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Don’t ‘Drill for Roads’
Two reasonable policies shouldn’t intersect.

By Marc Scribner


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Congress is well known for going down roads to nowhere. In the case of the upcoming highway-bill reauthorization, that may be true in a more literal sense. On this occasion, it is Republican members who have come up with a misguided piece of highway robbery that breaches their own longstanding principles. House Republicans have proposed expanding domestic fossil-fuel extraction on federal lands and in offshore areas, and depositing much of the royalty revenue into the federal Highway Trust Fund.

While “drilling for roads” may sound appealing to many conservatives (and expanding domestic energy production should certainly be a top legislative priority), it is short-sighted. Incorporating this new revenue stream would undermine a longstanding funding principle of the Interstate Highway System — that highway users ought to pay for their use of highway infrastructure. This should concern anybody who cares about the future health of our nation’s highways.

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The federal government has been involved in comprehensive highway funding since 1916, the year which saw the passage of the Federal Aid Road Act. In 1932, Congress enacted the first federal gasoline excise tax as a deficit-reduction measure. In the early history of federal aid for highway building, use had no direct impact on infrastructure investment, which was instead funded by general revenues. This arrangement resulted in a low-quality highway network and highly politicized fights over road appropriations. It was not until the 1956 Highway Revenue Act, coupled with the creation of the modern Interstate system, that Congress attempted to remedy these problems by directing fuel-tax revenues into the new Highway Trust Fund.

The Highway Trust Fund is largely shielded from the politicized appropriations debates that afflict most federal spending. Relying on highway users is the fairest way to fund the Interstate system. Payment is proportional — if you drive more, you pay more. Charging users also ensures a reasonable level of funding predictability, because highway use does not change wildly in the short run. And given that user-tax revenue roughly tracks road use, it provides an important signal as to how much infrastructure investment is needed to maintain a desired level of efficiency. Highway users pay the tax, but they are also the beneficiaries of the resulting investments and improvements.

During the 35 years that it took to build the Interstate system, fuel taxes provided an adequate source of pay-as-you-go funding. As a result, America built its modern superhighways without adding to the national debt. In 1982, Congress authorized that a portion of fuel-tax revenue be dedicated to mass transit. It was at this time that the user-pays/user-benefits bond began to weaken.

Fast forward to 2011, and the Highway Trust Fund is facing insolvency. The last time Congress raised excise taxes on fuel — currently set at 18.4 cents per gallon of gasoline and 24.4 cents per gallon of diesel — was 1993. Inflation has reduced its buying power by 40 percent, annual vehicle-miles traveled have increased by 30 percent, and mass transit now siphons off one-fifth of highway user-tax revenues.

A quick, temporary fix would be to raise federal fuel-tax rates, but this is a political non-starter in the current political and economic climate. If House Republicans are truly serious about improving our nation’s highway infrastructure without increasing federal tax rates on fuel, they could devolve more transportation funding responsibility to the states and support more tolling. They could also rein in the waste and abuse of highway-user revenues at the hands of pro-mass-transit special interests and their enabling politicians.

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COMMENTS   11

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A HE
   12/09/11 08:35

No, highway funding does need to change.

States and cities should be responsible for almost all of the funding because the majority of highway use is local.

Mass transit use is almost entirely local and should be paid exclusively by people who live in the area that built it and not by people living outside major metropolitan areas. All other mass transit systems would go away, as nobody uses them outside of New York, Chicago, Washington DC and maybe a few others.

Anyway, those cities should pay for their own mass transit.

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Alan Mackenthun
   12/09/11 12:31

I completely agree. I can see the federal government providing some support for the interstate highway system since it has a substantial impact on interstate commerce. Mass transit has almost nothing to do with interstate commerce and should be strictly a local issue.

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 SC
   12/09/11 12:08

Privately-run mass transit is making a great comeback without any government support as Michael Barone pointed out a few months ago (External Link ).

A He is right that gov't should not be funding mass transit out of the highway infrastructure fund. He is wrong to dismiss mass transit out-of-hand. Where there is a true need, entreprenuers will find a way.

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 SC
   12/09/11 12:15

The biggest problem I think with the highway trust fund is the mis-prioritization on new construction rather than maintenance. It's much more appealing to politicians to have a bridge named after oneself than to fix the potholes!

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Alan Mackenthun
   12/09/11 12:39

The republicans proposal here is terrible. Using a federal gas tax to finance the interstate highway system makes good sense. The justification being that the interstate highway system supports and protects interstate trade which is a legitimate function of the federal government. Raiding the federal gas taxes to finance mass transit bastardizes the tax into supporting local transit alternatives that have almost no impact on interstate trade. Local transit as well as all local transportation issues should be dealt with at the state and local levels. Eliminate the federal funding of transit and the problem is solved. As it's clear that even the fiscally responsible (ha ha ha) republicans can't bear to cut a program, why not use any new drilling revenue for mass transit and rededicate the gas taxes to highways?

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   12/09/11 13:50

We need to start now with a gradual increase of the gas tax to fix America's crumbling infrastructure. A side benefit will be the signals that is sends to consumers so that when oil spikes back up our economy is ready.

Oil will be heading towards $200 a barrel before this decade is out (between supply constraints and increasing demand from China and India). If we don't start now with the transition, there will be HUGE headwinds to the economy.

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markenoff
   12/09/11 15:28

Your comment doesn't make sense. Unless the gas tax that is increased now is reduced as market forces increase the real price of oil, the headwind you talk about will still exist.

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   12/09/11 16:17

No, because people will be switching to more fuel efficient (or less energy intensive) modes of transportation.

They key is to give people time to do so, instead of the sharp run up like we had in 2008.

Our country is built to run on cheap oil. But those days are gone. And it's going to take a while to get things back on track.

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   12/10/11 20:41

Rather than increasing the burdens we're already under thanks to the Obama Depression by hiking gas taxes and forcing us into smaller, unsafe cars, here's a thought: remove all the restrictions that have made cheap oil a thing of the past. The current high price of oil is due to the government, under the control of environmental extremists, artificially constricting the supply - nothing else.

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   12/09/11 15:58

Another "lockbox" looted. I'm not surprised. Plug up the mass transit fund siphoning; it's not part of the highway system. Raise the taxes. Conservatives are not against all taxes, just most, especially when we don't know where the money is going. In this case, I'm okay with "taxing for roads" because it seems to be within the scope of the Constitution. Shame on the Repubs who escape their fiduciary responsibilities to a trust by replacing it with another general slush fund.

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   12/09/11 16:45

Socialism in defense of pork is not extremism. Or something like that.

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