With the federal highway trust fund running on empty this week, the sensible thing for Congress would be to raise the gasoline tax to provide money to fix our crumbling roads and bridges.
But Congress isn't sensible.
The federal gas tax, now 18.4 cents per gallon, hasn't been raised for more than 20 years and brings in about $16 billion less a year than the nation spends on highway projects.
Afraid to talk about tax increases, congressional leaders have turned to fundraising tricks and claims of immense future savings. Though the Senate-House split on the Export-Import Bank has drawn most of the attention in the highway bill debate, the public policy question over how to pay for roads is an important one.
One of the gimmicks in the proposed Senate highway bill says that revoking or withholding passports from those who owe more than $50,000 in back taxes would raise $400 million over a decade, presumably because people would want to pay up so they can keep traveling. In 2012, the Senate said that $743 million could be raised for roads via the passport crackdown route.
There are many more provisions, the combination of which means no discussion of how to match highway revenue with highway spending. But in this all-out effort to avoid facing the tax question, one idea stands out as both foolish and a threat to national security. The Senate plan, backed by Republican leader Mitch McConnell, R-Ky., and Democratic Sen. Barbara Boxer, D-Calif., would reduce the nation's crude oil stockpile by selling 100 million barrels to theoretically generate $9 billion between 2018 and 2025.
Crude oil prices will be much higher then than they are now, the senators say, which will mean more money for road projects. In fact, no one knows how much oil will sell for next week, let alone in 2025. But to generate $9 billion in theory, for purposes of federal accounting, the price has to be near $90 a barrel, so the Senate says that is what the price will be.
"Crude" is not the word for this type of budgeting, which is sophisticated enough to make anyone who has ever scribbled figures on the back of an envelope seem like an economist.
Not to be outdone, the U.S. House has approved a bipartisan health care bill that would sell nearly 65 million barrels from the reserve to help pay the costs of drug innovation research.
To her credit, Alaska Sen. Lisa Murkowski has identified the raiding of the Strategic Petroleum Reserve as a terrible idea, whether for roads or drug research. While she did not propose an increase in the gas tax as a way of paying for higher highway costs, Murkowski correctly noted that selling one-seventh of the stockpile means a greater risk of economic disruption whenever world oil flow stops. She wants to put the word "strategic" back into the mindset of those who are treating the stockpile as an ATM.
Sen. Maria Cantwell, D-Wash., the ranking Democrat on the Energy and Natural Resources Committee chaired by Murkowski, shares that view. Murkowski and Cantwell introduced a bipartisan energy bill that includes many provisions, one of which is that money raised from selling oil should go into modernization of the infrastructure so the facilities are ready to use in future emergencies.
In a speech Monday on the Senate floor, Murkowski said the idea of tapping into a crucial energy asset for short-term budget gains is a "foolish error of historic proportions." On three occasions, the federal government has withdrawn oil during an emergency, the most recent event taking place in 2011, during the Libyan civil war.
"We've got a pretty volatile world out there," she said.
The federal government created the stockpile 40 years ago after the Arab oil embargo, when a sudden shutdown of imports created economic chaos in the U.S. The goal was to create some insurance and limit the economic damage from oil market disruptions. About 700 million barrels are stored in underground caverns in Texas and Louisiana that can be used in case of disasters, both natural and manmade.
The federal government says its average cost for the oil was $29 per barrel, but a lot of that was purchased three decades ago. Adjusting for inflation, the government would be selling low after buying high, which is hardly strategic thinking.