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Sunday, December 4, 2016

Tea Party Gas Tax Fix Is Bad Economics, Worse History

Aug. 23 (Bloomberg) — If the debt-ceiling showdown made your blood boil, if the shutdown of air-traffic-control work related to the airline-ticket tax drove you crazy, then you should unplug your TV and power down your computer in late September, as the deadline for extension of the federal gasoline tax draws near.

Because while President Barack Obama and most experts are pushing for a greater federal investment in roads and infrastructure to create jobs and strengthen our economy, a growing minority in Washington wants to end the federal gas tax and phase out funding for new construction under the federal roads program. That’s right: A sizable chunk of Republicans, led by Senator Tom Coburn of Oklahoma and Representative Jeff Flake of Arizona, want to abolish the tax that pays for the federal highway program and replace the whole system with one overseen by individual states.

This insurgency, inspired by the Tea Party, reflects flawed thinking on economics, transportation policy and even American history.

Like many other excise taxes, the federal highway tax comes up for periodic renewal, which is usually noncontroversial. But not this time. If Congress doesn’t act to renew the tax by Sept. 30, gas stations all over the country have to stop collecting it; the highway trust fund will never get the money; and new work on federal highway projects will come screeching to a halt.

Costs and Layoffs

A delay of just 10 days in renewing the tax would mean the permanent loss of $1 billion in highway funding (and layoffs for thousands of workers). Longer delays would measurably increase the national unemployment rate.

Although the gravest threat to renewal of the tax was removed last week, when anti-tax czar Grover Norquist ended weeks of uncertainty and dropped his opposition to a short-term extension, Tea Partiers and their allies on this issue haven’t given up the fight over ending the tax; if they can’t abolish it outright just yet, they’ll push to allow states to opt out.

Incredibly, the system of highway financing championed by Republican President Dwight D. Eisenhower six decades ago is a target for today’s Tea Party-influenced Republicans.

The economic impact of this radical position would be disastrous. Although it’s true, as I’ve written, that federal road programs create fewer jobs-per-dollar than they did generations ago (due to better equipment and technology), hundreds of thousands of Americans still draw paychecks working on such projects — and their paychecks help keep countless sandwich shops, dry cleaners, barbers and grocers in business. Cutting off this vital source of employment now, or at any time when unemployment is elevated, would be a grave self-inflicted wound.

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