Yesterday, retiring Rep. Tom Petri (R-Wisc.) joined wacky Rep. Earl "United Streetcar" Blumenauer (D-Ore.) to endorse increasing the federal gasoline tax by 80 percent. While it is true that federal fuel excise tax rates have not been increased since 1993, the public, Congress, and the Obama administration remain strongly opposed to gas tax hikes.
Like many Republicans seeking to justify their actions as conservative, the outgoing chairman of the Highways and Transit panel of the House Committee on Transportation and Infrastructure invoked the spirit and deed of former President Reagan to make his case for highway user tax increases:
Transportation advocates have frequently cited Reagan’s support for a gas tax increase in 1982 in an attempt to build support among modern Republicans for a 2014 hike, but they have so far been unsuccessful.
Petri said Wednesday that the 40th president was right to increase the gas tax in the early 1980s.
"Reagan supported raising the gas tax back in 1982 because he believed in funding American infrastructure in a responsible way. I think he was right, and it's the best course of action we can take at this time.”
There's a lot of Reagan mythology and hagiography on the right, for sure. But the tale of his supposedly brave and principled stand to significantly increase the fuel tax in his first term is one of the more obnoxious examples, as it arguably was one of the first clear instances of President Reagan selling out his fiscally conservative principles in a political horse trade. Here's the real story:
The pure users-pay/users-benefit principle was not breached until 1970, when PL 91-605 allowed federal highway monies to be used for bus lanes, bus facilities and park-and-ride lots. Many urban and transit advocates wanted to open up the Highway Trust Fund much further, being dissatisfied with the extent of funding available from the Urban Mass Transportation Administration (UMTA), created by 1964 legislation. (UMTA was originally located within the Department of Housing & Urban Development—HUD—but was shifted to the Department of Transportation when the latter agency was created.) Several years later, in 1973, Congress enacted PL 93-87, which (1) allowed Highway Trust Fund monies to be used for capital expenditures for buses and fixed rail facilities and (2) permitted a state to petition the U.S. DOT for permission to withdraw a planned urban Interstate project and build a public transit system instead, using federal general fund monies up to the amount that the Interstate segment would have cost.
President Carter proposed consolidation of the highway and transit programs, merging the Federal Highway Administration (FHWA) and UMTA, as part of the 1978 highway bill. But that bill ended up making only minor program changes. And that status quo prevailed until the early years of the Reagan administration. DOT Secretary Drew Lewis accepted the need for increased federal highway investment, but had difficulty persuading President Reagan to support the corresponding federal fuel tax increase. To build transit groups’ support for the measure, “He promised to create a mass transit account in the Highway Trust Fund that would receive 20 percent of the revenue from a five cent per gallon tax hike (the ‘transit penny’). This convinced many big city Democrats and liberals to support the measure, despite their concern over the effects of the tax on the poor.” After first promising to veto the bill, after the 1982 elections Reagan changed his mind, and signed the bill after it finally passed, in January 1983.
That bill, the Surface Transportation Assistance Act of 1982 (PL 97-424), established the Mass Transit Account within the Highway Trust Fund, to receive “one-ninth of the amounts appropriated to the Highway Trust Fund” from all federal motor fuels taxes. As Jeff Davis’s “History of the Highway Trust Fund” notes, the changes from 1973 through 1982 “represented a shift away from the ‘benefit taxation’ model . . . whereby user fees are levied on system users in proportions that are as close as feasible to the direct benefit that the users get out of the system.” He adds that, “although the votes brought to the table by the transit lobby were the key to getting the biggest ever increase in the ‘user fee’ on drivers and truckers, the addition of mass transit to the Trust Fund made the gas and diesel taxes resemble true ‘user fees’ much less.”
Far from "funding American infrastructure in a responsible way," as claimed by Rep. Petri, Reagan made an incredibly irresponsible and unprincipled decision that broke the user-pays/user-benefits highway funding principle to gain the support of the subsidized mass transit lobby. President Reagan's role in weakening the user-pays principle can be felt today as politicians in Washington scramble to throw more money at transportation special interest groups while facing an imploding Highway Trust Fund.
There is a real need for intelligent infrastructure investments, but Congress and the Department of Transportation ought to be stepping aside, rather than doubling down on their past failures. Given that so much highway user revenue is wasted on high-cost/low-value projects that do not benefit the taxpayers, can you blame the public for being skeptical about upping the gas tax? The public is more receptive to road facility use charges such as all-electronic tolling, which are more efficient and fair than fuel taxes. If Rep. Petri was looking to be proactive in his final days, he might have chosen to endorse a sensible Obama White House proposal to end the federal prohibition on states tolling their own Interstate segments instead of latching onto a mistake made by Ronald Reagan.