Road Hazard: How The Embarrassing’ Gas Tax Impasse Explains Washington
by Alec MacGillis ProPublica, July 22, 2015, 5 a.m.
This story was co-published with Politico.
In 1993, the Dow Jones industrial average was still well under 4,000, the best-selling car in the country was the Ford Taurus, and the average cost of a Major League Baseball ticket was under $10.
That was also the year that Congress last raised the federal tax on gasoline.
The gas tax pays most of the tab for America’s federal highway program; it’s what we rely on for new highways and for the bridge repairs that keep us safe. Those costs go up every year, but the tax remains stuck at 18.4 cents per gallon. In fact, it’s effectively going down: since it was last raised, those 18.4 cents have lost more than a third of their value to inflation, and at the same time drivers with fuel-efficient vehicles have been buying less gasoline, further reducing the federal take.
As a result, the main U.S. spending account for infrastructure has fallen deep in the red, and the gap gets worse every year. The government, through a series of funding tricks, keeps the Highway Trust Fund on life support with short-term emergency patches. The latest infusion expires at the end of the month, and the argument about how to fix it is coming to a head this week.
The uncertainty has frozen major projects around the country, from the widening of Route 1 in Delaware to the Kalispell bypass in Montana, while maintenance and repairs are long overdue on thousands of roads and bridges dangerously near the end of their expected life spans.
That Congress can’t fulfill such a basic purpose of government stands out as a signal example of Washington dysfunction. Unlike some other stalemates, though, this one can’t be blamed on special interests at loggerheads. Nearly all the lobbies that take an interest are in favor of simply increasing the tax 2014 big business, the road builders, the unions, even the truckers. Lobbies that might oppose an increase, notably the oil industry, have invested relatively little in the debate.
Instead, it’s an example of those big decisions that get trapped in a kind of ideological crevasse. Because it’s a tax, raising it has been decreed out of bounds by a combination of anti-tax orthodoxy among conservative Republicans and a fear of political backlash that spans both parties.
Still, there may be a way out of the trap. A slew of states around the country 2014 including some led by conservative Republicans 2014 have managed to raise their state gas taxes to address the transportation burden without triggering the fury of taxpayers. The contrast is an unflattering one, says former Pennsylvania governor Ed Rendell, a Democrat and a leading proselytizer for infrastructure spending.
“If the gas tax could be voted up or down on a secret ballot, it would get 285 yes votes in the House and 85 or 90 in the Senate,” says Rendell. “Everyone knows we need new revenue, everyone knows we can’t let the trust fund go broke 2026 Everyone knows this is one of the most embarrassing chapters in the history of the U.S. Congress.”
What’s gone so wrong?
It sounds strange now, but the gas tax was born and built up under Republican presidents. The U.S. government has been picking up a part of the highway tab for nearly a century 2014 since 1916, when, in an era of Model T’s bumping over rutted country lanes, the bluntly named Good Roads Movement gave rise to a law providing federal money for any rural routes used for U.S. mail. Fuel taxes started around the same time, but only at the state level.
When the federal government adopted its own penny-per-gallon one in 1932, under President Hoover, it was intended for deficit reduction, not roads. It was only when the tax was raised to 3 cents under President Eisenhower in 1956 2014 with an additional cent added on in 1959 2014 that it was targeted for the new interstate highway system and the Highway Trust Fund that would finance it.
In a country that loves big cars and views cheap energy as a national birthright, the gas tax was never going to be beloved. After several failed attempts to raise the tax in the 1970s as a means to spur fuel conservation and fight inflation, it was left to Ronald Reagan, of all people, to push through the next increase, in late 1982.
With the economy still sluggish after Reagan’s steep income tax cuts in 1981, “they were facing $200 billion deficits as far as the eye could see 2026 and the administration was desperate to find some way to close that gap,” recalls Kenneth Schwartz, a career employee in the Office of Management and Budget.
Just before the 1982 midterm election, Reagan had ruled out a gas tax increase “unless there’s a palace coup and I’m overtaken or overthrown.” But shortly after the election, he and his budget director, David Stockman, settled on a five-cent increase in the gas tax (or “user fee,” as Reagan preferred to call it) proposed by House Ways and Means Committee Chairman Dan Rostenkowski, the Illinois Democrat. The increase, Reagan said, would be “less than the cost of a couple of shock absorbers.”
The proposal had bipartisan backing from Hill leadership. In the House, well over half of Republicans voted for it. The Senate passed it 54-33.
That political landscape was already shifting when Washington took up the tax again less than a decade later. As part of George H.W. Bush’s big deficit-reduction package of 1990 2014 in which he violated his “read my lips” pledge 2014 the gas tax was raised by another nickel. This time, it didn’t win over a majority of House Republicans: just over a quarter of them voted for the increase. The partisan divide ratcheted several notches further three years later when President Clinton, after initially proposing a broad-based “BTU tax” on all forms of energy, included a 4.3 cent gas tax increase in his 1993 deficit-reduction package. It passed without a single Republican vote.
The following year brought the electoral earthquake of 1994 that made Newt Gingrich House Speaker. Two years earlier he’d been the only Republican in Georgia’s 10-member House delegation. Now he was one of eight. Among the lessons drawn by Clinton and other Democrats from this wipeout was a deep wariness about fuel taxes.
The lesson was no less clear to Clinton’s successor, whose father had been pilloried among Republicans for the 1990 increase. Schwartz says that it was impressed on him and his OMB colleagues under President George W. Bush that a gas tax increase was not to be discussed.
While the flow of money from the gas tax was flat-lined, spending wasn’t. Congress kept pressing for bigger highway bills. “They weren’t raising the revenues,” says Schwartz, “but they were raising the authorizations.” After 2000, lawmakers turned to one-time budget gimmicks and spending from general revenues to plug the gap, thereby driving up the deficit.
Liberals have a handy culprit to explain why the gas tax hasn’t budged since 1993: Grover won’t allow it. Republicans, the story goes, have developed such fealty to the anti-tax pledge rolled out by Grover Norquist’s Americans for