Congress Siphoning Billions <br>From Highway Funds <br>While Seeking Tax Hikes
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Last week I testified before the Senate Finance Committee on whether we need a federal gas tax hike. While most of the members of Congress and the army of lobbyists in the room wanted a higher gas tax, I argued emphatically no.
Congress and the lobbyists argue that the tax hasn’t been raised for 20 years and that the highway trust fund is running out of money. They say that the 18.4 cents a gallon federal gas tax will raise about $34 billion this year, but that isn’t enough revenue to cover all the spending Congress wants to do.
But here’s the dirty little secret that motorists aren’t being told: the so-called highway funding shortfall is a hoax. The federal gas tax raises plenty of money to finance the upkeep of the interstate highway system. Between 1984 and 2012, the capital spending for roads and bridges rose nearly three times the inflation rate. If the infrastructure is crumbling and bridges are falling down, it’s not because of too little money spent.
The problem is that Congress steals money from the highway trust fund to finance projects that have nothing to do with roads. Overall, about 20 cents of every federal gas tax dollars underwrites non-highway projects such as mass transit, bike paths, high speed rail, and bus lines. Think about that the next time you plunge into a watermellon-sized pot hole.
This year alone roughly $8 billion of highway trust fund money will be raided and used for mass transit projects. But by definition, if you’re in your car driving, by definition you aren’t using the mass transit system. So why should you have to pay for it? Mass transit is so lightly used, the impact on traffic congestion is tiny.
Then there is the federal Davis Bacon Act l that requires effectively a “prevailing wage” be spent on all federal road projects. This adds as much as 20 percent to the cost or building a road. We could get a free bridge for every five we build, if we could repeal this sop to the unions.
If Congress would implement these two measures alone they could fully fund the interstate roads America needs.
Every study shows that the middle class is financially-squeezed right now. A good rule of thumb is that every penny rise in gas prices at the pump takes about $1.5 billion out of the wallets of motorists. So a 10-cent or 20-cent gas tax will take between $15 billion to $30 billion from mostly working class consumers. That’s a massive negative stimulus to the economy at a time of stagnant wages.
No wonder that in Michigan this year, 80% of voters rejected a ballot initiative to raise gas taxes to pay for roads.
What is true is that America needs more roads because congestion is getting worse each day and this is a clear economic drain on the U.S. The average American worker must work the equivalent of an extra week a year (37 hours stuck in traffic congestion) due to crowded roads and highways. That means building the roads we need and ending the white elephant projects like the $70 billion high-speed rail project in Calfornia that few Golden Staters will ever ride.
The bottom line: rather than raising taxes, Congress must insist that every penny raised by the gas tax is used to improve the roads in America. The gas tax is supposed to be a user fee to pay for roads. Right now it pays for Washington waste. The gas tax hike isn’t about roads, it’s about Congress making another bipartisan raid of taxpayers’ wallets. Have a nice summer vacation.
Mr. Moore is a senior fellow at the Heritage Foundation.