Jockeying for a Gas Tax Increase from Fiscal Cliff Talks

It could be a win-win: Reducing the deficit, stimulating job creation, and avoiding the dreaded 'fiscal cliff'. Those pushing for a gas tax increase have joined other industries in using the need to raise and/or cut $500 billion to avoid recession.

2 minute read

November 26, 2012, 5:00 AM PST

By Irvin Dawid

Josh Mitchell writes how various industries are hoping to cash-in on Congressional and White House talks on creating "a $500 billion combination of tax increases and spending cuts set to begin Jan. 2", i.e. what is necessary to avoid falling over the 'fiscal cliff' on Dec. 31, plunging the nation possibly into another recession.

"The U.S. government spends roughly $52 billion a year on highway and transit projects, but the gasoline tax is generating only about $37 billion annually. That has created a roughly $15 billion annual shortfall that Congress has filled in recent years by taking money from the government's general fund, adding to the budget deficit."  It is precisely that shortfall that caused the 2010 Simpson-Bowles deficit-reduction commission to include a gas tax as part of a broad deficit-reduction plan.

"President Barack Obama has opposed raising the gas tax. The White House didn't respond to requests for comment. Representatives of House Speaker John Boehner (R., Ohio) and Senate Majority Leader Harry Reid (D., Nev.) didn't respond to requests for comment."

However, Obama does advocate transportation spending to reduce unemployment - it was a major part of the 2009, $787 billion Recovery Act that was funded by deficit-spending.  A small gas tax increase could fund needed construction, estimated to be an additional $138 billion a year at all levels of government by a congressional commission that "is needed to maintain the current system and to make modest improvements", writes The Associated Press' Joan Lowy in her article about additional funding needed to safeguard transportation infrastructure from extreme weather and climate change.

Speaking of climate change, earlier Steven Mufson wrote in The Washington Post that carbon tax advocates suggested that the fiscal cliff talks represented an opportunity to promote their cause.

William Pizer, associate professor of economic and environmental policy at Duke University, "said that a $20-a-ton tax on carbon dioxide would raise gasoline prices by about 20 cents per gallon and boost electric bills slightly. It could be most efficiently collected “upstream,” at coal mines, oil and gas wells, or terminals for oil tankers arriving at U.S. shores."

President Obama was quick to pounce on that option.

"We would never propose a carbon tax, and have no intention of proposing one,” White House spokesman Jay Carney said.

Would he be more receptive to a gas tax?

Note: Access to article may be time-limited without subscription

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