Statement on Amendment 1645
Senator Michael B. Enzi
March 7, 2012
Mr. President, First, I want to say how important roads and bridges are. We are a fortunate country that has realized and funded roads and bridges. We need to do that now too - but we need to do it the right way.
I rise to call up Amendment 1645. My amendment is very simple and straightforward. It would allow the gas tax rate to be adjusted with inflation. This isn’t a new idea and it certainly isn’t a popular discussion point, but this is a debate the Senate needs to have.
The long-term viability of the Highway Trust Fund is incredibly important to all our states. The underlying proposal the Senate is debating would pay for transportation and infrastructure projects and programs for the next two years but does not address the future of these programs, nor do the financing proposals fit within the time frame of the bill. I have serious objections to paying for two years of spending with ten years of revenue.
Let me stop on that issue for a moment. We are spending money in two years what it will take us ten years to generate. How can we tell the American people that we are serious about the deficit and serious about spending while we allow money to be spent five times as fast as it comes in?
If the Senate wants to keep the highway programs viable through a trust fund instead of subjected to the general fund - which any accountant or banker would say is bankrupt, we need to either cut spending or generate more revenue. Those are the two choices.
A lot of work has gone into the bill before the Senate. I appreciate that many of my colleagues are trying to reduce mandates on the states, as well as consolidate and eliminate programs. Those are steps we need to take. Even with some serious streamlining, however, the Highway Trust Fund will not have the revenues needed to meet the current obligations of the fund. We can certainly give states more flexibility in how they prioritize the federal funds they receive. We should not and cannot ignore that with this bill, we are just buying time. Buying time is something the federal government has been doing for decades and that has gotten us into this fiscal mess. We are buying time with borrowed money and the borrowing is pretty dubious.
I want to share some charts with you. You may only be able to discern what I say and what I say is what appears in the Senate Journal, not the charts. [CHARTS]
So if my amendment were enacted, what kind of adjustment to tax rate would we see? If this amendment had been enacted last year in 2011, this January the tax would have increased by one half of one penny. One half of one penny – the price per gallon fluctuates by more than that on a daily basis.
If we had enacted indexing in 1993, the last time Congress adjusted the gas tax, there would have been an increase of 11 cents in the gasoline tax over 19 years. Excluding the one tenth of a cent that is added to the base tax rate for the Leaking Underground Storage Tank Fund, the rate would adjust from 18.3 cents per gallon in 1993 to 29.5 cents per gallon today. In that same time frame, gasoline prices have risen from about $1 per gallon to $3.50 per gallon or more. If we had enacted indexing in 2005 under the last highway bill, there would have been only a 3.5 cents per gallon adjustment. I estimate that would have increased revenue to the Highway Trust Fund by over $18 billion from gasoline alone.
This is very important. In 1993, the gas tax of 18.3 cents was included in the one dollar gas (as well as state gas taxes). Eighteen cents out a dollar. Now the 18 cents is part of the four dollars a gallon! Don’t you think construction costs have increased based on the cost of a gallon of gas? Remember, the gas tax is what has paid for roads and bridges - but can’t anymore, causing us to use very bad financing methods - stealing from pension funds with no way to pay it back - using ten years of projected revenue to pay for two years of construction!!! What do we do for money in two years? Roads and bridges will always need construction. Our economy runs on construction. The construction industry has mixed feelings about my proposed amendment. They are for it as long as it does not bring the bill down. My intent is not to bring the bill down. But rather to make it a viable bill. Of course, my amendment will not make it a viable bill by itself. The Bowles/ Simpson deficit report said we needed to increase the gas tax by 5 cents a year for three years to have a viable fund. [CHART] I’m just testing the water to see if there is enough courage to do even a minimal step.
My amendment does not fully solve the shortfall of the Highway Trust Fund, nor would it fully pay for this legislation, but it is a step in the right direction. It is a step in getting the Highway Trust Fund back to what it was created to be – a dedicated pot of money to pay for the roads, funded by those who use the roads. We need to take this step and a lot of other steps if we are to fix our money problems and fund programs as intended.
The National Commission on Fiscal Responsibility and Reform, the Simpson-Bowles Commission, supported a 15 cent increase in the gas tax, to be gradually adjusted over three years. Once fully implemented, a 15 cent increase in the tax rate would generate an additional $24 to $27 billion per year. The Commission also recommended that Congress enact a limitation so that spending could not go beyond revenues. That seems like a fairly common sense approach, spend only what you generate. Of course, that principle is something we need to enact in our overall budgeting in Washington.
Let’s be clear here: the tax rate and gas prices are two very separate issues. Folks might think that as the price of fuel goes up, so does the federal gas tax, and that is just not true. Whether the price of gas is $1 per gallon or $4 per gallon, the federal tax remains the same. Again, the fund collected 18.3 cents from each dollar of gas in 1993. Construction costs have increased and now we only collect the same 18.3 cents from a four dollar gallon of gas.
I am sensitive to the fact that gas prices are high right now, and I am always looking for ideas on how we can work to bring those prices down. With the distances we have to travel in Wyoming, high fuel prices have a disproportionate effect on the residents of my state.
President Obama has said there isn’t a silver bullet to bring prices down. That’s certainly true if you look at his Administration’s policies which have done everything possible to increase the price of fuel. While there might not be a silver bullet, there are a number of actions that will make a real difference.
One reason that gas prices are high is that supply is limited and tensions in the Middle East have further strained that supply. To fix the supply problem, we should be producing American energy wherever it is possible. Instead of blocking production, President Obama should be encouraging us to develop American energy in Alaska and off the Outer Continental Shelf and on Federal lands. Yes, production is up, but its not from federal land that is shut down. Its coming from private land where a permit doesn’t take a lifetime of investment and delay. Federal lands are down 12% in production. We should be enacting policies that encourage energy production on public lands in Wyoming and other Western states. Rather than relying on oil from the Middle East and Venezuela, President Obama should approve the Keystone XL pipeline so we can get as much supply as is possible from friendly nations like Canada before they feel forced to sell it all to China who is buying up energy worldwide. China understands that, in twenty years, the country with the energy will have the power - and I’m not talking about electrical power. I’m talking about world power.
Gas prices are also high because of the regulatory uncertainty created by this Administration’s relentless pursuit of policies that are designed to make energy more expensive under the guise of halting climate change. Rather than arguing over new taxes for the oil and gas industry, we should be working to rein in the Environmental Protection Agency to stop those regulations that make it impossible for businesses to plan.
We have a permitting problem. When I hear the lecture about the number of acres leased for exploration, but not being drilled I get angry - and I’m usually not angry! Leased parcels include land that has no oil. When you buy a lease, you buy a package and then drill where the oil or gas is. Also there are millions of acres ready to be drilled, but the leaseholder can’t get the bureaucrats to turn loose of the permits. Of course, Energy Secretary Chu recently confirmed that his Energy policy is to create conservation by having our gas prices reach the same level as Europe. Well, unless we do something with the gas tax, at his desired $7 a gallon, we will still only get 18.3 cents a gallon for the critical highway fund. If we were really trying to match cost to construct with revenue, the radical suggestion would be to have gas user fee - and it is a user fee - be a percentage of the cost of a gallon of gas - but be clear we are NOT doing that.
We need to do everything we can to lower gas prices, and I am working to do just that. In fact, we are debating some of those issues on this legislation because the Majority refuses to debate them using regular order. However, the issue of gas prices is entirely separate from the issue of determining how we should pay for highways. We have set up a trust fund that is supposed to take care of our road and bridge needs. And I might mention that changing the formula to miles driven would just be to increase the gas user fee while hiding the increase. That’s the wrong way to do it. If we don’t add more revenue to the trust fund, we should cut our spending to the amount of money we have in the trust fund.
I know there are a lot of sensitivities in talking about the rate of the gas tax. There is no doubt that individuals and businesses are still stressed in this economy and are struggling to make ends meet. People in rural states like Wyoming have few options to driving long distances for many of their needs. Several of my colleagues have said to me, this just isn’t the right time to be talking about the gas tax. I must ask when will the time be right? Members of Congress don’t want to tackle this topic when the economy is strong nor do we want to tackle this topic when we have economic challenges. When revenues to the Highway Trust Fund were meeting the needs of the highway program, no one wanted to consider that there might be a time when the revenue couldn’t keep up with the needs to maintain our highway system. We are pennies away from insolvency of the Highway Trust Fund.
When is the right time to talk about the revenue stream for the Highway Trust Fund? We need to start today. My amendment is a small step to address the long-term viability of the Highway Trust Fund. It is a small step to get us moving to living within our means and maintaining our roads with the money we have, not the money we wish we had.
I probably cant get a vote on this minimal increase, but it does test the water. I would be happy to revise my amendment to any reasonable level Senators would be willing to support.
We cannot continue to kick this conversation down the road for another two years. We cannot lie to our constituents about the state of the Highway Trust Fund. We shouldn’t steal from other trust funds and we shouldn’t do unapproved long term financing for short term projects. We have a mechanism to pay for the road programs – a dedicated funding stream paid by those who use the roads.
I hope my colleagues will take a hard look at my amendment, take a look at the plan under Simpson Bowles, and study the numerous ideas out there. Let’s have a real debate on how to preserve this dedicated funding for our roads.
In Wyoming we have an optional sales tax for projects by communities and counties. The construction is stated and the people vote for the increase in taxes. As long as the money is used to pay for the promised projects, the voters continue to approve the increased taxes. People will allow focused taxes for what they know they need and I say they know the need for roads and bridges.
When is it the wrong time to do the right thing? I believe most everyone in this chamber knows this is the right thing. Most of our constituents will see it that way too. A vocal few won’t, but the reason Congressional approval is at a record low is because so many of us live in fear of taking the votes that will fix the problems. We have a chance to change that today.