Monday, August 16, 2004

The Slow Boil

Today's New York Times reports on the alarming, and dangerous, situation unfolding within the Environmental Protection Agency's Superfund program. According to a recent Congressional report, "dozens of Superfund sites that are eligible for cleanup money are likely to be granted nothing or a fraction of what their managers say is needed because of a budget shortfall that could exceed $250 million."

The lack of requisite funding means that many sites that expose local populations to harmful and carcinogenic contaminants will remain a public health risk in the near term, and possibly the long term. Consider this, 65 million Americans, including 10 million children below the age of 12, live within four miles of a Superfund site. In addition, the lack of funding means that the current backlog of over 1,200 sites for which the clean-up process has yet to begin will likely remain untouched, although more sites will almost certainly be added, further increasing the ever daunting case load.

The crisis over the lack of funding has its roots in a shift in tax policy that began nine years ago. When the Superfund program was signed into law 23 years ago by President Carter, the funding mechanisms of the act were designed to ensure that polluters, not taxpayers, paid for the required clean-ups utilizing a two step payment process. First, the entity responsible for polluting the site was presented with the bill for clean-up. Equally important, a measure was included to fund the clean-up of sites for which there was no longer any responsible corporate entity in existence. This was accomplished through the creation of a special fund financed by taxes on certain industries that are prone to pollute, and on levies on the use of highly toxic chemicals and petroleum products (the pollutants themselves).

In 1995, the special taxes were eliminated altogether, leaving the funding to come out of polluter liabilities and general tax revenue. Despite the lack of "polluter pay" fees, the Superfund remained solvent for years to come, and the Clinton administration, to its credit, was successful in securing adequate additional funding from Congress during the remainder of their term. Unfortunately, the Bush administration has been far less vigilant in requesting the necessary money from Congress. A 2002 inspector general report showed that the Bush administration underfunded the Superfund program by 45% compared with amounts requested by EPA regional directors for site cleanups. Furthermore, in the last three years, the Bush administration has greatly reduced the liabilities faced by corporations guilty of creating these environmental calamities, which has only compounded the funding shortages. The results of this one two punch to financing the Superfund have bordered on catastrophic.

Katherine N. Probst, author of "Superfund's Future," a 2001 report to Congress that predicted a growing shortfall of money, said that people who live near the affected sites will feel the financing squeeze. "These people have been promised something they are not getting," she said. Delaying the cleanup of a problem like groundwater pollution, she said, means "it probably will cost us more in the long run."
Using a rhetorical double speak that has become all too common, the Bush administration initially argued that, through reform of the process and the elimination of bureaucratic red tape, they would actually produce a more efficient and effective Superfund program despite the apparent curtailment in funding that would result from their policy focus. Corporate liabilities and industry specific taxes were actually an impediment to clean up efforts, according to Bush administration officials (although it is worth noting that former head of the EPA Christie Todd Whitman resigned her post in the early going over this and other disagreements with the Bush team). The evidence, of course, suggests that these sanguine, even panglossian, predictions were not borne out by the facts on the ground.

True to the warnings of environmentally concerned citizens and politicians much maligned as scaremongerers by administration officials, the current system of funding is woefully inadequate to meet the needs of present and future environmental disasters. Adding to the problem are the current budgetary realities. In the midst of multiple resource draining military endeavors, and in a climate of staggering budget deficits and greatly reduced tax revenue, it is more difficult than ever to secure funding from an ever dwindling stream of general tax funds. Now, it is easier for Congressional Republicans and the White House to feign concern over the Superfund's goals, while claiming their hands are tied by the lack of tax revenue and the need for fiscal discipline. The canary in the mine shaft of starve-the-beast budgetary politics has just perished. Is anyone paying attention?

The logic-defying leap of faith promulgated by the Bush team to allay the concerns of the public regarding the funding of environmental clean up, is reminiscent of a larger pattern in this administration, and possibly portends of a grand strategy for ultimately shrinking the size of the federal government to relatively miniscule proportions. For example, the same rationale can be seen in the justifications for the Bush economic policies that claim that the massive tax cuts will actually reduce deficits through the ramped up collection of taxes resulting from increased economic activity spurned on by the tax cuts.

This inverted logic was described by former Nixon Commerce Secretary, Peter G. Peterson, in his recently released book entitled Running on Empty: How the Democratic and Republican Parties Are Bankrupting Our Future and What Americans Can Do About It: "No matter which taxes are reduced, and no matter how far, Bush's economic team is inclined to believe - and of course his political team agrees - that reducing them still further will ultimately raise more revenue. . .This tax cut ideology is not fact-driven. It is faith-driven." [emphasis added]

Again, with the record deficits as Exhibit A, the overwhelming heft of empirical evidence militates against the Bush economic team's prognostications. Although enormous deficits and big spending initiatives seem counterintuitive to an overall policy goal of shrinking the federal goverment, therein lies the brilliant sleight of hand. A frontal assault on Medicare and Social Security is almost impossible to mount, and certain political suicide for those that try, but perhaps there is another way. If an administration were able to so greatly diminish the revenue stream through far reaching permanent tax cuts while encumbering the government with spending obligations (Iraq, prescription drug benefit, etc.), they could create a fiscal crisis that requires drastic countermeasures, especially in regard to entitlement programs on the verge of feeling the baby boomer strain. Just like the Superfund's diminished priority, that potential economic climate would necessitate tough decisions, even on seemingly sacrosanct programs such as Social Security and Medicare.

As with the ability to secure Congressional disbursements for the Superfund, will the Republicans in Congress and the White House soon be allowed to plead that in relation to gutting Social Security and Medicare, the circumstances made them do it? Will the American people allow the same politicians whose policies ran up the deficits and shrank the revenues necessary to pay them down, claim that the deficits are to blame for the impending massive cuts to entitlements, and not their own fiscal policies?

Make no mistake, with Iraq continuing to hemorrhage money, and the President intent on making his reckless tax cuts permanent, the arguments of fiscal necessity are coming and they will threaten the prolonged life of Social Security and Medicare, especially with the imminent retirement of the baby boomers. Grover Norquist's long sought after starve-the-beast showdown is on the horizon, and it will be carried out under the guise of the circumstances being beyond the control of the politicians. In fact they will blame the entitlements themselves for being unsustainable. Will the so-called liberal media remind them of the road taken to the fiscal crisis?

There is a saying that if you drop a frog into boiling water, it will leap out immediately feeling the shock to its nervous system. But if you place that same frog in tepid water and bring it to a boil slowly, the frog won't react to the gradual change in temperature and remain in the water until fully cooked. In the fiscal sense, we are in the midst of a slow boil.

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