On the Road to Recovery: Strengthening Our Transportation Infrastructure

Although the Dow was recently flirting with 10,000, there is no celebration on Main Street. This is a jobless economic recovery, and without job growth there will be no sustainable economic recovery on either Main or Wall Street. Compounding the loss of jobs is the explosive economic growth of China and its ominous effect on U.S. debt, standard of living, and geopolitical influence.

While our government obsesses over health care, Rome is burning. President Obama and his advisors don’t seem to understand that the overwhelming problem that needs to be fixed is the loss of jobs. Furthermore, they don’t recognize the critical path to economic recovery, energy independence, and world leadership is bolting a national transportation infrastructure plan to a national energy plan. Like China, the United States needs to recognize the strategic value of a national transportation infrastructure and energy master plan.

In 2008, a minimum of $150 billion per year for the next five years was needed at all government levels to repair and improve bridges and roads, according to Department of Transportation and Association of State Highway and Transportation Officials estimates. In January 2009, Ernst & Young and the Urban Land Institute arrived at the same conclusion in their Infrastructure 2009 Pivot Point report. Despite these expert reports, however, the American Recovery and Reinvestment Act of 2009 includes only $27.5 billion for repairing bridges and roads.

SATISFYING THE SHORTFALL

Because the U.S. national debt will exceed $12 trillion by the end of 2009, the federal government will be constrained from printing money and increasing its debt load to plug the huge shortfall in funding bridge and road maintenance. The shortfall must be satisfied by increasing federal fuel taxes 50 cents per gallon in 2010 and, thereafter, an additional 15 cents per gallon to replace the one-time $27.5 billion provided in the Stimulus Plan.

National recovery is dependent on this tax increase, which will yield $120 billion per year. The current federal gasoline and diesel fuel tax is 18.4 cents and 24.4 cents, respectively, and generates approximately $35 billion. Neither tax has been increased since 1993.

A permanent fixed floor for fuel prices needs to be created with taxes in order to attract investment in alternative energy and new fuel-efficient technologies for motor vehicles. To be sensitive to consumer pocketbooks, this tax should be pegged to the price of oil, not the Consumer Price Index, so that when the price of oil goes up, the tax goes down and vice versa.

OUTLINING THE BENEFITS

Political opponents argue that increasing fuel taxes is a non-starter because of the state of the economy. But this recession is precisely the right time to raise taxes because fuel prices are the lowest they’ve been since 2002.

Increasing fuel taxes to fund infrastructure construction provides the foundation for a national transportation infrastructure and energy master plan that can produce enormous benefits, including the following:

• The taxes will fund basic infrastructure requirements for the next five years.
• Infrastructure construction will create more than six million jobs. Each $1 billion invested in infrastructure will create 35,000 to 40,000 direct construction jobs that will cascade into indirect jobs throughout the economy, according to Department of Transportation, Association of State Highway and Transportation Officials, and Ernst & Young estimates.
• A permanent fuel tax increase will attract investment in fuel-efficient vehicles to help revitalize the U.S. motor vehicle industry and related manufacturing sectors. This will create additional jobs.
• A permanent fuel tax increase will create a fixed floor for fuel prices, giving investors the confidence to invest in alternative energy: wind, solar, and especially nuclear. This will not only create more jobs, but will be the catalyst to wean the U.S. economy off oil and put it finally on a path to energy independence. It will also eliminate the need for complex cap-and-trade regulations.

A STRONGER TOMORROW

If the government explains a fuel tax increase in these terms, the American people will buy it enthusiastically. A 50 cents per gallon increase in federal fuel taxes will provide indirect benefits such as creating millions of jobs, reviving the economy, increasing housing values and alternative energy investment, boosting the stock market, recapturing lost retirement fund wealth, and reducing carbon emissions.

The United States rose to world leadership in the 20th century because we had confident leaders who understood risk, accepted responsibility for tough decisions, and made sacrifices that promoted the welfare of the country. Today’s economic crisis presents a golden opportunity to rebuild our infrastructure, restart our economy, and execute a plan for energy independence and climate change. Now is the critical moment for our leaders to choose this strategic course to fix our economy and secure our world leadership in the 21st century.