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232 IRET Congressional Advisory 1 (2007)

handle is hein.taxfoundation/iretcgadv0229 and id is 1 raw text is: INSTITUTE FOR RESEARCH ON THE ECONOMICS OF TAXATION IRET is a non-profit 501 (c)(3) economic policy research and educational organization devoted to informing the public about policies thait will promote growth and efficient operation of the market economy. December 4, 2007 Advisory No. 232 ENERGY BILL COMPROMISE: TWO WRONGS MAKE A MESS Concern over rising energy prices has spurred efforts by the Congress and the Administration to finalize an energy bill. A scaled back, compromise version of the House- and Senate-passed energy bills is being negotiated for presentation to the Congress. (The House bill is H.R. 3221; the Senate bill is H.R. 6, a House bill agreed to earlier in One is left wo the Senate.) Why are wt The compromise consists would be beti chiefly of an increase in scratch with a mandatory fuel economy government standards for motor vehicles obstacles to and mandates for increased use exploration ai of ethanol in gasoline, with a requirement that a portion of the ethanol supply come from non-corn sources (such as wood chips and switch grass). Both the Congress and the White House have supported this shift toward alternative sources of motor fuel. The compromise is mainly a bow to the environmental lobby to reduce carbon emissions by a tiny amount, and will inconvenience car and truck buyers and drivers and consumers of many other products. Other provisions of the earlier bills appear to have been either scaled back or dropped for now. These sections involve a large number of tax changes relating to energy. They include tax subsidies and credits for development of alternative fuels, for purchasing hybrid (electric/gasoline) powered vehicles or dual fuel (gasoline or ethanol 85) vehicles, and for making buildings more energy efficient. The subsidies were to be paid for by some controversial and unhelpful tax increases on domestic energy producers. As this is being written, it is not nderii dohi er.. fiocu. (x a ( effi id pro clear how many of the subsidies and taxes are omitted from the compromise. The rationales for the original bills were a jumble of incoherent and often conflicting promises to improve the environment by reducing carbon emissions, save ig and asking, consumers money by reducing gig this? I global energy prices, and tenhance U.S. energy f. independence or energy s on remoing security. Neither the original nd regulatory bills nor the scaled down cient energy version would reduce world duction. energy prices significantly, and would not promote energy security. They would force consumers to pay more for domestically-produced energy and drive smaller vehicles that are less crash- worthy. One is left wondering and asking, Why are we doing this? It would be better for the country if the Congress were to defer the whole issue until next year, and to start from scratch with a focus on removing government tax and regulatory obstacles to efficient energy exploration and production. The mandates in the compromise. Higher CAFE standards. The Senate bill contained an increase in the Corporate Average Fuel Economy standards (CAFE) from the current 25 miles per gallon to 35 miles per gallon by 2020, and would have included cars and light trucks in the g~,fl kfl S I 66~ 8 ~eg

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