December 11, 1979
Page 35320
AMENDMENT NO. 777
Mr. MUSKIE. Mr. President, what is the pending business?
The PRESIDING OFFICER. Amendment No. 777 offered by the Senator from New Jersey (Mr. BRADLEY) .
Mr. MUSKIE. I thank the Chair.
Mr. President, I rise today to support the pending amendment of my colleagues, Senators BRADLEY and ROBERT C. BYRD. This amendment, if accepted, will help us meet the budget demands of the next decade, as well as the current fiscal year.
First, the adoption of this amendment will bring this bill into compliance with the second concurrent resolution, which was adopted by the Congress 3 weeks ago. The Bradley-Byrd amendment would raise $312 million in fiscal year 1980. Net revenues generated by the bill would rise to $2.5 billion — a bare $100 million more than assumed in the second concurrent resolution.
Mr. President, this amendment is also a constructive response to the budget demands of the 1980's outlined in my speech 2 weeks ago. In that speech, I focused on the problems facing the budget for the next 10 years. Failure to enact a responsible windfall profit tax could create deficits through much of the 1980's — unless the tax cuts mandated by Nunn-Chiles-Bellmon are forgone, or the energy initiatives dictated by the same events that create windfall profit are not to be undertaken, or the defense targets adopted by this Senate are reneged upon or we fail to enact other legislation, welfare reform for example.
The Bradley-Byrd amendment will generate $30.8 billion from 1980 to 1990 — an important step in meeting the budget demands of the 1980's. Budget restraint will still be necessary and should be observed. But with this amendment we can recycle to the American consumer an appropriate part of the higher prices they will pay for oil in any event.
May I emphasize, Mr. President, as I read it, this is the last clear chance to add to the revenues of the pending bill.
I do not believe this amendment will discourage the production of significant quantities of oil.
CBO has estimated the production of oil, by tier, under a scenario of continued controls and a scenario of decontrol with no windfall profit tax. The results are interesting: 63 percent of the heavy oil which we could expect to be produced from 1980 to 1990 would have been produced under continued controls; 67 percent of all newly discovered oil, we could expect, would have been produced under continued controls; similarly, 90 percent of expected tertiary production would occur under continued controls.
The additional oil we can expect to be produced under decontrol — with an appropriate windfall tax applying much lower rates to new and high cost oil than to other types — is important to our quest for energy independence. But, Mr. President, I believe these statistics indicate that this proposed minimum tax would not significantly reduce the production of oil. Furthermore, I believe the producers of this oil will receive a true windfall because of decontrol. Granted, this oil has not yet been produced — but much of it would be produced even in the absence of decontrol.
It is reasonable, therefore, Mr. President, to impose a tax on such oil, given decontrol and oil prices set by a cartel. That cartel can be expected to increase world oil prices, by whim. The last few months indicate the rapidity with which oil prices can rise. In June of this year the Ways and Means Committee of the House assumed a $16 price per barrel for costing their bill. In September, when the Finance Committee began deliberations, a price of $22.50 was deemed appropriate. However, that price assumption was increased to $30 per barrel before the bill was reported. And in last Sunday's Post, Virginia stripper oil producers were quoted as receiving $32.50 per barrel of oil. Mr. President, that represents a doubling of oil prices in just 6 months.
With the cartel controlling prices, and instability in the Mideast, it is only reasonable to expect this precipitous increase to continue. This amendment will insure that a portion of the true windfall revenues will be recaptured for public use: Public uses such as encouraging conservation, the production of alternative fuels, helping people meet their heating bills, and giving the American public well deserved tax cuts when we can do so at a fiscally prudent time.
So, Mr. President, I urge my colleagues to support this amendment, and I yield the floor.