Fixing America’s Infrastructure

An idea to raise gas taxes is surprisingly gaining traction across the country due to a problem much too familiar to our course: horrible American roads. As we saw in Detroit, American infrastructure is deteriorating. All across the country, roads are in disrepair. According to the lobbying group TRIP, a third of American roads are in poor or mediocre condition, and a fourth of American bridges are structurally deficient or functionally obsolete. The condition of American infrastructure is being noticed by many more than just lobbying groups. According to the World Economic Forum, over the years American infrastructure has fallen from first place to sixteenth.

Levying the tax on gas seems to be what the United States needs to catapult itself back into first place. Former Pennsylvania governor Ed Rendell told CNBC, “If the government “kicks the can down the road” by delaying funding the Highway Trust Fund, “we’re going to miss next year’s construction cycle, which is going to really contribute to the roads getting even worse and bridges in dangerous, dangerous condition.”

Raising gas taxes seems to be a viable option. Gasoline tax is already at 18 cents a gallon, but they have not been raised for 20 years. Now could be the time to consider such a raise. However, neither side of the US Government is ready to consider the tax levy. White House spokesman Jay Carney has clearly stated the Obama Administration’s opposition to such a plan, and Republican Speaker of the House John Boehner also stated his party’s opposition to the plan.

Federal officials are not the only ones stating their opposition to the plan. CATO Institute senior fellow Dan Mitchell cited inefficient spending and corruption by the federal government in opposition to the tax hike. He instead proposes a system in which infrastructure problems are dealt with on a closer-to-home basis. However, this theory is not exempt from issues itself. Interstate highways run across state boundaries, and would require federal intervention in many cases. Also, if the feds are cut from the equation, areas with struggling budgets, such as Detroit, would have increasingly deteriorating infrastructures, driving business out of the area, and further worsening the dire financial situation, starting a nasty cycle of budget cuts and sub-par roads.

A hike in gasoline taxes may not be the snake in the grass that it appears to be. Aggressive CAFE standards are pushing manufacturers to create more efficient engines with higher MPG ratings. This increase in more efficient engines could offset rising gas prices created by increased gas taxes. This rise is gas prices would also increase demand for viable substitutes for internal combustion engines, such as purely electric powertrains.

One thing is for certain. America’s roads are poor, and they are not getting any better. How will the United States deal with this growing issue? Would a gas tax be beneficial or detrimental to the US auto industry?

– Zac Durkin

Source: http://www.cnbc.com/id/101652280

3 comments to Fixing America’s Infrastructure

  • mayolj16

    As we read in Vlasic’s Once Upon a Car, taxes on gas and toll booths seemed to be a working solution in the first years of the automobile. At the same times, rising taxes in the US has never been popular for politicians. Another issue arises when taxes are used for other spending that could be considered to be of higher importance, like education or healthcare, making the tax lose its purpose.

  • That the Cato Institute is against the tax is unsurprising: they are reflexively antitax. Federal government inefficiency? – well, are state and local governments better at managing large projects? When it comes to roads, not! Durkin correctly notes that devolving infrastructure onto broke local governments won’t get things fixed. [There’s a pun in there somewhere….] Unfortunately election dynamics are at play, no one wants to run on the back of a tax increase. Doubly unfortunately, failing to fix roads levies higher costs on one and all, and neglect is cumulative in impact.

  • Louis Ike

    The politics behind increasing government funding towards projects like improving American infrastructure never go well for either party. At best an area might get an earmark on a large bill allocating funds to a district where the incumbent may need some help in wining reelection. Perhaps that view is too cynical, but when even the democratic party is unwilling to take a stand on the dire conditions of American infrastructure, one must call into question the reelection dynamics at play. Too often the public good is overlooked by the political system because it does not appeal to electorate regardless of how immense the benefits actually are for the voters.

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