09-28-2002
TRANSPORTATION: Presidents at the Pump
Read my lips: No new taxes. Those six words, uttered by George H.W. Bush
in 1988, opened the door to what some consider one of the biggest blunders
in modern-day presidential politics. Bush, of course, broke his promise
two years later when he signed tax increases-including gas-tax hikes-into
law. To this day, conservatives believe the flip-flop cost him his bid for
re-election in 1992.
Not surprisingly, George W. Bush has done everything possible to avoid
repeating history; in fact, he's become the kind of supply-sider that his
father once ridiculed. In June 2001, the younger Bush signed into law his
$1.35 trillion tax cut, the largest in a generation. And this summer, he
floated the idea of additional tax cuts for investors, although he later
backed away from the idea.
Yet no matter how hard Bush II has tried to distance himself from Bush I,
it's uncanny how his administration has so far mirrored his father's. The
economy has nose-dived. The country is gearing up for war against Iraq.
And now this: President Bush might be forced to raise taxes, especially if
members of Congress and Washington's pavement and asphalt supporters have
their way.
Last week, at a hearing before the House Transportation and Infrastructure
Committee, members of the influential highway lobby introduced their
various proposals for next year's big surface transportation
reauthorization bill. With traffic congestion already growing, and the
numbers of people and vehicles both projected to increase significantly by
2010, these interest groups argue that the government needs to invest more
in highways and mass transit. Indeed, they point to government reports
showing that the federal government must spend nearly $50 billion per year
just to maintain America's highway system. Current federal road spending
is $32 billion.
Since 1998, when the last surface transportation bill was signed into law,
highway spending has been directly linked to federal gasoline taxes and
other levies that flow into the Highway Trust Fund. And at last week's
hearing, several of the interest groups proposed that the best way to
boost highway spending is to increase the federal gas tax. The American
Road & Transportation Builders Association, for example, outlined its
"Two Cents Makes Sense" plan, which would raise the current
federal gas tax of 18.4 cents per gallon by 2 cents in each of the next
five years. ARTBA says its proposal would elevate highway spending to $60
billion by 2009. Meanwhile, other groups-such as the Associated General
Contractors of America-advocate tying the gas tax to the Consumer Price
Index, which would produce an estimated $15 billion in new revenue over
the next six years.
House Transportation Committee members, who have always supported
enlarging the federal highway program, received these tax-hike proposals
with open arms. "I think it's going to be very difficult to pass a
new transportation bill without new money," said Robert A. Borski,
D-Pa.
But many transportation observers argue that the chances of the Bush
administration supporting a gas-tax increase are about as likely as the
administration hosting a fundraiser for Planned Parenthood. These
observers maintain that Karl Rove, the president's chief political
adviser, would never permit Bush to do what his father did, particularly
with the 2004 election on the horizon. Pete Sepp, vice president for
communications at the National Taxpayers Union, told National Journal that
fiscal conservatives were already disappointed that Bush signed the
pork-laden farm bill-and they would be even more upset if he raised
gasoline taxes.
So far, the administration has signaled its opposition to a gas-tax hike.
"In this administration, I don't think that's an alternative that
would be considered," Transportation Secretary Norman Mineta told
reporters in June.
Nevertheless, transportation advocates point to a precedent of a
conservative, tax-cutting president eventually agreeing to a gas-tax hike.
Back in 1982, road advocates and the congressional highway coalition
pushed for a 5-cent gasoline-tax increase. Early on, President Reagan
scoffed at the idea. "Unless there's a palace coup and I'm overtaken
or overthrown, no, I don't see the necessity for that," he
said.
However, after prodding from the highway lobby, Reagan eventually
acquiesced and signed the increase into law. Since the tax money would be
funneled into the Highway Trust Fund, and thus ostensibly used for highway
improvements, Reagan spun the increase as a "user fee" rather
than a tax hike. "The program will not increase the federal deficit
or add to the taxes that you and I pay on April 15," he said in a
November 1982 radio address. "It'll be paid for by those of us who
use the system, and it will cost the average car owner only about $30 a
year. That's less than the cost of a couple of shock
absorbers."
In fact, advocates of a gas-tax increase argue that their current
proposals are similar to the 1982 increase, because all the revenue would
be funneled to the Highway Trust Fund. The Bush I gas-tax hike in 1990, on
the other hand, was partially dedicated to the general fund and to deficit
reduction. But the NTU's Sepp contends that spinning this increase as a
user fee won't work. "We'll make sure that we remind members of
Congress that a gas hike is a tax hike-no matter how you package it,"
he said.
Still, the Reagan precedent isn't the only reason why a gas-tax hike might
occur. The House Transportation Committee has traditionally had its way on
transportation funding issues. With 74 current members, the committee is
the largest on Capitol Hill, and its members are usually unified on
funding issues. As a result, the panel has been able to use its size to
influence leadership officials, especially when the balance between
Republicans and Democrats is so close. And at last week's hearing,
committee members were already flexing their muscles on a gas-tax
increase. "Let's take the White House on," Borski said.
"Let's take the leadership on."
Moreover, it's not easy for presidents to veto transportation spending
bills, since they contain so many goodies and pork for members of
Congress. Even if the final reauthorization bill contains a gas-tax
increase, Bush might have a hard time vetoing the measure. And if he does,
Congress might have the votes to override it. "It is very difficult
to veto a transportation bill," said Ed Mortimer, a lobbyist with the
U.S. Chamber of Commerce, which supports increased transportation
investment but remains undecided on a gas-tax increase. "When Reagan
cut his deal, it was cut right at the end."
Grover Norquist, an ardent tax cutter and president of Americans for Tax
Reform, says it's unlikely that Bush would agree to a stand-alone increase
in gas taxes, because the president-like his father-has pledged not to
raise taxes. But Norquist believes that some sort of compromise could be
worked out. "It is conceivable that you could do a gas-tax increase
with an income tax decrease somewhere else," he said.
Despite the conditions that might work in their favor, transportation
advocates still face an uphill battle to get a gas-tax increase signed
into law. In fact, after gasoline prices soared in 2000, they had to use
all their influence to roll back proposals to decrease gas taxes.
Consequently, these advocates have also proposed other, smaller, ways to
increase transportation spending. For starters, they would like to tap
into the balance of the Highway Trust Fund, which is worth about $20
billion. (Current statute prohibits tapping into this balance.) They also
want the government to fully tax ethanol-based fuel and direct all of
those revenues to the trust fund, which would raise $12 billion over the
next six years. (Presently, ethanol-based fuel gets a subsidy, and part of
the revenue from the ethanol tax is sent to the general treasury.)
But Washington's transportation interests aren't giving up on some sort of
gas-tax increase. ARTBA spokesman Matthew Jeanneret explains that his
group's strategy has been to trumpet its gas-tax plan early and loudly.
"We are talking about it, stimulating debate, and getting people to
think about it."
"We are not under any illusion. It's going to be a challenge,"
Jeanneret added. "It's the first quarter and we just kicked off.
We've got a long way to go." The question is: What is the Bush
administration going to do with the ball?
Mark Murray
National Journal
