Tuesday, November 1, 2011

Coalition Wanted A Gas Tax Increase to Fund Infrastructure

From Politico:

For the first time in two decades, major transportation groups have banded together and made a request that, in other circumstances, would be considered crazy — “Tax us … NOW.”

But the answer from Congress and the White House has been a resounding “No!”

The players came together in 2009, and it was a strong coalition — the U.S. Chamber of Commerce, labor groups, cities, states and county groups banded together. Truckers also joined with the manufacturers whose goods they transport.

But it wasn’t enough. Pro-business Republicans ignored the Chamber’s advice. Democrats didn’t do what unions wanted. The White House, worried about the middle class in a bad economy, didn’t want to further burden working families.

“We are not going to raise the gas tax. I will be emphatic on that — we can’t,” Transportation Secretary Ray LaHood told Congress in 2009.

“You’d think that the courageous politicians would use that to hide behind and do the right thing, but they’re not,” Ruane said. “They’ve got political cover. We’ve created cover all over the place — they could blanket themselves from here to Los Angeles.”

Former Sen. George Voinovich (R-Ohio) said President Barack Obama missed his chance to increase the gas tax and pass a robust highway and transit bill.

“The president is talking about wanting to do something — but he missed the boat,” Voinovich said.
Voinovich is far from alone in his thinking. A number of transportation stakeholders were optimistic — in hindsight, overly so — about the prospects for strong federal funding of infrastructure.

“I believe that it was a missed opportunity,” Ruane said. “They did have the majority and they had the opportunity to pass a bipartisan bill with a robust funding level.”

What they could have done is fund the spending with a short-term increase in borrowing (remember, interest rates have been incredibly low for some time) and then tied a tax increase to an economic marker such as, "when GDP grows at over 3% for a period of X quarters, the gas tax will increase by Y and the funds will be specifically targeted to infrastructure."  But, that just wasn't going to happen.