Obama likely to steer clear of gas tax hike in SOTU

by Keith Laing, The Hill Newspaper
1/20/15

President Obama is likely to steer clear of mentioning the idea of raising the federal gas tax in his State of the Union address on Tuesday night.

Talk of raising the 18.4 cents per gallon gas tax to help pay for new infrastructure projects dominated the opening days of the 114th Congress as gas prices dipped to their lowest levels in years.

But Obama, who has opposed previous efforts to increase the gas tax, is not likely to embrace the idea on Tuesday, even as he is expected to call for increased infrastructure funding as he has in previous State of the Union addresses.

“The President is unlikely to mention the gas tax,” Eno Center for Transportation President Joshua Schank told The Hill on Tuesday afternoon.

“He has little to gain from mentioning it if he does not want to push it, and all indications are that he prefers corporate tax reform as a funding solution,” Schank continued. “He won’t want to come out against it either, so best to just leave it out.”

Transportation advocates in Washington said they would settle for Obama talking up the need for a new federal highway bill because the current funding bill for infrastructure projects, which was passed last summer, is set to expire in the spring.

“We’re optimistic that President Obama will use his State of the Union speech to renew his call for investment in U.S. infrastructure, particularly the Highway Trust Fund,” Association of Equipment Manufacturers spokesman Michael O’Brien told The Hill in an email.

“Both the president and Republicans in Congress have talked about this as a potential area of agreement, and we’ll closely watch both tonight for indications as to how they would meet our infrastructure needs,” O’Brien continued. “Time is of the essence for both the administration and Republican leaders to offer more detailed plans and fewer talking points with the Highway Trust Fund’s deadline approaching at the end of May.”

Republicans in Congress have resisted calls from business leaders and others to boost the tax as a way to pay for upgrades to the nation’s crumbling roads and bridges for more than 20 years.

However, since the start of the new year, several senior Senate Republicans said they want to keep their options open and that “nothing is off the table” when weighing the best mechanisms to pay to finance infrastructure projects.

The Obama administration has been cautious about get behind a gas tax increase, even as it has pushed Congress for years to pass a new long-term transportation bill.

Former Transportation Secretary Ray LaHood, a Republican, has come out in favor of a gas tax hike, but only after he left the administration in 2013. Obama has argued that lawmakers should fund transportation projects other way, pushing instead for a corporate tax reform package that has gone nowhere on Capitol Hill.

A transportation industry source told The Hill on Tuesday that he would “shocked” if Obama reversed his stance on the gas tax in Tuesday’s speech.

“POTUS hasn’t exactly been its foremost proponent, and I doubt he’s likely to use tonight to do so,” the source said.

“That said, I would expect a heavy focus on the need for infrastructure investment as a potential area of agreement between himself and the GOP Congress,” the industry source continued. “But as always, the devil — in terms of how they would actually reach that consensus — is very much in the details.”

The gas tax, which predates the development of the Interstate Highway System by nearly two decades, has been the primary source for federal transportation projects since its creation in the 1930s.

Receipts from the gas tax have been outpaced by transportation expenses by about $16 billion annually in recent years as construction costs have risen and cars have become more fuel efficient.

The current level of federal spending on transportation is about $50 billion per year, but the gas tax only brings in about $34 billion annually at its current rate.

Transportation advocates have argued that increasing the gas tax for the first time since 1993 would be the easiest way to close the gap. Lawmakers’ reluctance to ask drivers to pay more at the pump has doomed previous attempts to increase the gas tax.

Congress has instead turned to other areas of the federal budget in recent years to close the gap. However, critics say the temporary bandages are contributing to a weakened national infrastructure.

Congress had a chance to pass a multi-year transportation funding package last year, but lawmakers could not agree on a way to pay for more than a couple of months’ worth of projects, resulting in a temporary extension that lasts until May 2015.

The nearly $11 billion measure, which reauthorized the collection of the gas tax but did not increase it, was intended only to prevent a bankruptcy in the Department of Transportation’s Highway Trust Fund.

The trust fund had been projected to run out of money in September without congressional action.

Prior to the decline in gas prices, transportation advocates had suggested that the recently completed lame-duck session would have been the best time for lawmakers to raise the gas tax.

However, lawmakers showed little appetite for tackling the issue before they wrapped up the 113th Congress.

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