Not every missing $2 billion raises fuss in Congress

Bob Tippee

Ever vigilant where public money is concerned, congressional leaders think the US government is missing $2 billion and want to know why.

They're calling the Department of Interior to task for deepwater Outer Continental Shelf leases issued in 1998-99 that didn't limit royalty relief with oil and gas price thresholds (OGJ Online, Aug. 4, 2006).

"This is a matter of paramount importance not only for this committee but for the American people," wrote House Reform Committee Chairman Thomas M. Davis III (R-Va.) and Energy and Resources Subcommittee Chairman Darrell E. Issa (R-Calif.) in a letter to Interior Sec. Dirk A. Kempthorne.

The fiscal concern is admirable. But it's selective.

Nobody in Congress is fussing about another $2 billion of tax revenue that the government won't collect this year alone because of the 51¢/gal income tax credit for ethanol blended into gasoline. And that tax-revenue sacrifice will grow in later years with phase-up of the renewable fuels mandate enacted with the Energy Policy Act of 2005.

The ethanol subsidy took a blistering last month in a study from the National Taxpayers Union.

Written by Policy Analyst Jeff Dircksen, the study said ethanol raises retail prices of gasoline, costs taxpayers at least $2 billion/year, and lowers fuel efficiency.

"Despite federal and state subsidies, a guaranteed market that is protected from international competitors, and millions of dollars from private investors," Dircksen wrote, "it is abundantly clear that ethanol is not and may never be a truly competitive energy alternative."

The American Coalition for Ethanol didn't like Dircksen's work.

"The only thing abundantly clear is that NTU's 'study' is nothing more than a deceptive piece of propaganda with no basis in reality," said coalition Executive Vice-Pres. Brian Jennings.

Then he lost all authority on matters pertaining to reality by calling ethanol's tax subsidy, market mandate, and trade protection "modest support from the federal government."

That's at least $2 billion/year and rising for a substance that would have no market as a fuel without the help. In other contexts, lawmakers call mistakes of that size matters "of paramount importance."

(Online Aug. 4, 2006; author's e-mail:

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