Leading the World in Potholes and Subway Delays

Barely two weeks before Congress approved a three-month patchwork extension of the Highway Trust Fund, former Transportation Secretary Ray LaHood appeared on the Bloomberg television channel to reuse his favorite rallying cry for infrastructure funding.[i]

"America is one giant pothole," he emphatically repeated. Although tens of thousands are moving to the nation's urban centers and are looking for alternative transportation, our nation starves our infrastructure.

LaHood, the only Republican member of the Cabinet, did more than simply spout his turn of phrase, however: he used it to highlight the most common sense reason of all that the United States should raise its 18.4-cent federal gas tax, which was last set in 1993.[ii]

"You can't tell me anything that has [not had a price increase] in 20 years," LaHood said. "A dozen eggs, a gallon of milk, on and on and on. Everything has been increased, but the gas tax has not, and that is why America is one big pothole right now."

LaHood is right. Prices have increased, largely across the board for consumer goods. Yet the gas tax--which provides the majority of the revenue for the Highway Trust Fund--has not.

A dozen eggs? In June 1993, those cost 92 cents. In June of 2014, those same eggs cost $1.95, an increase of over 100%. In June 2015, those eggs, thanks to a market hiccup caused by a bird flu outbreak, cost almost 180% more than they did in 1993.[iii]

How about a pound of ground roast coffee? In June 1993, $2.53 was what you paid for 16 ounces of caffeine-rich black gold. In June 2015, however, that price tripped up to $4.69, for slightly more than an 85% increase.

Since 1993, a pound of white sugar has increased by 62.5%. A movie ticket has increased by 97.34%.iv A flight from Washington-Reagan National has increased by 17.56%.[v] A new car or truck has increased by a whopping 163%.[vi]

The picture is simple: prices tend to go up. Some price increases soar over the amount that can be accounted for by inflation, which hovers around 65% for the period from 1993 to 2015. Some price increases, like the 28% price increase for a pound of chocolate chip cookies, fall under the inflation rate, but the increase is still exist. Spend long enough playing with the Bureau of Labor Statistics data for the Consumer Price Index and you'd be hard-pressed to find an item that has not increased in price to at least some degree since 1993.

Yet the gas tax, which is so critical to our nation's infrastructure, has not increased. Not even to index it to inflation; according to the Tax Foundation, due to inflation the value of the gas tax is 36% lower than it was in 1994.[vii] To put it another way, if the gas tax had been indexed to inflation, the tax would currently sit at around 30 cents a gallon instead of 18.4 cents. If a 30 cent per gallon tax sounds unbearable, keep in mind that in 1959, President Eisenhower raised the gas tax to four cents, which is the equivalent of 33 cents today.[viii]

Critically, rising prices have affected construction costs. These costs have risen since 1993 while the gas tax has remained static, with catastrophic consequences for our nation's infrastructure. While part of the problem is that cars are more efficient--meaning they need less gas--even more problematic is growing difference between construction costs and gas tax revenue.

Over three-fourths (78 percent) of the current gasoline tax revenue shortfall is a result of Congress' failure to plan for inevitable growth in the cost of building and maintaining the nation's infrastructure. The remainder (22 percent) is due to improvements in vehicle fuel-efficiency. In other words, construction cost growth has been 3.5 times more important than fuel-efficiency gains in eroding the purchasing power of the gas tax.[ix]

Despite the logic of raising the gas tax, gas taxes remain an unpopular idea, at least to national politicians: a Jan. 10 Editorial by the New York Times commented on Congress' "longstanding terror of offending the nation's motorists" as well as President Obama's fear of "political blowback." But what should make sense to constituents--those in the vast majority who rely on maintained roads to get them around--is that raising the tax is a benefit for consumers, as paying more at the pump now means paying less later. Ken Perret, head of the Louisiana Good Roads and Transportation Association, remarked recently that state fuel taxes cost the average Louisiana driver $100 a year, while the same driver spends $408 a year for repairs caused by bad roads.[x]

Raising the gas tax, whether by indexing it to inflation or by raising it a few cents a year for several years, does not solve all of the nation's infrastructure problems, especially as cars continue to become more fuel efficient, people use more public transportation and electric cars begin to take over the grid. But it's a common sense place to start. Prices have increased, and yet, defying logic, the gas tax has not.

As LaHood said, "Congress needs to step up and provide a little vision, a little leadership, and a lot of funding."

Or else America might very well continue on its path to becoming one giant pothole.

[i] http://www.bloomberg.com/news/videos/2015-07-15/america-is-one-big-pothole-ray-lahood
[ii] http://switchboard.nrdc.org/blogs/rperks/goosing_the_gas_tax.html
[iii] http://www.bls.gov/data/#api
[iv] http://natoonline.org/data/ticket-price/
[v] http://www.transtats.bts.gov/AverageFare/
[vi] http://www.usatoday.com/story/money/cars/2013/09/04/record-price-new-car-august/2761341/
http://www.usatoday.com/story/money/cars/2015/05/04/new-car-transaction-price-3-kbb-kelley-blue-book/26690191/
[vii] http://taxfoundation.org/blog/senate-approves-three-month-highway-trust-fund-extension
[viii] http://taxfoundation.org/article/federal-gasoline-excise-tax-rate-1932-2008http://www.bls.gov/data/inflation_calculator.htm
[ix] http://switchboard.nrdc.org/blogs/rperks/happy_birthday_gas_tax.html
[x] http://theadvocate.com/news/13142263-123/leader-of-road-advocacy-group