Gas tax vs. balanced budget is tough choice for Congress
Americans may be spared from paying an extra 10 cents a gallon at the gasoline pump if a large number of congressmen have their way. But the motorists' collective sigh of relief could doom the balanced 1981 budget, for which Congress and the White House still yearn.Skip to next paragraph
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At issue is President Carter's $4.62 a barrel fee on imported oil, designed to encourage energy conservation by adding 10 cents a gallon to the price of gasoline.
Marching through both houses of Congress are resolutions which, if passed, would prevent imposition of the fee, due to raise pump prices beginning May 15.
PResident Carter might veto the measure. Both chambers, by a two-thirds majority vote, could override his veto, killing the fee for good.
Congressional sentiment against the fee is so strong that an override cannot be ruled out.
But that is only one side of the story. The House already has proposed a $ 611.8 billion budget for fiscal 1981, boasting a surplus of $2 billion. The Senate, a bit slower off the mark, still is debating final shape of its proposed budget, also expected to be slightly in the black.
The House budget does not include, as part of the balancing act, the estimated $10.3 billion in revenues from the oil import fee. The $2 billion surplus is achieved through spending cuts.
The House stipulates that revenue from the oil import fee should be used to provide a "productivity tax cut." This means, said a House Budget Committee source, some relief on social security taxes and some tax cuts for business.
President Carter also says that import fee revenues should not be used to balance the budget. By proposing drastic spending cuts, he has given Congress a revised 1981 budget calling for a tiny surplus of half a billion dollars -- without oil import fee revenues.
Proceeds from this "gasoline conservation fee," as Mr. Carter calls it, should be set aside, to give the balanced budget a "margin of safety."
Now, however -- with recession forcing higher government outlays for unemployment compensation and related welfare costs -- officials on the Hill and in the White House agree privately that the budget has little chance of being balanced, without throwing the $10.3 billion import fee receipts into the revenue pot.
"Much depends," says a senior White House official, "on Congress allowing the oil import fee to remain in place, because this $10.3 billion will have to be thrown into the breach to balance the budget."
Even using that fee, officials agree, balancing the budget becomes iffy, if the jobless rate continues to move up during the year and the recession deepens beyond White House expectations.
The revised Carter budget was predicated on a 7.2 percent unemployment rate at the end of 1980. Already the rate stands at 7 percent, with many analysts predicting an 8 percent level by the end of the year, possibly even higher in 1981.
"Roughly speaking," says a key congressional budget source, "if unemployment goes to 8 percent, you will have an additional $12-to-$13 billion deficit."
This shortfall would develop not only from higher unemployment outlays but from reduced income and corporate tax revenues.
In short, Congress appears to be pursuing two contradictory goals:
* Balancing the 1981 budget, perceived to be widely demanded among voters at large.
* Sparing millions of American families an additional drain on their purses by eliminating a 10-cent-a-gallon levy on gasoline.