At Last, the Final Chapter in the Black Liquor Saga


Brad Plumer reports that Congress had to play some pretty serious budget games in order to fund the two-year highway bill that it passed yesterday:

But what happens after two years? At the moment, it looks like the federal government will simply run out of money to fund the nation’s transportation needs….When 2014 rolls around, the trust fund will be broke. 

….Here’s how the $109 billion Senate bill got paid for. Right now, the gas tax is set to raise $72 billion over the next two years, according to the Congressional Budget Office. The Senate bill would also pull some money from the next 10 years of trust fund revenue to fund spending for the next two years. But there was a cost to all this gimmickry. According to the CBO, the Highway Trust Fund will go bankrupt in 2014.

And even then, there was still a $10 billion shortfall in the Senate bill. So they had to scrounge around for the rest. Some of the money — about $3.7 billion — came out of a separate trust fund intended to clean up leaking underground fuel tanks (which was originally paid for by part of the gas tax). Another $2.8 billion came from ending the tax deduction for “black liquor,” a byproduct of paper manufacturing. Another $743 million came from revoking passports for people who owe $50,000 in back taxes. The IRS got some more money to collect delinquent Medicare taxes and transfer some tariffs into the Highway Trust Fund.

Black liquor! You should read Brad’s post to learn more about the Highway Trust Fund shenanigans, but really, I’m highlighting this because it gives me an excuse to link to one of my favorite little stories of all time: Chris Hayes’ 2009 piece about a federal tax credit for black liquor. I don’t want to give away the punchline, though. “Once in a while,” Chris wrote, “I hear a story that gives me the queasy feeling that I’m nowhere near cynical enough.” That was the story of black liquor. Do yourself a favor and go read it.

UPDATE: I spoke too soon. Commenter veeger explains:

Actually, the black liquor provision got dropped from the final agreement after GOPers and Dems alike objected to it. Plumer must be looking at the version of the tax title that was reported out of the Senate Finance Committee. The provision was removed between the committee and floor action.

Sigh. More background here.

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