Almost nothing is as important to the nation's security as a stockpile of oil. Without it, should there be a grave interruption to imports, the Air Force jets and the Army tanks included in President Reagan's $189 billion defense budget for fiscal 1982 could literally run out of gas.
To its credit, the Reagan administration recognized the critical importance of rebuilding the nation's strategic petroleum reserve (SPR) by including $3.8 billion in its revised budget for fiscal 1982, sent to Congress March 10.
But to its discredit, the Reagan administration failed to provide the leadership necessary when the Senate Budget Committee, playing politics, knocked $3 billion out of that $3.8 billion on the theory that selling "oil bonds" or some other form of alternative financing could provide the money. Three separate amendments restoring part or all of the $3.8 billion item were beaten by a Republican-controlled Senate.
"There is no natural constituency for the SPR," a Senate backer says. "No one is going to rush to contribute to your next political campaign if you support SPR. And there are many senators interested in energy who are really pushing their own pet projects -- conservation, solar, whatever -- and are willing to see funds taken from SPR for their own parochial choices."
An administration official in the thick of it confesses: "This is a good example of politics getting in the way of policy.We didn't want to get into an internecine war between (Sen. Pete) Domenici (R-N.M.) and (Sen. James) McClure (R-Idaho)." Domenici, Budget Committee chairman, wanted to knock the SPR in the head to show a nice big slash in the budget, whereas Energy Committee chairman McClure was willing to keep full SPR funds if offsetting savings could be found.
Instead of pursuing its own best judgment, the administration copped out. White House officials and Budget Director David A. Stockman hid behind a declaration that they were "neutral" on the financing issue, all the time assuring congressional proponents of building the SPR that they were solidly behind it. But the only way to be sure that oil will flow into the stockpile is to pay for it through the budget.
As a Congressional Budget Office Director Alice Rivlin told the Senate energy subcommittee, selling bonds to finance SPR doesn't guarantee "prompt completion" of the strategic reserve, whereas budget money not only assures it, but probably is the least costly way.
The fact is that Treasury officials early on had examined alterrnative methods of financing the SPR and came down hard against it. But Stockman, who would have preferred a straightaway budget commitment, concluded that the administration would needlessly knock its head against a stone wall, fighting for a $3.8 billion item that couldn't survive because everyone on the Hill considered it "an all-purpose slush fund."
Thus, in reality, the Reagan administration is not really "neutral." It has abandoned its former commitment to $3.8 billion in budget money for SPR, and is going an off-budget route, once the remaining $800 million is spent. As Rep. Albert Gore Jr. (D-Tenn.) points out, the Reagan administration until now has piously emphasized that shifting expenditures from the real budget to various "off-budget" techniques is a fraud because it hides real costs. But in an easy abandonment of principle, it is going the off-budget route for the SPR, even though it will add to eventual costs, to say nothing of delays in filling the stockpile.
Building an essential part of the national defense structure by soliciting private financing has to be rated a screwball idea. Does anyone propose private financing for guns, planes or tanks? Gore suggests that "it's akin to using bonds to pay for food and medicine for civil defense shelters."
Sen. Nancy Kassebuam (R-Kan.) has a slightly less ridiculous idea: She would require the oil companies to contribute five days' worth of imports to the SPR. But why should the risks of one element of national security be imposed on one particular group in American society?
The senators who are intent only on sawing three billion bucks off the spending total in effect are saying to hell with what it does to the SPR, which at the moment holds enough oil only to cover a 24-day interruption in Persian Gulf oil imports.
What makes it worse is that Iraq and Iran are pumping more oil these days, and the oil companies -- poor babies! -- are so drenched in the resulting glut that they are having to discount prices. If ever the time was right for a worthwhile government expenditure, it is now, to build the SPR into a six-month or one-year cushion against disaster.
"I talk to [Secretary of State Alexander] Haig and [national security adviser Richard] allen," says Sen. Bill Bradley (D-N.J.), "and they tell me that they're in favor of SPR, or that they're 'interested.' Dammit, I've heard that before, from the Carter administration. Everybody is supportive.' But nobody wnats to bite the bullet."
Privately circulated memoranda made available to The Washington Post leave no doubt the Reagan administration knows the real score on this issue, but won't buck the political pressures on Capitol Hill. One document not only points out that the sale of oil bonds (impacting the credit market like any government bonds) would surround the program with uncertainty, but says flatly that the government "is sure to be the loser, and oil-bond holders will be sitting pretty."
Paraphrasing another government paper so as to protect the author:
You get into an emergency stockpile in the fist place because supply lines may be threatened, and someday, you may have to use that oil to fly your airplanes. So a basic assumption is that in such a crazy world, oil prices will be scooting up even faster than other inflation rates. It doesn't take much intelligence to figure out that in that circumstance, it would be cheaper for Treasury Secretary Don Regan to borrow the money through Treasury bills than to float oil bonds.
If the Reagan administration fails to recover its initiative in the Senate, the issue will come up again in the House, and we will have a chance to see whether the Democrats have the guts to call the Reagan administration on a national security issue. Some House Democrats, with an eye to the 1982 elections, make noises that are supposed to be interpreted as more "fiscally responsible" than the Republicans.
Others, like Gore, are ready to lead a fight for SPR. It will be interesting if enough Democrats have the courage -- if an eventual House-Senate conference on the SPR problem -- to force the defense-oriented Reagan administration to spend as much money for a national security prupose as its own departments of Defense, State, Treasury and OMB seem to think is necessary -- but are afraid to ask for fear of antagonizing a few United States senators.