With oil prices hovering at historic lows, the time seems ripe for a long overdue increase in the 18.4 cents per gallon federal gas tax to address the nation’s crumbling infrastructure.
Leading Senate Republicans including John Thune of South Dakota and Bob Corker of Tennessee have actually argued that with gas prices below $2.50 per gallon, Americans can afford to leave a few more cents per gallon at the pump to help fix highways and bridges and launch other major construction projects.
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But the combination of the Tea Party rebellion against House Speaker John Boehner (R-OH) and solid opposition from outside conservative groups may have struck the death knell for a tax increase to replenish a Highway Trust fund that’s been running on fumes.
Boehner is still recovering from a near-crushing blow on Tuesday when 25 far-right members opposed his reelection to a third term as speaker and nearly blocked his first-ballot victory. He strongly signaled Thursday he would not go along with a Senate bipartisan effort to raise the gas tax for the first time in two decades. Influential conservative groups including the Heritage Foundation and the Club for Growth adamantly oppose a hike as do many House conservatives.
“I’ve never voted to raise the gas tax,” Boehner said at a news conference. “Funding the highway bill is critically important – it’s a priority for this year. How we will fund it – we’re going to have to work our way through it.”
The speaker didn’t totally rule out a gas tax increase as part of some larger tax code overhaul aimed at lowering income tax rates: “There’s a lot of ideas. We’ve got to find a way to deal with America’s crumbling infrastructure, and we need to do it in a long term program that is, in fact, funded.” However, Michael Steel, Boehner’s spokesman, later clarified the comments in an e-mail to The Washington Post: “The Speaker doesn’t support a gas tax hike. Period.”
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David McIntosh, president of the fiscally conservative Club for Growth, told Newsmax TV that Boehner was right to throw cold water on any Senate notion of a gas tax hike. Stephen Moore, chief economist at the Heritage Foundation, wrote shortly after the Nov. 4 election, “The only Republican across the country who lost this week was [Gov.] Tom Corbett of Pennsylvania. He infuriated conservatives by raising gas taxes.”
The federal gas tax has been frozen at 18.4 cents per gallon since 1993 without being indexed for inflation. The key reason? The political cost of a boost in a commodity that scores of American voters buy on a regulator basis. As Boehner pointed out yesterday, Democrats were unable to get the votes necessary to raise the gas tax in the past – so why should anyone expect the GOP leadership to do any better?
Yet the failure to index the tax to inflation has meant that the revenue it brings in covers fewer costs connected with maintaining and upgrading the U.S. highway system, as previously reported here.
With the legislation providing interim funding for the Highway Trust Fund expiring in May, some lawmakers believe it’s time for an increase.
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Corker told CNBC this week that this would be “a heavy lift.” But instead of “kicking the can down the road,” he said Congress must face the need to permanently bring the gas tax more in line with states’ demands to maintain and expand the nation’s infrastructure.
“What Congress has done five times since 2008 is literally generational theft, just stealing from future generations out of the general funds to pay for infrastructure because Congress is going to fund infrastructure but not in the appropriate way,” Corker said in the interview.
Revenues from the federal gas tax have been eclipsed by transportation costs – to the tune of about $16 billion a year in recent times. Construction costs have risen while motorists with more fuel efficient cars buy less gas. The current level of federal spending on transportation is about $50 billion per year, compared to about $34 billion a year in revenue from the gas tax.
Corker and Sen. Chris Murphy (D-CT) have suggested raising the gas tax user fee by 12 cents over a two-year period and offsetting it with reductions in other taxes that Americans would pay. “So it’s revenue neutral, but at least it would put our infrastructure on strong footing,” Corker explained. The plan would also peg the level to future inflation.
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Support is building. Senate Environment and Public Works Committee Chair James Inhofe (R-OK) said this week, “Everything is on the table,” including a gas tax increase – though he prefers to call it a “user fee.”
But Senate Majority Leader Mitch McConnell (R-KY) said this week he was opposed to any gas tax increase. House Minority Leader Nancy Pelosi (D-CA) also said she would oppose the idea if it were linked to a larger package of income tax relief for wealthier Americans. But she did say as well: “How do you relate the gas tax to the Highway Trust Fund? That’s the relationship that is real… I do think if there’s ever going to be an opportunity to raise the gas tax, the time when gas prices are so low, oil prices are so low, is the time to do it.”
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