Serious Energy Policy Suffers in Political 'Silly Season'

Election antics are distracting from actual policy progress.

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Pete Sepp is executive vice president of the National Taxpayers Union.

In recent times, the mid-summer of any presidential election has meant one unfortunate thing: Though the conventional season doesn't change, the political "silly season" starts to get underway. It is a time when elected officials, who often seek opportunities to demagogue issues for their own gain anyway, become almost manic in their one-upping activities. And energy consumers pay a price.

One sign could be seen on June 29, just prior to Congress's Independence Day recess, when lawmakers fell all over themselves to enact a legislative package that reauthorized federal surface transportation programs while extending historically low student loan interest rates. One of the few bright spots in the bill—reform of the federal flood insurance program, which has saddled taxpayers with nearly $18 billion in debts—was clouded over by unsustainable spending schemes. A National Taxpayers Union Vote Alert opposing the bill, authored by my colleague Nan Swift, best captured the problem:

It is unacceptable to continue to spend taxpayer funds at a break-neck pace, $120 billion over 27 months, when our deficit grows by the day. Congress ignored opportunities to practice fiscal responsibility by implementing practical reforms such as only spending that which the program brought in through the federal gas tax or giving states more control over how their [transportation] funding is spent.

[ See a collection of political cartoons on energy policy.]

Alas, members of Congress interested in "campaign-season bragging rights," as the Associated Press put it, cleared the bill by massive margins of 373-52 in the House and 74-19 in the Senate.

Too bad they couldn't agree as readily on a policy that could have delivered genuine benefits to job creators and consumers, by proceeding with building a pipeline to transport needed oil resources from Canada to the United States. During final negotiations over the package, a provision that would have cleared away bureaucratic hurdles to construction of the Keystone XL Pipeline was deleted. As a result, Congress missed another opportunity to overcome the Obama administration's sluggish and contradictory approval process, which began another phase last month with a new State Department review.

Meanwhile, even powerful Democrats are growing nervous over the foot-dragging. Noting that what he cares about is "working right now to get the most jobs for Montanans, and Keystone is a part of that solution," Senate Finance Committee Chairman Max Baucus, Democrat of Montana, called Keystone XL approval "a no-brainer ... People at home, they want this."

[ See a collection of political cartoons on the 2012 campaign.]

Other antics took place in the U.S. Senate last month, as it debated a monstrosity of a bill entitled the Agriculture, Reform, Food, and Jobs Act. The legislation, more commonly known as the Farm Bill, called for spending nearly $1 trillion on agriculture and food-entitlement programs between 2013 and 2022, with a barely perceptible trim from what the cost would be under "current law baseline." Few other products from Congress can match transportation bills for pork-barrel pandering at taxpayers' expense, but the Farm Bill manages to do so.

Once again, a National Taxpayers Union Vote Alert pointed out the drawbacks of the legislation, which included distortionary energy policies. Aside from showering more subsidies and other federal favors on the crops that go into the manufacturing of ethanol fuel, "the bill is also packed with giveaways to the green energy and ethanol industries, with $193 million for the Biomass Crop Assistance Program and another $241 million for the Rural Energy for America Program." Yet, when presented with opportunities to right these wrongs—such as an amendment from Sen. Pat Toomey, Republican of Pennsylvania, to strike grants and loan guarantees for expensive bio-refineries—the Senate largely balked. Toomey's amendment failed, 63-33.

While National Taxpayers Union prefers to see the entire Farm Bill scrapped in favor of a leaner, pro-taxpayer, free-market alternative, it remains to be seen if the House will have any more success this week at limiting the damage caused by the legislation's energy-related parts.

[Take the U.S. News Poll: Should Obama Make His Keystone XL Decision After the Election?]

But not all the strange noise is coming from Congress. President Obama has just cranked up the "tax fairness" bandwagon again, by announcing a new initiative to extend only part of the 2001 and 2003 taxpayer relief laws for the year 2013. Widely described as an election-year attempt to match moves from his opponents, President Obama's proposals are retreads from previous budgets as well as a flawed tax reform plan the administration crafted earlier this year.

If the president is reaching from past playbooks to guide individual income tax policy, can energy tax policy be far behind? One staple of the administration's rhetoric has been to end what it calls "tax subsidies" for certain oil and gas companies. In reality, this can mean taking away provisions such as the Section 199 job creation deduction and the "dual capacity" credit against double taxation abroad—both of which are widely available to many industries, but which the White House and its allies would strip away only for oil and gas.

At this rate, it could be a tough summer and an equally unpromising fall for Americans hoping to see better energy policies from Washington—policies that stress low taxes and free markets for all energy sources rather than playing favorites and punishing foes. Instead, we're treated to a silly season—and no one seems to be laughing.