This blog printed on 100% recycled electrons.
Revenue for road construction and repair is declining. The National Surface Transportation Policy and Revenue Study Commission concluded this year that the United States needs to spend $225 billion dollars a year for the next 50 years to upgrade and maintain our ground transportation system; current federal, state, and local spending combined is $90 billion a year. South Dakota is feeling the crunch, even as our fair state receives two dollars back from Uncle Sam for every dollar we pay in (and South Dakotans say they don't like big government).
John McCain maintains that we should cut the federal gas tax. That's still a bad idea. It's not just columnists and economists saying so: it's guys in hardhats who will lose their jobs and, believe it or not, a lot of McCain's colleagues in Congress. Not only has Congress pretty much buried talk of a gas tax holiday, but they are now quietly laying the groundwork to raise gas taxes by a dime a gallon. Congress is looking at implementing this tax increase in the 2009 highway bill, in time to address a projected $3 billion deficit in the Highway Trust Fund. If they're willing to even mention a tax increase in an election year, they must be serious.
I'm not eager to pay higher taxes, but I'm also not fond of potholes and collapsing bridges. Consider that the 18.4 cents per gallon we pay for gasoline was set in 1993, when that tax was 17% of the retail pump price. That 17% levy didn't stop the expansion of the economy, travel, or vehicle size in the 1990s. A 17% tax per gallon on today's $4/gallon gas would be 68 cents.
Another perspective: our Canadian friends pay a 15% federal fuel tax. Our friends up in Newfoundland and Labrador pay an additional 62.5 cents per gallon in state tax and 13% in sales tax.
Much as I enjoy creating my own ice road to Madison across Lake Herman in winter, that only works for three months of the year, tops. I'd rather our county, state, and federal government keep hiring Amert Construction et al. to build those nice solid concrete and asphalt paths on dry ground for me. And until we find another way to fund highway construction, that means paying even more at the pump.
The Year in Review, oh, and Merry Christmas!
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I used to be against Winter Wonderland at Falls Park but I have to admit,
the pics on my bike this year have been good, so I guess I am okay with the
city ...
2 days ago
Well, they got guts.
ReplyDeleteThe tax holiday idea is a feel-good measure that wouldn't have accomplished much of anything as a policy. It would have made a significant difference to trucking companies At 240 gallons every 2 days an independant owner operator loses $600 in a month to taxes. That could be the difference in staying in business or not. But eventually the trucking industry will be able to pass on the higher prices, tax included, to the consumer and it will just be a bit more inflation.
ReplyDeleteNot only is it little more than a political stunt, McCain goes further to offend me in wanted to cover highway maintenance cost from the shell-game general fund instead of the economically far better consumption tax already in place.
Can I please have a candidate worth voting for?
....now building a refinery or 2, THAT would be worthwhile!
ReplyDeleteI don't want to pay a single penny in tax until they do an independently sponsored audit of every single state and federal gov't agency and get rid of the extra crap! Believe me, having worked for the fed gov't and a relative working for our state gov't there is plenty of padding, people who don't need to be there, excess driving gov't cars at gov't expense, travel to meetings that should be conducted over the internet, etc etc etc. If they want more money from me, they had better start paying attention to how they are spending my money. I sure as ---- am paying attention to how I (emphasis on I) spend my money, and they should be too. This goes for both parties, state and federal.
ReplyDeleteAnon, it isn't that your point isn't valid because you are absolutely right. However in the scheme of spending it isn't significant when compared to the giant gorillas in the room. Social Security and Medicare/Medicaid are both rife with fraud and abuse and utterly insolvent even if you accept that they are a legitimate functions of our federal government, which I don't. But you can't deny that maintaining roads and public infrastructure is. The sales tax on fuel should have been increased long ago to compensate for inflation and 50% over the course of 15 years is reasonable
ReplyDeleteI'm a huge supporter of gas tax hikes. Honestly, I'd like to see a $1.00 raise right now. I honestly don't care if large amounts of the money get siphoned off so long as it further encourages fuel efficient vehicle development.
ReplyDeleteI should be punished for driving around my 26 mpg SUV. This in turn would encourage me to get a fuel efficient import. Once I quit buying SUV's auto makers will start producing fuel efficient SUV's to draw me back. And the cycle will be complete.
While this is very painful for businesses we need to start aggressive transitioning as soon as possible. Future oil prices and shocks are just too devastating to ignore. I would love to see progressive hikes in the gas tax every year until fuel effiency goals are met. Quit regulating the auto industry directly, alter the economics of fuel efficiency by taxes, and let consumer wallets force the change. The free market will find a way to minimize the cost.
Al Gore was on public radio last week, touting his "ten year plan" for U.S. energy independence. He seemed to admit that there would be some pain in the transition, but (correctly, in my opinion) said that doing nothing would hurt more.
ReplyDeleteI don't think that punitive taxation is a good idea. The conscious intent should be to fund and encourage development of new technologies, not to directly inflict pain. That sounds a little too much like "social S and M" to me.
The way the world is headed with China and India emerging as huge oil consumers, we might not need any tax to drive the price of fossil fuels out of sight within the next few years. Let them be slaves to the purveyors of that product. We don't have to be.
Public Radio!! Now there's a good example of wasting taxpayer money!
ReplyDelete"Ten Year Plan"... isn't that twice as bad as Stalin?
ReplyDeleteStan:
ReplyDeleteMy concern is directly in line with yours coupled with a dramatic spike in price. We are seeing right now how dependent our economy is on oil.
Imagine what would happen five or ten years down the road when some wacko regime (Russia anyone?) decides to penalize the US for our current world policy. It's conceivable that gasoline prices could spike to ~10-15 dollars. Such an increase would destroy our economy in less than one year with our current vehicles.
Market mechanisms are slow. New vehicle roll-outs and developement are multi-year time scales. Dramatic oil price shock is the number one threat to the USA. We need to start preparing for this inevitability now.
Some of the simulations coming out of our national labs on the subject are down right terrifying. Several regimes have the capacity to devastate our economy today.
Lastly I'm normally not alarmist, but this threat is far too real. We have already shown to the world through our complicit dealings with China that we can be bought and are willing to ignore human rights for a price. It's only a matter of time until a more corrupt oil producing regime figures this and kicks us where it hurts.
Jackrabit1:
ReplyDelete"Ten year plan" is only half as bad as Stalin. It's an inverse relation.
;-p
I did put that term in there as somewhat of a jest. (I don't think Al Gore actually uses that term. He ain't that stupid.)
Tony:
When I said "We don't have to be" (slaves to fossil fuel) I meant precisely what you seem to be saying here -- that we have to get off the petrol, and the faster the better.
Not sure how much more of a tax burden the American people can ante up. If the cure kills the patient ...
Anon 3:50:
Public radio has Thistle and Shamrock every Sunday evening at 7:00, and that makes up for a multitude of sins.
And poets, Stan. Don't forget poets.
ReplyDeleteTony: if we created our own energy we would be just as immune to foreign economic attack and we wouldn't be driving thousands of people out of the workforce with a patronizing and punitive tax policy. I support the dime increase in gas tax because it directly funds necessary road maintenance. Using taxes to enforce your own warped morality is a height of arrogance I would never support. The government needs to facilitate better energy solutions for our current and future problems, not compound them by TRYING to crush our economy before those solutions have a chance to be fully developed.
ReplyDeletePS Russia can't cut off oil to a country it doesn't supply, it would have to commit that act of warfare primarily against China and Europe.
Yeah, tax us more. Good sound bite right out of Obama's vocabulary. He said he didn't care that the gas price was so high, he was just surprised it went so high so fast. So much for caring about the little guy that such prices hikes affect the most.
ReplyDeleteI firmly believe there is technology for better gas mileage now. We used to drive diesel Chevettes for years and they got wonderful gas mileage. Of course, now we can't buy such small, more gas efficient cars. But they used to make them! Why can't they now? We have an old Corsica as well that gets great mileage, again why don't today's cars?
Higher taxes aren't the solution to every problem, including this one, except to Dems!
Anon:
ReplyDeleteMy statements are not a moral indite. They are a practical policy decision.
Additionally, the government is equally intrusive in many other areas of the economy. This is not a new concept. The government intervention is done to stabilize the economy (subsidies, tariffs, etc.).
The whole point of doing it with a progressive tax raise is to allow our free market economy to minimize the cost. Massively increasing fuel costs are coming. The only question left is if we want them to come in the form of giant steps or a consistent slope. The free market economy is only good at minimizing consistent slopes. THERE IS NO OTHER MECHANISM.
Also, the economy is global. All Russia would have to do is limit its output whenever we chose to do something it didn't like. GLOBAL demand would sky rocket and prices accordingly. Whether or not the particular barrel we receive comes directly from Russia does not matter. Only their contribution to the global total.
Second Anon:
"Higher taxes aren't the solution to every problem, including this one, except to Dems!"
Right, is this one solving itself on its own? You prefer regulation over taxes?
At least with taxes people aren't explicitly told what to do. We have the capacity to innovate to avoid taxes. Car companies will innovate to create fuel efficient vehicles if the price rises high enough.
We need to view short term tax increases as a way to lessen the impending skyrocketing fuel prices. They are a necessary airbag to lessen the effects of the future energy crisis
Well, don't forget tropical storms. They are already making a big deal over Dolly with 50-mph winds that are not even close to the oil rigs.
ReplyDeleteI've been in tropical storms as well as hurricanes of various magnitudes, and something like Dolly is just a wet day. But now, it seems, every little blip in the Gulf weather pattern sends the media into a feeding frenzy. On the Weather Channel they showed a map with a thousand dots, all oil rigs, and Dolly wasn't even in the rectangle -- but there was what's-her-face, speculating.
Jeez, wait until Son of Katrina comes barreling into Port Arthur with 170-mph winds and a 30-foot storm surge with 20-foot waves on top of that! What in tarnation are they going to say then?
If it ain't Russia, it will be storms; if it ain't storms it will be China; if it ain't China it will be the oil companies; if it ain't the oil companies it will be the SUVs; if it ain't the SUVs it will be the truckers; if it ain't the truckers it will be the sunspot cycle; if it ain't the sunspot cycle it will be the comets in the Kuiper belt.
But it will never be me and old No. 8.
If we get off the petrol and become self-sufficient in energy, none of these excuses will mean anything. Hopefully, it will be the private sector that innovates and comes up with a solution. Whatever the government can do to help, that's fine with me. I suspect certain targeted tax breaks and incentives for alternative energy development and deployment (solar, wind, geothermal, maybe some nuclear) would work better than tax increases to support government programs. But I could be wrong.
Are the oil companies investing in alternative energy? Or is their greed for the moment so far gone as to be suicidal? It seems to me that any oil baron with a lick of sense would be pouring every extra penny into alternative energy development. Am I nuts?
Anyhow, let's us Republicans come up with our own solution. Maybe, say, energy independence by the year 2020 and call it the "Twenty-Twenty Energy Initiative" or some such. Ideas? Suggestions? Do I need a cold bucket of ice water over the head? I mean, here I am blogging at 2:30 in the morning ...
"We need to view short term tax increases as a way to lessen the impending skyrocketing fuel prices." Huh, Tony? How in the world will a short term tax increase lessen the future cost of energy? Unless the "short term" tax is gradually lessened as the cost increases - fat chance of that!! Once a tax, always a tax. Won't lessen the impact one iota IMO.
ReplyDeleteNonnie