combined $30 billion, and Chevron announces its numbers today.

Well, now some critics are saying it's time for big oil to pay up. Democratic Congressman Dennis Kucinich of Ohio wants a tax on excess oil profits. Jerry Taylor, who is a senior fellow with the Cato Institute, is against any new oil taxes.

Good morning, gentlemen.

MR. TAYLOR: Good morning.

REP. KUCINICH: Good morning.

MS. STORM: Congressman, let's start with you. A windfall profit tax on these big oil companies -- how does that translate to consumers and help the people who are paying at the pump?

REP. KUCINICH: Well, first of all, my bill, H.R. 27, is supported by 51 members of Congress. It will bring down the cost of gasoline, because what it'll do, it'll tax the excess profits that are coming out from price gouging. So I think the American people are waiting for some solution to challenge the excess profits and the price gouging by the oil companies. And that's what my bill does.

MS. STORM: But how do the taxes bring down the price of gas?

REP. KUCINICH: No, no, no. It doesn't tax the price of gas. It taxes --

MS. STORM: No, I know. How do the taxes --

REP. KUCINICH: It taxes only excess profits.

MS. STORM: Right.

REP. KUCINICH: And when you start imposing some discipline on the oil companies, 100 percent tax on excess profits, then the oil companies aren't going to be making $1,300 a second, like ExxonMobil is; $10 billion a quarter. Their CEO had a $400 million golden parachute. Their stock's at an all-time high.

I mean, what's going on here? The American people are getting ripped off at the pump, and somebody has to stand up for them.

MS. STORM: Mr. Taylor, why do you think this is a bad idea?

MR. TAYLOR: Well, we went down this road before. We passed a windfall profits tax in 1980. It was in place through 1988. And according to the Congressional Research Service, its effect was to increase prices at the pump. And the reason is simple. If you increase taxes on the oil industry, you'll get less investment in the oil business. That reduced domestic production, according to CRS, by 3 to 6 percent over that period of time, which meant higher prices, not lower prices. So if Mr. Kucinich's bill passed, you'd see higher prices at the pump.

REP. KUCINICH: That's absolutely not true. I mean, the gentleman's doing a good job of representing the oil companies. I'm representing my constituency in Cleveland and the American people in saying that, look, this will not increase the price of a gallon of gas. It's going to tax only excess profits. The bill he was talking about would have increased the price of a gallon of gas. This is only on excess profits, and this will --

MR. TAYLOR: That's not true. I'm representing the research from the Congressional Research Service.

REP. KUCINICH: Please. This will increase the hopes and dreams of consumers, who are absolutely getting attacked and price-gouged by the oil companies.

MS. STORM: Mr. Taylor --

REP. KUCINICH: Congress has to stand up for the consumers.

MS. STORM: Mr. Taylor, how can you justify these record profits by these oil companies at a time when consumers are struggling at the pump? People are struggling to drive to work, drive their kids to sports practice. Even some school buses didn't run last spring because of gas prices.

MR. TAYLOR: What most people don't realize is that these oil companies are making about an 8 percent profit on their dollar. That's according to the first quarter of 2006 in their financial report. So I ask you, what's a fair return for an oil company -- 8 percent? Well, that's the U.S. industrial average.

From 1973 to 2004, it might surprise you to learn that the oil companies actually returned less money for investment to the U.S. industrial average than the mean industrial average, and they were riskier investments to do. So if you were investing in oil companies from '73 all the way to the present, you probably lost money compared to what you might have made in other investments.

So if we pass Mr. Kucinich's bill, we institute a form of one-way capitalism, where it's okay if you lose money in the oil business or just break even, but never try to make profits that are average or a little better than average or Congress will put a hammer to you.

REP. KUCINICH: The poor oil companies. Let's look at it this way. You know, they're not even paying the government the royalties that they should be paying for drilling on federal land. They get tax breaks that no one else gets.

MR. TAYLOR: Thanks to the Clinton administration.

REP. KUCINICH: They ought to be taxed at 100 percent for excess profit because they're price gouging. And my bill would do that without increasing the price of gasoline.

MS. STORM: Mr. Kucinich --

MR. TAYLOR: It would increase the price of gasoline.

MS. STORM: Congressman, is there a way to ensure that these oil companies do pay money for alternative fuel research, that supply is increased? Is there a way to make that happen?

REP. KUCINICH: Well, let's -- of course there is, when you start challenging them. I mean, you have to break up the monopolies. Look, they're running the country right now, and everyone knows it. And it's about time the American people had someone and people in Congress standing up for them. That's what my bill does.

You know, we need -- this bill, by the way, would put money into mass transit from the excess profits tax. It would put money into development of cars that work on alternative fuels. Energy-efficient cars would get a tax break, particularly those that are made in America.

We need to change our energy consumption patterns, and we also need to start breaking this hold the oil companies have on our country. That's why they can get a $10 billion profit and make $1,300 a second, and the American people are just helpless.

MS. STORM: That will have to be the last word. Congressman Dennis Kucinich, Jerry Taylor, thanks so much for being with us this morning.

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