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Capitol Comment

    Capitol Comment 255 - A Toxic Recipe for Bigger Government: Renewing the Superfund Tax

    10/12/1999

    President Clinton Calls for New Taxes. On September 30, President Clinton signed a three-week continuing resolution for fiscal year 1999. During his remarks after the signing, the president referred to a renewal of the Superfund tax, which expired in 1995.

    President Clinton Calls for New Taxes. On September 30, President Clinton signed a three-week continuing resolution for fiscal year 1999. During his remarks after the signing, the president referred to a renewal of the Superfund tax, which expired in 1995. Under this proposal, businesses would pay a total of $6.5 billion over five years into the Superfund — a pool of money created to pay for the cleanup of waste sites where no responsible parties can be identified.1 President Clinton lamented that Congress would not agree to his proposal for a "tax on polluters to clean up toxic waste dumps."2

    Superfund is a monument to government waste and new taxes will do little to encourage needed reform.

    Presidential spin aside, renewing the Superfund tax has absolutely nothing to do with "taxing polluters" or ensuring that cleanups are funded. Moreover, Superfund is a monument to government waste and new taxes will do little to encourage needed reform. The fact is that the president’s proposal is designed to do one thing: increase the size of government. Since President Clinton cannot propose broad-based taxes to fuel the spending increases in his budget, this new spending must be funded by "targeted" tax hikes such as Superfund.

    Making the Polluter Pay? By repeating the mantra of retribution against "polluters," President Clinton is implying that a renewed Superfund tax would be levied only on individuals and businesses that were specifically responsible for creating toxic waste sites. This is hardly the case. The expired Superfund tax was levied on a wide range of companies — regardless of their environmental record. A tax that is borne indiscriminately hardly promotes a "polluter pays" system.

    While a wide range of companies would be affected by the new Superfund tax, the majority of cleanups are actually undertaken and paid for by parties ensnared in Superfund’s costly liability system. In fact, these parties have taken care of 70 percent of long-term Superfund cleanups, and EPA will also recover from the private sector another $2.5 billion of costs incurred during its own cleanups of Superfund sites.3

    Superfund IS Funded. If a renewal of the Superfund tax is not about making "polluters" pay, then perhaps the taxes are needed to ensure completion of ongoing cleanups. But this is not the case, either. Even if Congress refused to give Superfund another dime, there is still $1.3 billion in the program’s trust fund.4 Moreover, Congress will provide more than $700 million in new funding for fiscal year 2000 alone.5 With an appropriation of this magnitude, plus interest earned on trust fund balances and cost recoveries from the private sector, Superfund is in no danger of running out of cash.

    In fact, Superfund will need less and less funding as time goes on since, according to the EPA, work is being finished at many sites. As of September 22, 1999, construction was complete at 626 of the nearly 1,400 sites nationwide, and another 459 sites have clean up construction underway.6

    New Taxes for a Broken Program? While construction may be complete at almost half of the Superfund sites, the program remains a monument to government waste. For example, the average Superfund site takes more than 10 years to clean up, at a cost of around $30 million.7 Perhaps this is due to the bureaucratic structure of the program — in fiscal year 1997 only 45.8 percent of Superfund dollars went for clean up actions.8 The rest went for administrative support, research, enforcement, EPA salaries and other overhead costs. Another $2 billion has been lost due to accounting failures.9 Renewing the Superfund tax will guarantee that innocent parties will pay for EPA’s inability to properly administer this program, and that needed reforms will be shelved.

    Fuel for Bigger Government. The president’s proposal to renew the Superfund tax is designed to do one thing: increase the size of government. President Clinton has proposed more than $200 billion in new discretionary spending over the next five years.10 The only way to fuel this increased spending is to raise taxes. And since broad-based taxes are politically impossible, "targeted" tax hikes — such as Superfund — are the answer.

    Renewal of the Superfund tax has nothing to do with "making polluters pay," nor is the Superfund tax needed to keep the program solvent. Instead, renewing the tax unfairly hits businesses regardless of their environmental record, and will perpetuate the program’s inefficiencies. Policymakers should not be fooled by President Clinton’s rhetoric of retribution.

    1Fiscal Year 2000 Budget: Analytical Perspectives, Office of Management and Budget, 1999.

    2Remarks by the President on Signing of the Continuing Resolution, White House, Office of the Press Secretary, 9/30/99.

    3"Superfund: Progress Made by EPA and Other Federal Agencies to Resolve Program Management Issues," U.S. General Accounting Office, 4/29/99; Prepared testimony of Timothy Fields, Jr., Assistant Administrator, Office of Solid Waste and Emergency Response, U.S. Environmental Protection Agency, 9/22/99.

    4Fields, Jr., Ibid..

    5Department of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 2000.

    6Construction Completions at National Priorities List Sites by State, EPA, 9/28/99; Fields, Jr., Ibid.

    7"Superfund: The Good, the Bad, and the Broken," Wayne T. Brough, Issue Analysis #70, Citizens for a Sound Economy Foundation, 2/27/98.

    8"Superfund: Progress, Problems, and Future Outlook," U.S. General Accounting Office, 3/23/99.

    9"Superfund: Progress Made by EPA and Other Federal Agencies to Resolve Program Management Issues," U.S. General Accounting Office, 4/29/99

    10Facts on File World News Digest, 2/4/99.