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Saturday, October 22, 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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  • kurt.lorentzen

    Most of what you say is true in that federally funded jobs will be lost, and it doesn’t seem as though we can afford any tax cuts at this stage of the economic meltdown. But there are some positives – lower transportation costs will curb food price inflation. And there are some neutrals – States will still have to maintain roads, so those jobs would have to be picked up by state funding. The biggest problem I have with things like this is that they functionally constitute an unfunded mandate. In the end States woud just have to increase taxes to replace what was lost, and there would be a shortfall during the gap (leading to poorly maintained roads and more people on unemployment). As long as the Federal programs are living within the means of their tax revenues, it’s just moving the coin from the right pocket to the left. If the feds are subsidizing from other sources, then I would favor replacing anything that constitutes Federal deficit spending. It just has to stop.

  • 1archie1

    Initially, I would like to suggest that we drop the Tea Party phrase and instead call it as it is, the Koch Brothers Party. Secondly, the Federal Gas Tax is necessary, as noted, to maintain trans-state commerce, not to mention to guarantee national security. I do believe more close scrutiny needs to be held on all federal spending, from the design of federal projects to the construction of them. We have all heard of the outrageous cost run ups in the federal world, from the civilian to the military. Perhaps a good way to do that oversight would be to have the judicial system involved, and have judges looking at projects outside their state jurisdictions.

  • RichardBernierFuller

    I have to question Kurts driving experience on poorly kept roads and highways. The vehicle maintenence increases astronomically just for starters and the over the road time increases in parrallel. They refer to them as 18 wheelers for a reason and destroying very expensive tires in half the time or less is not necessarily cost effective. Lower transportation costs will be out of the question and higher food costs will result. Lower MPG will add to the costs. As suggested lower populated states will not have the tax base nor popular will to sustain rapidly deteriorating highways as the trucks and cars pass through their domain. The National Highway Network is already deteriorating rapidly under current conditions. We cannot postpone the inevitable.

  • JOCK

    Getting rid of the gas tax would be ridiculous. America needs good roads. Richard hit it on the head when he talked about the time and maintenance on vehicles driving on roads not maintained. Also no one is taking in the safety factor of the accidents which could occur and the added deaths that may occur because of tire failure and people losing control of their vehicles. Possible if wages were kept at a reasonable level more work could be done and more people could be put back to work.

  • SlyRobber

    You all know what this really is all about? Right? You all better extinguish this madness and soon or I think Canada and even Mexico will be acquiring new territories when these more sovereign states start to feel disenfranchised and starved for functioning funds by this dystopian neo-con dream of refighting the Civil war. I as a Canadian and Quebecer look forward to annexing Main, New Hampshire and Vermont. Why not upper New York this state of affaires will right a historical wrong and give back territories lost during the French Indian wars. Who knows how this will work out in sparsely populated stated in the west and even Cascadia on the west coast. As for the Mexican boarder states well these rednecks would have to resort to crimes agaist humanity to keep from being absorbed by the Latino demographics that will eventually bring about the regaining of some of the dessert stares. After walmarts role back the prices this is like Kosh party role back history. Keep hacking at the national fibre it will benefit us, not the US, in the end.

  • JonSavage

    Already states are on the verge of bankruptcy – see Ny and Ca – without the stress of maintaining the roads – which here in ny – already r worse then our neighbors – like pa and canada – never traveled to mass or vt… But it would be nice for gas prices here in NY – which as a state are the highest in the nation –

  • dcole

    “The survey work for the first proposed national road was done by none other than George Washington. The early Congress funded a national road that traced a path similar to today’s Interstate 70, from Maryland to Indiana. Many veterans of the Revolutionary War, then serving in Congress, voted in favor of it. Even the anti-Federalist administration of Thomas Jefferson pushed the project; Albert Gallatin, Jefferson’s Treasury secretary, told the Senate: ‘No other single operation within the power of the government can more effectually tend to strengthen and perpetuate the Union.’”

    This is a powerful history lesson. We need a “strong union”. The Revolution was not fought to eliminate taxes. It was fought to eliminate “taxation without representation”. We do elect our representatives! We know we need to pay taxes to have a strong and secure country. The question is the fairness of the taxes and the efficiency of expenditure. Don’t ever vote for a candidate that wants to eliminate taxes–we need a strong government for our own safety and that of the rest of the world.

    To reiterate Ron Klain’s point–“Let’s not forget that the idea that brought those amazing men to Philadelphia in 1787 was to create a system of robust federal government and form a “more perfect union” — not just to leave the states to handle their needs on their own.”