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“That men may rightfully be compelled to submit to, and support, a government that they do not want…No principle … can be more self-evidently false than this; or more self-evidently fatal to all political freedom … a man, thus subjected to a government that he does not want, is a slave. And there is no difference, in principle — but only in degree — between political and chattel slavery. The former, no less than the latter, denies a man's ownership of himself and the products of his labor; and asserts that other men may own him, and dispose of him and his property, for their uses, and at their pleasure.”     Lysander Spooner

August 2, 2011

Should Republicans Fight Gas Tax Renewal?

by Brad Warbiany

It appears that our Federal $0.184/gallon gasoline excise tax is set to expire in just under 2 months, on September 30. This was news to me. As my colleague Doug blogs over at Outside the Beltway, this is being batted around as potentially being big news — brought to you by Grover Norquist & the Tea Party — over the interim:

You can already see how this issue could play itself out a month from now. As it is the issue of increased energy prices is an easy one to demagouge with simplistic slogans (“Drill Baby Drill”) and even more simplistic ideas (anyone remember when Hillary Clinton and John McCain came up with the idiotic idea of a Federal Gas Tax Holiday during the 2008 campaign?). It’s not at all hard to see the argument over the the gas tax being boiled down to the slogan Barack Obama wants to increase the price of gas. Given that renewing the gas tax is going to require affirmative action on the part of Congress (rather than legislation to block it) I’d already say that the forces that come out against it are going to have the advantage here, especially given the partisan make up of Congress and the difficulty of getting anything through the Senate.

There are, in fact, some remarkable similarities between the just concluded debt ceiling showdown and the showdown that could result over renewing the gas tax. Like increasing the debt ceiling, the renewal of the Federal Gasoline Tax has been a fairly non-controversial action in the past.

Republicans and Tea Party folks can advocate this on two grounds.

The first, of course, is Federalism. It is inefficient and counterproductive to route all these dollars through the earmark meat-grinder of Washington when states are more than capable of maintaining their own roads. Simply put, outside of direct Interstate Highway planning (which may have interstate commerce implications), the Federal government need not be involved in intrastate maintenance. For a party that has paid so much lip service to the earmark issue, this is a natural progression.

The second is mere populism. The national price of a gallon of gas on the day Barack Obama was inaugurated was $1.68. Today it is $3.70. That’s more than doubled since election day, and while it’s certainly easy to point out that there are a lot of reasons NOT related to the POTUS that drive gas prices, the “drill baby drill” crowd can clearly point to the moratorium on offshore drilling to suggest that POTUS is not only driving up gas prices, but then wants to keep taxing on top of them.

There’s only one problem: it’s not going to work. As Doug & the original article point out, the public does see tangible benefit in a purpose-driven tax such as this — they have roads to drive on. While libertarians and free-market types can point out all the ways that government provides roads inefficiently and performs crappy maintenance, the public doesn’t see stripping the funding as a way to fix that.

But that doesn’t mean it’s not worth a fight. Just as previous debt ceiling increases were provided “cleanly” but this one was driven through brinksmanship to force a $2T budget cut to make it happen, it is clear that the gas tax renewal can be tied to being a package deal with something that Republicans want.

The natural package deal is allowing expanded drilling (incl. places like ANWR). Push that along with an end to most “green energy” subsidies, and you have a fallback position of simply allowing the drilling that will please most of the Republican base, potentially drive down long-term gasoline costs, and does so in a way that otherwise simply gives us the status quo (the current tax rates). Or tie it to different taxes (keeping the Bush tax rates, or tax reform in another area such as repatriation of foreign earnings), although these options might be a political loser as the two issues are so separate.

But it would be a shame to simply let this slide without a fight. This is a tax that’s set to expire unless Congress actively extends it. This means that the burden is on Congress to bring an extension to the floor and pass it. Given Republican’s recent fight over the debt, ending a tax which doesn’t have a lot of inherent opposition may not be feasible. But that doesn’t mean it should be a clean bill.

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3 Comments

  1. I wish they’d slap an extra 50 cents to the gallon – and then lower something else, like income tax, to compensate.

    We desperately need new infrastructure. And not just roads, we need better rail transportation or we’re really going to be a 3rd world country in a generation or so.

    The price of gas is already artificially low – subsidized by military spending mostly. Give us fairly priced gas and it would be $6 a gallon overnight – but at least people would see the reality of their addiction!

    Comment by Doctor Hylento — August 4, 2011 @ 5:06 pm
  2. I agree with Brian that something should be made of the attempt to renew the gasoline tax. And I also agree that expanded drilling is a possibility as are the green energy subsidies (ethanol, e.g.). My preferred thing to cut would be the ethanol mandate and subsidy.
    I do not understand Doctor Hylento’s claim of military spending subsidies. I suppose I simply have not studied the situation enough. Perhaps, Doctor, you could expand on that fact? I also would appreciate your explaining your phrase “at least people would see the reality of their addiction”.

    Comment by Phil — August 5, 2011 @ 7:07 am
  3. Doc Hylento,

    Your comment seems long on conjecture and short on substance. Can you explain exactly what would need to occur to have $6/gallon gas without punitive taxation?

    Also, you do realize that a $0.50/gal increase coupled with an income tax cut in the gas tax is highly regressive, right? Not that I’m complaining, of course, because I think it’d be a net decrease in total taxes *for me*, but I have a feeling that low-income people who pay almost no federal income taxes today will be a little “annoyed” at the rise in their transportation budget…

    Phil,

    My preference would also be to cut the ethanol mandate & subsidy. Republicans won’t dare do it, though, because of their support in farm states. I left it out of the original post because it’s a political non-starter.

    Comment by Brad Warbiany — August 5, 2011 @ 7:48 am

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