Ah, to be in the U.S. economy of 1990s, a decade when the gross domestic product grew by about one-third and unemployment dropped from 7.5 percent to 4 percent. In 1993, the federal government raised the tax on gasoline to 18.4 cents per gallon, an increase of more than 30 percent from the previous year, and business boomed.
Since then, the cost of a gallon of unleaded gasoline has more than doubled, yet the per-gallon federal excise tax has remained unchanged. States have raised their fuel taxes to keep up as best they can with local transportation needs, but the federal government's source of revenue has stagnated, a problem worsened by the fact that people are driving less and using more fuel efficient vehicles.
The result? The Highway Trust Fund has run dry, and the nation's transportation infrastructure has suffered. To simply keep up with basic needs, Congress has been forced to supplement it with billions of general tax dollars — money that might have otherwise been used to pay down the debt, offset sequestration cuts or fund other myriad priorities.
In the House this week, a bill was introduced that would raise the tax by 15 cents per gallon. That would, more or less, allow the tax to at least keep up with inflation (falling a bit short as a percentage of fuel costs). It has been endorsed by AAA, and it's a safe bet that many in the business community, in the labor unions and local government would like to see it approved as well. Reducing congestion and keeping up the transportation network is vital to the economy.
Yet it's also safe to assume the bill has absolutely no chance in the GOP-controlled chamber. So inviolate is their no-tax pledge that conservatives would rather see the nation's economy wither than be caught raising a tax that is so obviously in need of updating.
This is a classic case of cutting off one's nose to spite one's face. Critics can point to transportation dollars that have been wasted, allegedly, on projects that are under-used or built too elaborately or required their contractors to pay their workers a living wage. But collectively, such waste (and we use that term loosely since many of these complaints are misplaced) is negligible, even microscopic, compared to the enormous transportation needs.
According to the American Society of Civil Engineers, the U.S. needs to invest about $2.7 trillion in transportation and other infrastructure by 2020 if the nation is to remain globally competitive. Yet the federal trust fund has become so depleted that experts say it won't be able to meet existing obligations in 2015, let alone take on new projects.
To leave the next generation a pot-hole strewn, overcrowded and unworkable transportation system would be as disastrous and as economically crippling as any budget deficit. And, as history has demonstrated, raising fuel taxes does not kill jobs. Indeed, most industrialized nations tax fossil fuels at a much higher rate.
One can argue that in the future, the U.S. must gravitate toward a system of financing transportation that is not so dependent on gas taxes, perhaps one that taxes by miles traveled instead of fuel consumed. As a recent U.S. Public Interest Group report notes, Americans are driving less and depending on public transportation more — yet we don't have the resources to accommodate this transition.
It's also reasonable to look for more public-private partnerships and other creative ways to finance airports, ports, highways, trains, light rail and other modes of travel in the future. But that is not nearly enough. The bottom line is that the country is already falling behind, and realistically, raising the federal gas tax must be part of the equation.
Would raising the tax also increase the cost of fuel? Absolutely, but that's not necessarily a bad thing. As studies have shown, getting stuck in traffic is even more costly, and Americans are doing a lot of that these days. As a recent Texas A&M Transportation Institute study found, congestion is already costing the average American an extra $818 per year. As distasteful as raising gasoline costs may sound, it's a lot better than the alternative of neglecting the roads, bridges and rails — or expecting some other miracle to come along.
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