Obama budget could chill expansion – US chemicals sector

13 February 2012 23:50  [Source: ICIS news]

WASHINGTON (ICIS)--US chemical industry officials on Monday warned that President Barack Obama’s proposed budget for fiscal year 2013 could undermine the nation’s chemicals sector just as it is poised for new growth.

The American Chemistry Council (ACC) said that elements of the Obama administration’s fiscal 2013 budget could make it more difficult for petrochemicals producers and downstream chemical makers to expand, compete globally and generate more domestic jobs.

The White House issued Obama’s proposed $3,800bn (€2,888bn) budget proposal earlier on Monday.

“The budget proposal reinstates Superfund taxes, which could put an end to new investments, plants and job creation just as chemistry is driving a revival in US manufacturing,” the council said.

The Superfund law – the colloquial name for the Comprehensive Environmental Response, Compensation and Liability Act (CERCLA) of 1980 – was established to enforce contamination clean-up at waste dumps and other sites.

CERCLA remediation costs were to be borne by those most responsible for the pollution - or by taxpayers in circumstances where direct responsibility could not be established.

As part of CERCLA, a special corporate tax on chemical makers was established to generate additional revenue for the main taxpayer-sourced Superfund, but that so-called Superfund tax was allowed to expire after 15 years at the end of 1995.

The Obama administration tried to get the Superfund tax on chemical makers reinstated last year and in 2010, but Congress rejected both bids.

“Adding new taxes on industries that drive our economy is no way to in-source American jobs,” the council added, referring to the proposed resumption of Superfund taxes.

The council also was critical of the White House budget proposal for more funding to encourage wider use of natural gas in the transportation sector.

The council argued that the nation does not need “yet another new, taxpayer-funded programme to support a thriving industry”.

The budget appears to fund more conversion of trucks and other fleet vehicles to natural gas instead of gasoline or diesel fuels.

But the council noted that the natural gas vehicles market is already growing rapidly and does not need a federal stimulus or subsidy that in turn “could easily lead to higher costs for natural gas and electricity – both critical to American manufacturers”.

The White House budget proposal also came under fire on Monday from US oil and gas interests.

Obama’s budget is not likely to get much traction in the Republican-controlled US House of Representatives. That chamber has initial authority for and control of the federal government’s annual budget process.

A popular Capitol Hill political dictum is “The president proposes but Congress disposes”.

($1 = €0.76)

Paul Hodges studies key influences shaping the chemical industry in Chemicals and the Economy

By: Joe Kamalick
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