By the time you read this, Congressional Republicans will have overwhelmingly voted to violate one of their most cherished guiding principles: A service should be paid for by those who use the service. If we don’t fully pay for services, Republicans usually insist, markets can’t work effectively. We undervalue and overuse services, resulting in wasteful overspending.
All of which makes the debate about renewing and replenishing the months-long federal highway trust fund so revealing. This spring Republicans made clear their position: No new taxes. Rep. Dave Camp (R-MI), speaking for himself and his party declared, “I do not support, and the House will not support, billions of dollars in higher taxes to pay for more spending” on transportation.
Camp’s position might be reasonable if he and his fellow Republicans were at the same time willing to abide by another of their basic principles: Live within your budget. If you don’t have the money, don’t spend it. In this instance, if drivers are unwilling to pay the road budget then cut federal highway spending by 28 percent, which would reduce overall national road spending by about 7 percent.
But Republicans don’t want to cut road expenditures. They just don’t want drivers to pay. The result has been months devising strategies to divert money from other sources. In May, in a memo to rank and file House Speaker John Beohner (R-OH), Majority Leader Eric Cantor (R-VA) and Majority Whip Kevin McCarthy (R-CA) insisted they had come up with a perfect “way to ensure continued funding of highway projects in a fiscally responsible manner.” They would make up the highway-financing gap by eliminating Saturday postal delivery! To ensure that the roads are adequate for delivering the mail they will no longer deliver the mail.
Eventually Republicans decided that sacrificing the post office to ensure that drivers could use the roads more cheaply was politically unworkable.
By now I know many readers are asking, “What about Democrats?” After all, the House proposal was passed by a bipartisan vote of 367-55. True. But Democrats swear no fealty to the proposition that all services should, whenever possible, be fully paid by users. They believe I should pay for the public library even if I don’t use it. I should pay for the public park even if I don’t use it. They believe these are public goods available always to all. Republicans, or at least Republicans circa 2014 don’t seem to believe there are public goods.
Certainly some aspects of roads may be considered public goods. Even those who don’t drive may need them to deliver fire or police protection or ambulance services. Which would argue that some part of the road budget could justifiably come from the general public purse.
But the Republicans don’t make that argument. And if they did they would have to confront the fact that there are public costs as well as public benefits to roads. The environmental damages caused by driving, for example, far outweigh the taxes paid at the pump. To redress these damages some propose raising the gas tax by $1 or $2 per gallon or more. Republicans refuse to even entertain the notion. If they are so ideologically hidebound that they won’t even require drivers to pay for their roads, how could they possibly ask them to pay for the actual damages caused by their driving?
Republican have not always been willing to so quickly violate basic conservative economic principles. Prior to l956 highways were financed directly from the federal Treasury. Then in 1956, at the insistence of Republican President Dwight D. Eisenhower the Highway Trust Fund was established with revenue generated from a dedicated fuel tax. The original tax was 3 cents per gallon. Republican Presidents Ronald Reagan and George H.W. Bush each raised the tax by 5 cents per gallon. In 1993 President Clinton raised it by a little over 4 cents. And there, at 18.4 cents per gallon, it has remained for the last 21 years.
In 2008 the highway trust fund experienced a shortfall, a result of reduced driving due to sky-high oil prices. Congress made up the shortfall with $8 billion from general funds. In 2009 and 2010 Congress again supplied general funds.
The hope was that eventually Congress would develop a long term funding plan that would include a gas tax increase. In 2013 none other than the U.S. Chamber of Commerce supported such a move. The Republicans would have none of it.
Washington Republicans are not the only ones violating the user pays principle. The Tax Foundation estimates that overall state and local governments finance only 32 percent out of user fees. Federal funding brings this total up to 50 percent. The rest comes out of general funds. In the case of cities the majority comes from property taxes.
Recently states, Republican as well as Democrat have begun raising gas taxes. Eighteen states currently impose a gasoline sales tax whose revenue rises with gas prices or pegs the tax to the rate of inflation. But 16 states have not raised their gas taxes for two decades or more. Recently Wyoming raised its gas tax for the first time in 16 years. New Hampshire hiked its gas tax for the first time in 23 years. But states and cities have a long way to go before they could consider their transportation funding mechanisms self-sustaining.
By the time you read this, Congress may have jimmy rigged a temporary solution to the highway funding shortfall. Which means we get to have the same debate again next year. Perhaps Republicans will propose slashing food stamps or Medicare or Pell grants. Anything to avoid having to require those who use the roads to pay for the roads.
Image: Dan Reed, Creative Commons
