Transportation Bill Gridlock: Is Doctrine Driving Our Country Into a Ditch?
Posted June 9, 2011 in Moving Beyond Oil
Perhaps the biggest block to creating a viable transportation policy for this country is the rabid anti-tax sentiment in Congress, which has essentially taken revenue increases out of the transportation debate.
Our transportation program is broke. For years, Congress has been taking billions of dollars directly out of the Treasury to prop up transportation funding. This makes our current transportation policy a direct and active contributor to our national debt crisis.
Our lawmakers know that the transportation program needs investment. Report after report, from groups as disparate as the Presidential Debt Commission, the Carnegie Endowment for International Peace, the Chamber of Commerce and the AFL-CIO, shows this to be the case. But the pervasive anti-tax ideology, as well as high gas prices, has Congress paralyzed.
This paralysis is surprising when you consider that the last president to raise the gas tax for the explicit purpose of investment in transportation was Ronald Reagan. Yes, in 1982, the staunchly anti-tax Reagan worked with a Democratic Congress to raise the gas tax by 5 cents a gallon. And he won the support of urban Democrats by ensuring that 1 out of those 5 cents would go to funding mass transit programs. That’s the kind of big-tent coalition building it takes to pass difficult but necessary measures.
This Congress would never raise the gas tax, but there are a couple of more politically palatable funding mechanisms that should be on the table. The first is a no-brainer -- repealing Big Oil’s massive tax breaks, which Congress is considering, and pouring that money into things like road and bridge repair and new transit capacity. The nonpartisan group Taxpayers for Common Sense says that from 2011 to 2015, oil and gas subsidies will top $31 billion. Wouldn’t that money better serve commuters than oil company execs with $50 million salaries?
Another funding solution I’ve testified to Congress about is an oil security fee. It’s not just enviros like me who are interested in this idea – libertarians and conservatives, as part of the Mobility Choice coalition, have signed on as well. Instead of taxing at the pump, we go right up to the wellhead or port-of-entry and charge a security fee to oil companies. This fee reflects the enormous national security costs of protecting our oil supply, which has in the past been funded, somewhat invisibly, by taxpayer dollars. An oil security fee would not only generate revenue, it would also more accurately reflect the true cost of gas.
America needs to find ways to fund a modern transportation network, or we risk driving this country into a ditch. Ronald Reagan knew that, and he worked with Congress to pass a politically difficult gas tax increase. Can this Congress break free of its dangerous, doctrinaire thinking and find ways to generate the revenue we so desperately need?
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Comments
Gilmer — Jun 10 2011 10:13 AM
Instead of jumping on any Congressional showboat legislation, which is exactly what I would call the "big oil subsidy" discusion, we should first discuss/figure out how much transportation funding is needed.
I am very wary when Congress starts spending alot of air time on an issue. Typically their hot air is spent on irrelevant, but sensationally sounding issues, not the real problems this country is facing.
Ken Orski — Jun 11 2011 11:19 AM
As we have heard from many different quarters, "the Federal Government
must learn to live within its means." For the federal transportation
program this means limiting spending to the tax receipts
credited to the Highway Trust Fund. Those revenues (plus interest)
amounted to $36.9 billion in 2011 according to the Congressional Budget
Office - $31.8 billion was credited to the Highway Account and $5.1
billion to the Transit Account. Over the next ten years,CBO estimates
these revenues will grow at an average rate of a little more than one
percent per year, largely reflecting expected growth in gasoline and
diesel fuel consumption. ("The Highway Trust Fund and Paying for
Highways," testimony of Joseph Kile, Asst. Director of CBO, before the
Senate Finance Committee, May 17, 2011). Over the six-year period,
2012-2017, tax receipts credited to the Highway Trust Fund (plus interest)
could thus be expected to amount to approximately $230-240 billion.
But the federal contribution constitutes only about 25% of the nation's
total surface transportation budget (40% of the capital budget). The rest
is provided by state and local governments. In other words, the nation
will still be spending more than $150 billion/year to preserve and improve
our highways, bridges and transit systems. That is why the transportation
community greeted the prospective reductions announced by the House Transportation and Infrastructure Committee with relative equanimity.
While a 30% reduction from the FY 2010 baseline sounds enormous, in
reality it simply would mean a return to the more "normal" pre-stimulus
funding levels. Nobody had found those funding levels inadequate at the time.
KEN ORSKI
Editor, Innovation NewsBriefs
Deron Lovaas — Jun 13 2011 10:02 AM
Thanks for commenting. First of all, I think we're in agreement that we need a realistic assessment of the overall NEEDED investment level in transportation infrastructure. I linked to some assessments, and there are others out there, that claim (with some analytical backup) that deferred maintenance, missing links between modes and overall capacity shortfalls warrant much larger per annum investment at all levels of government. A chasm separates what these studies say is needed and the revenue level for the current federal program, which is no surprise since the gas tax hasn't been increased in almost twenty years and we are thankfully finally making progress on reducing gasoline dependence.
I'm sure that reasonable, more fiscally constrained investment need lies somewhere in that huge gap, and hope for some assessment from the Congressional Research Service, DOT, an academic institution or some other credible source.
However, I'm pretty confident that the level needs to be higher - possibly much higher - than what's dictated by current revenue, especially given deficit-wracked localities and states as well as an increasingly energy-challenged and hyper-competitive global economy. Europe invests 2.5x what we do on transportation as a percentage of GDP. China? 4.5x what we do.
The federal government must continue playing a leading role in infrastructure repair and development and not just leave states and cities holding the bag, in spite of what one famous fool once said about wanting to "drown it in a bathtub." That will require more revenue, and a variety of options deserve consideration including re-direction of archaic oil industry subsidies.