IN A SHORTSIGHTED effort to save his beleaguered oil import fee, the president has linked the fee to a balanced budget. Reducing oil imports and balancing the budget are vital national goals, but if either is to succeed, they must be designed and kept completely separate.
The confusion arises from the structure of the fee itself, ambiguous from the start. If its purpose was to lower gasoline use substantially, and also to reduce the country's dependence on foreign oil and the resulting dollar drain, the proposed 10-cent-a-gallon fee was much too small. At a minimum, a 50-cent fee -- as candidate John Anderson has proposed -- is needed. To contribute to deeper changes in automobile use and adjustments in the large portions of the economy that are tied to the auto, the fee should quickly rise to the levels found in all other industrialized nations: between $1 and $2 a gallon. But if the fee was designed to raise revenue and help balance the budget, it was much too big.
With the import fee now tied up in court and with large majorities of both houses of Congress strongly opposed to it, what options are left for the president? The bold move would be to withdraw the import fee and end the complex but irrelevant arguments over whether it is or isn't a violation of the Trade Expansion Act. The president could then send to Congress a 50-cent, fully rebatable, gasoline tax proposal and explain to the country that this is what the national security demands.
The need for the United States to lower its oil imports -- not because there isn't enough oil right now, but in order to avert further OPEC price increases by creating a buyers' market -- is now beyond dispute. Nor should it be arguable that gasoline use is the largest available pool of conservable oil. Automobiles and light trucks consume an amount of gasoline equal to more than 80 percent of oil imports. Recent experience has demonstrated, furthermore, that gasoline price increases cause much larger decreases in gasoline use than economists have confidently predicted.
The key to making a gas tax politially acceptable is that it must be simply and fully rebated. If it is not, Congress will get embroiled in an endless debate over which interests get what proportion of its revenues. Some interests will win, more will lose, and the proposal will finally be defeated. More important, a direct rebate to all adults should be not just acceptable -- but even attractive -- to a majority of Americans who will be able to use it as they individually choose: either to pay for more gas or as a source of additional income.
The president and his administration seem to have understood the need to lower imports and gasoline use ong ago. Where they have erred is in no making that need clear to the American public. Knowing Congress' resistance to the idea, the administration has tried to finesse each proposal to lower imports -- this time hoping that Congress couldn't resist the $10 billion bonus to help balance the budget. This approach has not worked -- and will not work. The gas tax needs to be faced head-on.