[Congressional Record Volume 142, Number 67 (Tuesday, May 14, 1996)]
[Senate]
[Pages S4986-S4987]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]




                        THE GASOLINE TAX REPEAL

  Mr. CONRAD. Mr. President, I rise today to discuss the effort to roll 
back the 4.3-cent-per-gallon gasoline tax that was part of the 1993 
deficit reduction package. I seriously question the wisdom of repealing 
the 4.3-cent-per-gallon gasoline tax at this time.
  I think it is important to remember how we got this 4.3-cent-per-
gallon gasoline tax. We got this as a result of the 1993 deficit 
reduction package. It was a time when there was an understanding that 
there was great urgency to reduce the budget deficit in this country. 
At that time, when President Clinton came into office, the budget 
deficit for the previous year had been $290 billion. Since that time, 
after we passed the 1993 budget plan, the deficit has been reduced to 
$145 billion this year. In other words, the deficit was cut in half. It 
was cut in half because some of us voted for a package to cut spending 
and, yes, to raise taxes, primarily on the wealthiest among us, in 
order to get our fiscal house in order.
  Now we have a proposal before us to reduce the gasoline tax by 4.3 
cents. Most people think it is a political move. Most people think it 
is politically popular. But sometimes what is politically popular, at 
least for the moment, does not stand much scrutiny. I believe that is 
the case with this proposal. I just had 40 members of the rural 
electric cooperatives from my State in my office, and I asked them, 
``What should we do? How would you vote if you were here representing 
North Dakota?'' By 38 to 2 they said, ``Keep the gasoline tax and if 
there is a proposal to offset the revenue lost by repealing the gas 
tax, take those funds and reduce the deficit. That should be the 
priority in this country.''
  I think those folks from North Dakota have it exactly right. The top 
priority ought to be to continue to reduce the deficit. Yes, it is true 
we have cut it in half since 1993, but the job is not done, and we 
ought to complete that job. We ought to get it done.
  Some are saying that this 4-cent-a-gallon gasoline tax is the reason 
gas prices have gone up. That defies common sense and it defies logic. 
Clearly, a 4-cent gasoline tax put into effect in 1993 has nothing to 
do with rising gas prices experienced in the spring of 1996. In fact, 
when that tax went into effect in October 1993, gas prices went down. 
They did not go up, they went down.
  The recent rise in gas prices has been caused by a number of factors 
totally unrelated to gasoline taxes: an unusually cold and longer than 
average winter that drove up demand for home heating fuel; refinery 
breakdowns across the country; more low-mileage sport utility vehicles 
that are on the road that increase the demand for fuel; the speed limit 
has been increased, again increasing the demand for fuel; and oil 
companies are holding lower than average inventories, moving to just-
in-time inventory management in order to save money. But even with all 
of that occurring, driving up the price of gasoline in the spring, the 
price of gasoline is now showing signs of coming down.
  In my home State of North Dakota, the price for a gallon of regular 
unleaded gasoline in Fargo, ND, the biggest city in my State, is now 
about $1.25, down about 4 cents in the past 2 weeks.
  It is not just in North Dakota that we have seen gas prices come 
down. As this news story from the Los Angeles Times indicates--the 
story ran last week--a major headline: ``Gas Prices Show Signs of 
Decline as Production Surges.''
  Los Angeles, CA, we all know, has been the hardest hit by increases 
in gasoline prices.

       Average cost at the pump falls half a cent, and state 
     officials predict more reductions. . . . After lagging, 
     refineries again operating at close to normal output.

  Mr. President, that is what has happened. Gas prices are starting to 
come down because of market forces.
  Additionally, the price of gasoline in the United States is very low 
in comparison to other industrialized countries.
  Saturday's Washington Post included a column comparing gas prices in 
other countries. I thought it was an excellent graphic that compared 
what folks are paying in other countries versus what we are paying. It 
is $4.66 a gallon in the Netherlands; $4.49 a gallon in France; $4.39 
in Italy; $3.68 in Britain; $1.30 in the United States.
  We have the lowest gas prices of any industrialized country in the 
world. Now we are talking about taking off 4 cents instead of applying 
it to deficit reduction, deficit reduction that over 7 years amounts to 
$30 billion?
  I really do not understand why we dig the hole deeper before we start 
filling it in. The people that I represent believe the highest priority 
is to eliminate these deficits so we can start to see this economy 
grow.
  Mr. President, there is also a question of whether this repeal would 
ever benefit consumers. The whole theory has been if you take off the 
4-cent gasoline tax, that is going to benefit consumers.
  The Washington Post last week had a headline that says: ``Experts Say 
Gas Tax Cut Wouldn't Reach the Pumps. Oil Industry Called Unlikely To 
Pass on Savings to Consumers.''
  Mr. President, these are not my views. These are not views of other 
Members of the Congress or other Members of the U.S. Senate. These are 
the views of oil industry experts.
  I go to one energy expert, Mr. Verleger, who is quoted in the story 
as saying:

       The Republican-sponsored solution to the current fuels 
     problem . . . is nothing more and nothing less than a 
     refiners' benefit bill.

  He makes the point these reductions in the gas tax will not be passed 
on to consumers, but the real beneficiaries will be the folks that 
refine the gasoline. Those are the folks that will get the benefit of 
any repeal of the 4-cent gas tax.
  The president of the conservative Cato Institute, a former member of 
President Reagan's Council of Economic Advisors, said:

       I don't think there is anything the Republicans can 
     credibly do to guarantee that the tax reduction gets passed 
     through to the consumer.

  Mr. President, I think he is right. We have not only had the 
testimony of those energy experts, but we have heard from the oil 
industry itself. The CEO of ARCO, Mike Bowlin, said last week:

       There are other market forces that clearly will overwhelm 
     that relatively small decrease in the price of gasoline. . . 
     . People's expectations will be that the minute the tax is 
     removed, they want to see gas prices go down 4.3 cents, and 
     that won't happen.

  Mr. President, what could be more clear? I think these three experts 
have said it about as clearly as it can be stated. There is no way that 
this reduction in the gas price can be assured to be passed on to 
consumers. But what we can be assured of--what we can be assured of--is 
this is going to blow a $30 billion hole in the plans to reduce the 
budget deficit in this country.
  I believe deficit reduction is more important than taking off the 4-
cent-per-gallon gasoline tax that we have no assurance will be passed 
through to consumers anyway. I understand the majority leader has 
provided offsets to pay for the gas tax repeal, at least for the next 
several months.

  Mr. President, I would like to offer an amendment that would take his 
offsets and, instead of repealing the gas tax, apply it to reducing the 
budget deficit that is still $145 billion this year. That is what we 
ought to do if we are, instead of playing politics, serious about 
managing the fiscal affairs of this country.
  If we are really serious about helping families, I think we ought to 
look at the benefit of reducing the deficit in comparison to the 
benefit of repealing this 4-cent gasoline tax.
  This chart shows the benefit to a typical family of balancing the 
budget versus what a typical family would gain from repealing the 4-
cent-a-gallon gasoline tax, and that is assuming every penny got passed 
on to consumers. We already know, from what I have already presented, 
that that gas tax repeal is unlikely to get passed on to consumers. But 
let us just look at what

[[Page S4987]]

happens, what the benefits are of balancing the budget to the average 
family versus what the gas tax repeal would do.
  Balancing the budget, balancing the unified budget, would reduce the 
home mortgage for a typical family in the United States by $917 a year. 
That is because interest rates would be reduced; a car loan savings 
would be $97 a year; student loan savings $56 a year; in comparison to 
what the gas tax would mean to a family, $42 a year.
  Mr. President, it seems to me very clear that the priority ought to 
be in further reduction of the deficit rather than in a repeal of the 
gas tax, which is unlikely to ever be passed through to consumers. The 
benefit to consumers, the benefit to families, lies in further deficit 
reduction.
  I thank the Chair and yield the floor.
  The PRESIDING OFFICER. The Senator's time has expired.
  Mr. BURNS addressed the Chair.
  The PRESIDING OFFICER. The Senator from Montana is recognized for 5 
minutes.
  Mr. BURNS. Mr. President, I thank the Chair.

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