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Legislative Horse-Trading Dooms Bush's Energy Bill

By Jim Lobe*

The U.S. Senate blocked a package of 31-billion-dollar reforms that would have given the energy industry almost free rein, to the great detriment of the environment. It is unlikely a new bill will be passed on this touchy issue in 2004, an election year.

WASHINGTON - An unusual coalition of fiscal conservatives, environmentalists, and consumer activists in the U.S. Senate formed last week to block one of President George W. Bush's top legislative priorities: the biggest national energy policy reform in a decade.

The project is designed to increase domestic supplies of everything from ethanol made from corn to natural gas, and reduce the country's rapidly growing dependence on foreign oil and gas, increasing amounts of which are now coming from South America.

Despite furious last-minute negotiations involving both Bush and Vice President Dick Cheney, the governing party's legislative negotiators of the 31-billion-dollar energy package could not overcome the delay tactics of the opposition, which included six members of their own Republican party.

A motion to end debate, which required 60 votes in the 100-seat chamber, fell two short.

The White House vowed on Nov. 26 to push again for a comprehensive energy plan when Congress reconvenes early next year.

Most analysts seem to agree that election-year politics in 2004 are likely to make success much more elusive, as both major parties move to sharpen their differences on a range of issues.

Democrats, 13 of whom backed the bill, will find themselves under much greater pressure next year to deny Bush a key legislative victory just months before the November elections.

The effort to craft a new energy policy has been a major priority for Bush since he took office in January 2001. The administration is studded with officials with long-standing ties to the oil business, beginning with the president and vice president themselves.

Within just a few months, a task force headed by Cheney produced a comprehensive report calling for major efforts to sharply increase the global and domestic supply of oil and gas, reconsider nuclear power as a future source of energy, and ease environmental and other regulations on the energy industry.

Conservationists were outraged by emphasis on increasing supply, particularly at the expense of environmental protection, and the relative lack of interest in developing non-polluting, alternative energy sources, such as wind and solar power; and promoting greater energy efficiency, especially for sports utility vehicles (SUVs).

When Democrats won control of the Senate in May, 2001, hopes for a Cheney-like plan quickly faded, although the administration tried to put together coalitions for a new initiative to little effect.

Those efforts gained more momentum after last summer's electrical blackout that struck much of the eastern third of the United States and a swath of Canada.

The administration and its supporters used the sense of urgency spurred by the blackout to push through its energy policy and intensified its efforts to put together a package that could muster the necessary number of votes.

But energy legislation tends to rely more on pork-barrel politics (lawmakers attempting to impose benefits for their constituents) than on ideological or even partisan sympathies, with the result that the administration soon found itself in a difficult and costly horse-trading process.

Bush was forced to offer significant incentives -- mostly in the form of tax breaks, loan guarantees, and subsidies -- at a time when lawmakers and business leaders were growing concerned about the skyrocketing size of the federal deficit, particularly with the approval of the administration's 89-billion-dollar request to support U.S. operations in Iraq and Afghanistan, which is expected to reach 500 billion dollars in the current fiscal year.

"The U.S. budget is out of control," the influential investment firm, Goldman Sachs, warned its clients in late November, on the eve of the final push for passage of the energy bill, a warning that was echoed in Washington by fiscal conservatives among Bush’s fellow-Republicans.

The estimated cost to the Treasury of all the subsidies and other incentives including included in the bill -- including a 20-billion-dollar publicly-financed gas pipeline from Alaska to the Midwest; two billion dollars in loan guarantees and exemptions from royalty payments for oil and gas drilling; and another two billion dollars a year in subsidies for ethanol production -- was estimated at 75 to 100 billion dollars.

"It isn't often that the entire political class in Washington disregards the interests of the American people," noted Business Week magazine, "but the 100-billion-dollar pork-barrel package in Congress that masquerades as an energy bill does just that."

"It not only fails to cut the country's dependence on Middle East oil but also weighs heavily on the budget deficit," it noted, adding that it amounted to "a package of taxpayer-funded goodies to give to campaign contributors and constituents before next year's elections," says the article.

The notion that the energy bill was a matter of politicians feeding at the trough was furthered by an investigative report in the Washington Post that also appeared on shortly before the energy bill vote. The report found that some two dozen of Bush's biggest campaign donors, including a large number of Texas oil and gas executives, are associated with companies that stood to benefit directly from the energy bill.

"In exchange for millions of dollars in campaign donations," noted Joan Claybrook, the head of Public Citizen, a consumers group which opposed the bill, "energy companies would be rewarded with tens of billions in government handouts."

She also noted that much of the bill was written by energy industry lobbyists and favored precisely the kind of deregulation strategies that resulted in the Enron bankruptcy and California’s devastating energy shortages two years ago.

Despite these concerns, the administration still had a chance to break the filibuster and force a vote on the package, but it could not persuade the powerful House Majority Leader, Tom DeLay, to drop a particularly controversial provision designed to protect makers of a gasoline fuel additive, methyl tertiary-butyl ether (MTBE), from legal liability for contamination of groundwater.

Bush personally appealed to DeLay, widely considered the most powerful Republican in Congress, to drop the provision, but the congressman from Houston, where most of the companies that produce MTBE are based, refused to do so, thus dooming the entire package.

"This simple action (of stripping the MTBE provision from the bill) would have the energy bill, as imperfect as it is, ready for the president's signature," said Democratic Sen. Tom Daschle who, despite his post as Senate minority leader, supported the package because of its subsidization of ethanol made from corn grown in his home state of South Dakota.

* Jim Lobe is an IPS correspondent.

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