Following the old adage, “Never let the facts get in the way of a good story,” the Congressional Budget Office (CBO) issued a report last week blaming an upcoming set of vehicle fuel economy and emissions standards for an anticipated gaping deficit in the Highway Trust Fund. Salacious as it may sound, CBO’s analysis rings far closer to fiction than reality.
First, a little background for those who don’t follow this stuff regularly. The Highway Trust Fund is a pool of money used to fund highway and mass transit projects. Receipts that credit the fund come from a variety of sources, though presently about 60 percent of the receipts come from gasoline tax. The concern, and a fair one, is how we will continue to fund our highway and mass transit projects as our vehicles get more efficient and use less gasoline.
The media coverage on this story widely – and incorrectly – stated that CBO was claiming a $57 billion loss in revenue due to the upcoming 2017-2025 vehicle standards. It turns out that the number is off by a factor of, oh, 10 to 20. By UCS calculations, the loss in federal gas tax revenue for the years in question is about $2.5 billion (or $6 billion if you also include state taxes, though CBO’s numbers do not). Don’t get me wrong, this is one of many reasons to revisit how we fund our highways, to be sure, but hardly the “sky is falling” scenario painted by CBO.
So how did CBO arrive at their numbers? Here’s the short version of their logic and math. Note the bolded years below.
- CBO recently conducted an (unrelated) economic outlook examining fiscal years 2012-2022.
- CBO pulled an (accurate) statistic from EPA’s and NHTSA’s recent proposed vehicle standards rulemaking about the efficacy of the standards. Specifically, that thanks to the standards, which will be phased in between 2017 and 2025, gasoline consumption in cars and light trucks will be down by about 25 percent come 2040, when the efficient vehicles are on the road in significant numbers.
- Accounting for a separate policy on renewable fuels, CBO estimated that the 25 percent reduction noted above is closer to 21 percent for actual gasoline.
- The numbers from CBO’s economic outlook were evidently handy, so “for illustration,” CBO “examined how the fund would be affected if gasoline tax revenues fell in the near term (for any reason) by 21 percent.”
CBO’s analysis isn’t so much inaccurate as it is irrelevant.
They took a reduction in consumption we’ll see in 2040, from standards that don’t even begin to take place until 2017, and applied them to a set of statistics covering 2012-2022. Unless those future 2040 vehicles are Back to the Future-type DeLoreans heading back in time to 2012, CBO’s analysis is, to put it kindly, beside the point.
Moreover, CBO even knows that it won’t be this big. Buried in a footnote more than halfway through the document, it claims, “The new CAFE standards would not take effect until 2017, so they would reduce gasoline tax revenues between 2012 and 2022 by less than 1 percent, CBO estimates.”
This would all be amusing if it didn’t have such serious implications, as this type of analysis could and likely will be used by those seeking to undermine the vehicle standards. The truth is, these standards will substantially reduce gasoline consumption and pollution – that’s, well, kind of the point. The 2017-2025 standards will save more than 1.5 million barrels of oil per day in 2030 alone. Even after paying for the cost of the fuel-saving technology, drivers will still net more than $50 billion in savings in that year alone.
We do need to find new ways to get the money we need to fix bridges, repair potholes, and keep our highways safe, but using shoddy math to pin fictitious budget shortfalls on smart vehicle policies isn’t the way to go about it.