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Distortions in the Desert

Pederson and Kyl both miss the mark in Arizona Senate campaign shoot-out.

September 13, 2006

Modified: September 13, 2006

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Summary

 

Democratic challenger Jim Pederson inaccurately portrays incumbent Sen. Jon Kyl's voting record on energy policy. He says Kyl "voted oil corporations billions in special tax breaks" when in fact Kyl was one of the few Republicans to oppose tax breaks in the recent energy bill.

Then, the Kyl campaign misfires with an ad claiming Pederson is "pushing a $1 trillion tax hike," which he isn't.

Analysis


The campaigns have traded over a dozen ads in the last month and a half. We find these two miss the mark.

Slippery Charge on Oil

The Pederson ad "Changed" says that Kyl has "voted oil corporations billions in special tax breaks." However, the evidence his campaign offers to back up the ad hardly support that claim, and in fact Kyl denounced a series of tax breaks proposed in a major energy bill as recently as last year.

Pederson Ad "Changed"

Pederson: I'm Jim Pederson and I approve this message.
Announcer 1:  Jon Kyl has changed. Twenty years in Washington has changed who he represents. Big oil has showered Kyl with big money and he's returned the favor. Senator Kyl has voted oil corporations billions in special tax breaks, voted against criminal penalties for price gouging, even voted to cut funds for alternative energy to lesson our dependence on foreign oil. Jon Kyl has gone Washington and we're paying the price.

Pederson cites eight different votes, of which only two can accurately be construed as "special tax breaks" for oil corporations. Five were against amendments to the Gulf Coast Economic Recovery Bill that would have created windfall profits taxes, but voting against a new tax isn't the same as voting to create a "special tax break." Another vote  was for a large tax bill which included a provision that actually reduced  oil company write-offs for offshore exploration expenditures. The Pederson campaign counts that as a vote for "special tax breaks" on grounds that a previous version of the bill would have eliminated the write-offs completely. But the fact is, Kyl voted for both versions.

It is true that Kyl voted  in favor of a tax credit for producing oil and gas from marginal wells in 2004, which was one small part of an election-eve economic stimulus bill that passed the Senate by a strongly bipartisan vote of 69 - 17. And it is also true that Kyl voted in 1995 for a royalty relief provision that may net oil companies as much as $10 billion over 25 years, though Congress didn't intend it to be so generous. The Clinton administration implemented the measure in a way that favored the oil companies, a matter under ongoing investigation by the House Committee on Government Reform.

More recently, Kyl has gone out of his way to denounce tax breaks for oil companies. He was one of only five Republicans who voted  against the the 2005 Energy Bill when it first passed the Senate, and was one of six members of his party to vote  against its final passage. In a statement explaining his opposition, Kyl characterized the bill as  "full of provisions that will distort competitive markets for energy through subsidies, tax breaks, loan guarantees, special projects, mandates and outlandish amounts of federal spending."

Trillion Dollar Misstatement

The latest salvo in the ad war is fired by the Kyl campaign in a spot called "Piggy." The ad falsely claims that the Democrat is "pushing a trillion dollar tax hike."

Kyl Ad: “Piggy”

Kyl: I'm Jon Kyl and I approve this message.
Announcer: Jim Pederson spending millions to buy a Senate seat, now he wants to spend your tax dollars on pork.
Pederson: Bring the bacon home, they call that pork.
Announcer: We sure do Jim, pork means higher taxes, higher deficits.  No surprise Pederson is pushing a trillion dollar tax hike just like John Kerry, higher income taxes, taxes on small business for more pork
Pederson: Bring the bacon home, they call that pork.
Announcer: Hey Jim it's taxpayers money, not yours. 
  

That's not true.

As support for its claim the Kyl campaign notes  that Pederson has criticized  Kyl's support for permanent repeal of the the Estate Tax by saying it "will add an extra $1 trillion to the federal deficit." But opposing a tax cut is not the same as supporting a tax increase. Pederson's $1-trillion figure is a big exaggeration in any case, as we explained in an earlier article. The Estate Tax brought in only $21 billion in 2004.

The Kyl campaign also points to programs Pederson is proposing, for universal kindergarten and for closing the so-called "doughnut hole" in Medicare prescription drug coverage. According to the Congressional Budget Office the 10-year cost of these two programs combined would be $1.1 trillion. Pederson isn't saying how he would pay for these, however. The Kyl ad would be justified in saying Pederson is pushing for $1 trillion in new spending, but it's wrong to say he's pushing $1 trillion in new taxes.

The ad also claims Pederson is pushing "taxes on small business," which isn't the case. The Kyl campaign argues  in its backup material that Pederson's support for raising taxes on upper-income individuals in effect hurts the owners of small businesses who file personal instead of corporate or partnership tax returns.

This is an overblown argument that we have discussed before. In fact, upper-income taxpayers actually get far more from salaries, interest, dividends and capital gains than they get from business income. It's wrong to characterize a tax increase on affluent individuals as a "tax on small business."

by Justin Bank

Sources

Committee on Government Reform, "Chairman Issa: Oil Companies Shed Light on Missing Price Thresholds and Department of Interior Failures,"    news release. 21 June 2006.

Kyl, John, "Kyl Criticizes Energy Bill as Bad for Arizona Gas Prices, Air Quality,"   news release. 29 July 2005.

"Kyl Campaign Releases New Ad on Jim Pederson's Support for Pork-Barrel Politics," news release. 12 Sept 2006.  

U.S. Senate, 104th Congress, 1st Session. Senate vote no.   553

U.S. Senate, 108th Congress, 2nd Session. Senate vote no.   211.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   158.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   213.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   331.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   332.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   339.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   341.

U.S. Senate, 109th Congress, 1st Session. Senate vote no.   345.

U.S. Senate, 109th Congress, 2nd Session. Senate vote no.  119.

 

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