06.17.11 4:09 AM ET
Ryan's Shrewd Budget Payday
When House Budget Committee Chairman Paul Ryan unveiled the GOP blueprint for cutting government spending, he asked Americans to make sacrifices on everything from Medicare to education, while preserving lucrative tax subsidies for the booming oil, mining and energy industries.
It turns out a constituency within his own personal investments stood to benefit from those tax breaks, Newsweek and The Daily Beast have learned.
The financial disclosure report Ryan filed with Congress last month and made public this week shows he and his wife, Janna, own stakes in four family companies that lease land in Texas and Oklahoma to the very energy companies that benefit from the tax subsidies in Ryan's budget plan.
Ryan's father-in-law, Daniel Little, who runs the companies, told Newsweek and The Daily Beast that the family companies are currently leasing the land for mining and drilling to energy giants such as Chesapeake Energy, Devon, and XTO Energy, a recently acquired subsidiary of ExxonMobil.
Some of these firms would be eligible for portions of the $45 billion in energy tax breaks and subsidies over 10 years protected in the Wisconsin lawmaker’s proposed budget. “Those [energy developing companies] benefit a lot from these subsidies,” explained Russ Harding, an energy policy analyst with the Mackinac Center for Public Policy, when presented with the situation, without reference to Ryan. “Without those, they’re going to be less profitable.”
To ethics watchdogs, Ryan’s effort to extend the tax breaks creates the potential appearance of a conflict of interest.
“Sure, senior citizens should have to pay more for health care, but landholders like [Ryan] who lease property to big oil companies, well, their government subsidies must be protected at all costs,” says Melanie Sloan, the director of the nonpartisan Citizens for Responsibility and Ethics in Washington. “It smacks of hypocrisy.”
Ryan’s office says the congressman wasn’t thinking about himself or the oil companies that lease his land when he drafted the budget blueprint that extended the energy tax breaks. “These are properties that Congressman Ryan married into,” spokesman Kevin Seifert said. “It’s not something he has a lot of control over.”
Nonetheless, the properties have been a lucrative investment for Ryan and his wife, earning them as much as $117,000 last year, and $60,000 the year before, his personal financial disclosure reports show. Overall, Ryan, 41, listed assets worth between $590,000 and $2.5 million, putting him in the top third of the richest members of the House.
Ryan and his wife reported owning minority stakes ranging from nearly 1 percent to 10 percent in the following four family companies: Ava O Limited Company, which holds mining and mineral rights; Blondie and Brownie, which holds gravel rights; Red River Pine Company, which holds timber rights; and Little Land Company, an oil and gas corporation.
While Ryan’s stake in the oil and gas firm was his smallest at 0.8 percent, it was listed as one of his most valuable assets, generating as much as $50,000 of his income last year, the report shows.
Aside from the land-lease income, Ryan could also personally benefit from the package of subsidies and incentives he has fought to protect. According to a report from the Joint Committee on Taxation, Ryan himself would be eligible to recover money from the government for investments the four family companies might make in such things as machines and maintenance if they didn’t pan out on the properties and failed to generate revenue.
Stephen Comstock, a tax analyst with the American Petroleum Institute, says the provision and several others like it would be protected under Ryan’s budget.
Rep. Dan Boren, a Democrat from Oklahoma who has announced his retirement next year, also owns stakes in three of the four same companies as Ryan. The two lawmakers are related through marriage. Boren is the first cousin of Ryan’s wife.
Boren aligned with his party and voted no on Ryan’s budget. But a month prior, Boren voted with Republicans (and only 12 other Democrats) to oppose an amendment that would have financially constrained major oil companies.
In a written statement, Boren told Newsweek and The Daily Beast, “It should come as no surprise the way I voted because the oil and gas industry is the largest private employer in Oklahoma.”
In addition to the tax breaks, Ryan’s family has benefited in recent years from another form or federal largesse—farm subsidies. Federal records show his father-in-law and great-aunt have collected more than $50,000 in agriculture subsidies on lands owned by the family.
Ryan’s budget had proposed cutting $30 billion in farm subsidies over the next 10 years, although some conservatives criticized the number for being too low.
Long a star among young conservatives who admired his commitment to fiscal discipline, Ryan soared onto the national political scene earlier this year, when Republicans chose the youthful, handsome lawmaker to give the nationally televised response to President Obama’s State of the Union address.
Ryan then opened the floodgates of criticism a few months later, when he submitted his “Path to Prosperity” plan to slash $6.2 trillion in federal spending over the next decade, going further than the president or other major politicians in the scope of his cuts.
Democrats pounced on the depth of cuts, including the virtual elimination of Medicare for retirees who are not yet 55.
Ryan’s Medicare program also drove a wedge through his own party. When former Republican House Speaker Newt Gingrich, now a presidential candidate, referred to the idea as “right-wing social engineering,” the blowback was so severe that Gingrich had to immediately apologize to Ryan.