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.

Misguided Policy

As transportation policy, the notion of the states taking over federal highway work is even more misguided. We have a national road system because we have national transportation needs — to move people and goods from state to state, region to region.

States with many miles of highways and few people are likely to have less revenue to keep up these national roads and less interest in doing so, because many of the goods and visitors are just passing through on their way to someplace else. Trucks carrying goods from Chicago to Seattle, Atlanta to San Francisco and Philadelphia to Los Angeles travel through large, lightly populated Mountain West states that may be unable to finance a world-class highway system for such long-distance needs.

Just “letting the states do it” puts our national transportation system at risk. The idea is so misguided that calling it a Third World transportation system is unfair to the Third World: Developing countries are virtually all striving to build the sort of national infrastructure that the Tea Party wants to unwind in the U.S.

Misreading History

Which brings us to the historical misunderstanding behind this anti-national crusade. Highway funding is one issue among many where the Tea Party movement has its historical perspective upside down. Our Founders were not opponents of a national road system; they were its very creators.

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.”

The highway-tax fight is a good moment for progressives to challenge the Tea Party — not just over economics and transportation policy, but also over what vision of America truly reflects the legacy of our Founders. 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.

(Ron Klain, a former chief of staff to Vice President Joe Biden and senior adviser to President Barack Obama on the Recovery Act, is a Bloomberg View columnist. He is a senior executive with a private investment firm. The opinions expressed are his own.)

Copyright 2011 Bloomberg

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