No Motorist Left in Line

With gasoline prices near $2 a gallon in some parts of the country, drivers and businesses are understandably edgy. Rising gasoline prices reduce disposable income and make transportation, which impacts nearly every sector of the economy, more expensive. If gas prices get too high, it will adversely affect economic growth and slow down job creation.

Future gasoline prices will depend on many factors, including the scheduled production cutbacks by OPEC, which in large part are the direct consequence of the decline in the value of the dollar. Oil is priced in dollars, and when the dollar depreciates, the real value of oil declines to producers who must sell the commodity for dollars in global markets.

To maintain the purchasing power of a barrel of oil priced in depreciating dollars, producers must earn more dollars per barrel. It’s as simple as that.

Because of its strong connection to the economy, the price of oil at the pump could become a prominent issue in the coming presidential campaign. This raises obvious questions: where do the two candidates stand on gas tax increases?

Sen. John Kerry (D.-Mass.) has left no doubt where he stands. He wants to make gasoline more expensive by raising taxes and imposing misguided environmental policies that increase fuel costs even more. Kerry believes these costs can be offset by a massive increase in the mandated fuel economy of automobiles, which he and Sen. John McCain (R.-Ariz.) would impose by new legislation they have introduced. By some estimates, the Kerry-McCain legislation raising the Corporate Average Fuel Economy efficiency standards of vehicles would destroy 450,000 jobs, boost the sticker price of cars and do little to reduce imports of foreign oil.

President Bush opposes increases in both federal gas taxes and so-called fuel efficiency standards. Despite heavy pressure from the Congress, Bush continues to resist attempts in the Congress to increase federal gas taxes to pay for the swollen transportation reauthorization bill currently making its way to his desk. By threatening to veto that bill, he not only drew a line on spending increases (the Senate bill would add another $10 billion a year to deficit spending during the next decade), he also put a stop – for the time being – to the $125 billion gas-tax hike that many members of the House, including some Republican members and the Republican chairman of the Transportation Committee, want to impose on motorists.

By digging in his heals on the highway reauthorization bill, President Bush not only draws a sharp distinction between himself and Sen. Kerry – who sits on the Senate Transportation Committee, supported the bill in Committee and announced that had he attended the full Senate vote he would have voted yea – Bush also has positioned himself to propose a bold new reform to federal highway programs.

Despite spending huge sums of money motorists pay in gasoline taxes, federal transportation programs, which cost $37 billion in 2004, fail to deliver the essentials of what motorists deserve in return for the fuel taxes they pay Uncle Sam: less congestion, greater mobility, improved safety, lower pollution and higher road quality. They have instead turned into the world’s greatest pork barrel.

According to a recent Heritage Foundation report by Dr. Ronald Utt, “special interests absorb as much as 40 percent of all federal highway spending, and that share is growing as Congress grants other influential constituencies access to the (highway) trust fund – where once it had the goal of providing America with the best transportation system in the world, today its purpose is little more than to accommodate a growing list of influential constituencies lucky enough to have their hand in the piggy bank.” As a result of this raid of the highway trust fund, Utt observes, “$700 billion (inflation adjusted) of federal highway spending since 1970 has added only 7 percent to our road system.”

Utt makes an innovative suggestion that I hope the Bush administration will consider seriously, namely “establish(s) explicit and measurable goals related to maintaining the quality of our interstate system, enhancing mobility, reducing pollution and relieving congestion.” They could call the proposal, “No Motorist Left in Line.”

Such a proposal would be consistent with other reforms the Bush administration has proposed, in areas as diverse as foreign aid (Millennium Challenge Accounts) and federal aid to education (No Child Left Behind Act), which links federal money, performance and accountability. In return for accepting federal money, President Bush’s attitude is that recipients should be required to achieve measurable improvements in concrete areas of performance. Why should state and local spending of federal transportation dollars be any different?