Statements on Introduced Bills and Joint Resolutions
STATEMENTS ON INTRODUCED BILLS AND JOINT RESOLUTIONS -- (Senate - September 18, 2006)
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By Mr. WYDEN (for himself and Mr. Bennett):
S. 3908. A bill to amend the Internal Revenue Code of 1986 to provide a credit for fuel-efficient motor vehicles and to require major integrated oil companies to amortize intangible drilling and development costs; to the Committee on Finance.
Mr. WYDEN. Mr. President, after years and years of congressional gridlock on the issue of automobile efficiency, I and Senator Bennett of Utah are today bringing to the Senate legislation that is market oriented, bipartisan, and a bill that we believe will bring millions and millions of fuel-efficient automobiles, cars, and trucks to the streets of our country.
We put our Nation on the road to energy independence by rewarding drivers who buy more fuel-efficient cars, trucks, and SUVs. These rewards, under the legislation I have drafted with the distinguished Senator from Utah, Mr. Bennett, are available on a sliding scale. The more fuel-efficient the vehicle, the greater the reward that the consumer would receive.
We also put the brakes on a needless subsidy to the major oil companies and use the savings that are derived from stopping that windfall to reward consumers in their wallets for helping to end our country's oil dependence. To his credit, the President of the United States has said: You don't need these incentives when oil is over $55 a barrel, as it is today.
I asked the CEOs when the major oil companies came before a joint hearing--I see the distinguished Senator from Alaska in the chair. He will recall at our hearing, the joint Commerce and Energy hearing that was held, I asked the oil company executives of the major companies whether they needed the various tax breaks that were currently offered, and to a person, they said they did not.
I see my good friend from Utah, and I thank him for his efforts to make this legislation bipartisan. What I will do, now that the Senator from Utah has arrived, is briefly describe how our bipartisan legislation works and why we think this will be a major transformation in terms of the cars, trucks, and SUVs on the roads of our country.
Under our bipartisan, market-oriented bill, consumers who buy vehicles that are at least 25 percent more fuel efficient than the applicable standards, called CAFE, would get a rebate of at least $630 and as much as $1,860 for the most fuel-efficient cars. We have separate standards for cars and trucks so the consumers can choose the type of vehicle they want and still get the rebate or the credit as long as they choose a fuel-efficient model.
In the past, the automobile industry has said that fuel economy standards are hard to achieve because car buyers place little value on fuel economy. The new program created by our bill directly addresses that concern by providing rebates to consumers for purchasing fuel-efficient vehicles.
Many in the automobile industry have also said that car buyers don't fully appreciate the value of lifetime fuel savings at the time of purchase. I and Senator Bennett believe this will change that by providing the rebates or the credits through focusing consumer attention on fuel efficiency at the time of purchase.
It will be possible for consumers at the time of purchase to see the type of notice I am holding as a sticker on the window of the automobile. So right at the time of purchase, because of this sticker--I am holding a copy of it--it will be possible for purchasers to see the real value of fuel-efficient purchases in the automotive sector.
For vehicles that qualify, the rebate or credit amount would be printed on the window sticker, as I have described, and the consumer could claim the rebate as a tax credit on his or her tax return.
Alternatively, I and Senator Bennett conceived that the rebate could be transferred to automobile dealers, allowing dealers to provide the rebates to consumers as cash back at the time of purchase.
In our view, the legislation also builds on the incentives that were provided in the Energy bill specifically for hybrid gasoline/electric-powered cars. We believe the approach that we are advocating will be especially popular because it is simpler and fairer. For example, unlike the hybrid credit that is in the energy bill, there is no phaseout of the incentives we propose, based on when a hybrid carmaker sells its 60,000th car. Because our legislation eliminates the truly complicated phaseout of the credit that now exists, it is our view that consumers will not be confused as they are today about when they can get a credit and how much it will be. Also, unlike the approach taken in the energy legislation, our bipartisan bill does not pick winners and losers among competitive technology. It takes a technology-neutral approach that allows any vehicle that has superior fuel efficiency to qualify for a rebate, whether it uses hybrid or conventional technologies.
I also want to emphasize why I think it is important that we take bolder action to jumpstart the markets for fuel-efficient vehicles. As I mentioned, there is a phaseout for the incentives today based on when a hybrid carmaker sells its 60,000th car. We have tried to get our arms around exactly how many of these alternative-fuel vehicles are going to be purchased this year. Many estimates seem to be just a bit over 100,000. But compare those 100,000 hybrids to the 1.8 million vehicles that could be purchased with the kind of incentives that I and Senator Bennett are proposing. We are significantly increasing, through a marketplace approach, the chance to multiply many times over the number of fuel-efficient vehicles on the streets of our country. The distinguished Senator from Alaska who is in the chair has sat in on many of the debates with me on the Energy Committee where we have heard views expressed about what could be done through a regulatory approach. Those approaches have been fought to gridlock on the floor of the Senate.
What I and Senator Bennett want to do is something very different. We want to use a marketplace approach to significantly jumpstart the market for these fuel-efficient vehicles over the next 5 years. Compare 100,000 hybrid vehicles that are likely to be purchased this year to the 1.8 million vehicles that could be purchased for each of the next 5 years under the legislation we are advocating and we get a sense of the difference in approach and why we think ours is very much needed and can make a break with the policies that have produced gridlock on the floor of the Senate.
Finally, I would wrap up by saying that the legislation I and Senator Bennett are proposing is fully paid for. According to the Joint Committee on Taxation, our bill saves $6.8 billion by limiting just one of the tax breaks that the major oil companies have said they no longer need. It is known as the expensing of intangible drilling costs, which includes land acquisition costs, development costs, and the costs of leasing equipment. The Congressional Research Service has called this special break economically inefficient. I looked very carefully at it after the hearing attended by myself and the distinguished Senator from Alaska and others, when I asked the major oil executives if they needed all of the tax breaks that were currently allowed under the code. They said they did not. The President, to his credit, said the major oil companies do not need tax breaks when the price of oil is over $55 a barrel.
So according to the analysis done by the Joint Committee on Taxation, the savings derived by limiting one tax break for major oil companies more than covers the $1.3 billion-per-year cost of the marketplace-oriented rebate and credit program.
To finally sum up, I believe our legislation--we call it OILSAVE--is a winner for consumers, a winner for energy security, and a winner for taxpayers. It is a win for the consumer because it helps our Nation's energy security by the purchase of what could be millions of fuel-efficient cars and trucks and SUVs. It helps us kick our Nation's oil dependence by stimulating the purchase of a number of greener vehicles at home and by limiting a tax break the Congressional Research Service calls economically inefficient. Finally, it is a win for our taxpayers because after the major oil company executives said that they didn't need this break, and the President indicated that with oil at these prices you didn't need incentives, it is possible for us now to jumpstart the marketplace for these vehicles without any additional costs to the taxpayers.
So I hope my colleagues will reflect on the difference between this discussion and the ones we have had previously on the floor of the Senate. The decibel level got pretty high during those past debates. When Senator Bennett and I launched our discussion, it was a different kind of discussion. It was a discussion about how we can find common ground in the Senate, how we can be significantly bolder in the area of automobile efficiency. We have zeroed in on this area, an area I know has been of interest to the Presiding Officer over the years, because automobile efficiency is the ball game as it relates to the issue of energy security. That is where our oil is going.
So I hope our colleagues will be interested in the legislation that we are bringing to the Senate today. The OILSAVE legislation is a departure from the polarized debates we have had in this body.
I want to say, wrapping up, that I don't think I could have a better partner for this particular effort than the distinguished Senator from Utah. He is the chair, as our colleagues know, of the Joint Economic Committee. He has been interested in energy legislation as a member of the Republican leadership for quite some time. I would note that today is his birthday, and he has decided to use this special day, when his family is clamoring for his time, to be part of this bipartisan effort with me. I am very grateful for his involvement in this task, and I would like to yield the floor, if I might.
I also see our distinguished friend from West Virginia here, and if it is acceptable, perhaps Senator Bennett could wrap up for our legislation, and then I know the entire Senate wishes to here the remarks of the distinguished senior Senator from West Virginia.
I ask unanimous consent that the text of the OILSAVE bill introduced today be printed in the RECORD.
There being no objection, the bill was ordered to be printed in the RECORD, as follows:
S. 3908
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