Treasury’s Adeyemo calls for eliminating subsidies, including to energy companies

(Reuters) -The United States should think about eliminating corporate subsidies, including to energy companies, U.S. Deputy Treasury Secretary Wally Adeyemo said in New York on Monday.

Adeyemo defended President Joe Biden’s budget proposal for fiscal 2024, noting that achieving fiscal sustainability would include modest tax increases, boosting tax revenue collections and finding other ways to cut costs.

“We want to be sure we have the money to pay for our priorities,” he told the Economic Club of New York.

Biden’s budget calls for boosting revenues by eliminating $31 billion in tax preferences and subsidies for oil and gas companies, who he says have failed to invest in boosting energy production, while continuing to offer targeted tax credits for clean-energy investments under the Inflation Reduction Act.

The proposal, which has run into big challenges in a divided Congress, came after repeated White House criticism of Big Oil for raking in record profits at a time of high consumer energy costs due to the Russian invasion of Ukraine last year.

Adeyemo also defended Biden’s proposal to bring the corporate tax rate back to 28% – the rate before former President Donald Trump’s tax cuts took effect – and said the effective tax rate would still be lower than during the administrations of Republican Ronald Reagan and Democrat Bill Clinton.

“We can also think about what we can do to eliminate subsidies,” he said. “None of us thinks it makes sense to subsidize energy companies in light of how they’re doing in this country. But there are probably other subsidies and other things we can do to make the budget more efficient.”

Adeyemo said he hoped to engage with Republicans in the House of Representatives about the issue, without giving any further details.

He also warned Republicans against threatening to shut down the government “every time they don’t get what they want.”

(Reporting by Andrea Shalal, editing by Deepa Babington)