August 02, 2005,
Venturing down the dustiest corridors of political memory, we recall a time when people thought a Republican Congress would be a fiscally responsible one. The hour to eulogize that hope has probably passed; but if one wished to drive a final nail in its coffin, it would suffice to adduce two monstrosities of wasteful spending that Congress sent to the president’s desk last Friday.
The cheaper of the two is the energy bill although “cheap” is not the word to describe a piece of legislation that will cost $66 billion. If we thought the bill would significantly increase energy supplies or lower costs, we would temper our criticism. What it actually does is indiscriminately lavish production incentives on anyone and everyone able to generate a spark of electricity.
In some cases, these giveaways are faddish and likely to be fruitless, such as $550 million for forest-biomass fuels, incentives for electric cars, or tax credits for residential solar power. That last idea was part of Jimmy Carter’s celebrated energy policy, and led to purchases of solar panels so inefficient that their buyers failed to earn back the cost of their investment. So it will be this time around.
Other incentives are manifestly unnecessary. With oil prices hovering near $60 a barrel, oil companies hardly need taxpayer encouragement to sink new wells.
Particularly egregious is a mandate for 7.5 billion gallons of ethanol to be added to the nation’s fuel supply a windfall for farmers from whose corn ethanol is made, but a loss for everyone else. A Department of Energy study found that the mandate could raise gasoline prices by three cents per gallon, and it isn’t even clear that ethanol yields more energy than is spent producing it.
These policies are attempts by Congress to bankroll the “next big thing” or “things” among energy sources. But next big things have an annoying tendency not to pan out, even after being midwifed at taxpayer expense. (Synthetic oil, anyone?) Free markets are far better than Congress at channeling capital to promising energy sources; a proper energy policy would therefore limit itself to authorizing exploration of new sources and removing the regulatory obstacles that hinder their development. The bill is not entirely without merit: It repeals PUHCA, a depression-era law that has prevented mergers and acquisitions, as well as outside investment, in the electric and gas utility industries. But although that is a nice bit of deregulation, it is being bought at a very high price.
Not as high, however, as the price of the federal highway bill, which, at $286.5 billion, is the most expensive public-works program in American history. The highway program began in 1956 with the legitimate aim of financing an interstate-highway system using revenue from the federal fuel tax. Once that goal was achieved in the early 1980s, the program lost its raison d’être; the federal fuel tax should have been abolished, and states which are responsible for the upkeep of the highways within their borders should have been left to fund maintenance and repairs through state gas taxes.
Instead, Congress morphed the program into a slush fund for some of its most indefensible pork-barrel spending. This spending takes the form of earmarks for pet projects that have precious little to do with interstate highways. In 1982, there were ten such earmarks, costing $362 million. The bill passed last week swells that number to 6,376 earmarks at a cost of over $24 billion. Discussing them in detail is a task better left to late-night comedians, but we will at least congratulate Alaskan representative Don Young on winning $1 billion for special projects in his state including, among other things, $3 million for a documentary on infrastructure improvements in Alaska, and $250 million for a massive bridge connecting an island with 50 dwellers to a town of 8,000 people.
With Congress unable to keep its pocketbook pocketed, it would be nice if President Bush could be counted upon to cast his first vetoes on bills so richly deserving of them. Instead, he plans to sign them. He may have resigned himself to the necessity of doing so in order to win congressional support for such administration priorities as the Central American Free Trade Agreement, which was ratified by a razor-thin margin last week.
Whether such compromises are necessary as a matter of political expediency is something reasonable people can disagree about. What is clear and lamentable is that they erode the credibility Republicans once enjoyed as the spokesmen of fiscal conservatism.