Dem leaders shy away from gas-tax hike despite party support

Despite pressure from some members, Senate Democratic leaders are reluctant to embrace an increase in the gas tax as they search for ways to rebuild the nation’s infrastructure.
 
“At this point, the caucus is not ready to sign off on a gas tax or any tax increase,” Senate Majority Leader Harry Reid (D-Nev.) told reporters Thursday afternoon.

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The issue arose because there is strong Democratic support for passing a multi-year transportation authorization bill.

Democrats say it would create jobs and make the economy more efficient by easing the transport of goods. But the money’s not there — unless the gas tax is raised or another major revenue source is found.

Talk of a higher gas tax came up during Senate Democrats’ two-day retreat at The Boar’s Head Inn in Charlottesville, Va., where they discussed other funding proposals.

Much of the private discussion focused on redirecting federal spending from redundant government programs to initiatives that could spur the economy, such as funding scientific and medical research, transportation infrastructure and energy development, according to senators who participated.

The problem is, cutting that fat wouldn’t provide enough money to sufficiently fund the programs essential to President Obama’s vision of winning the future by “out-innovating, out-building and out-educating” global competitors.

Raising the gas tax — which hasn’t gone up since 1993 — would increase revenue. But when lawmakers voted to raise the tax in 1990 and 1993, it was for deficit reduction.

A Senate Democratic aide said the proposal to raise the gas tax, pushed by Sen. Tom Carper (D-Del.) in Charlottesville, “did not generate much support.”

“There was much more of a consensus around ending subsidies for the oil-and-gas industry,” said the aide.

The White House opposes raising the gas tax, but Obama has called for ending tax breaks provided to the oil-and-gas industry.

Gene Sperling, whom Obama tapped to serve as director of the National Economic Council, told Democratic senators during the retreat that ending tax breaks for special interests could reap hundreds of billions of dollars for the government, according to senators present.

Obama’s fiscal commission estimated that special tax breaks cost the Treasury $1.1 trillion each year.

The fiscal commission also proposed a 15-cent increase in the gas tax, prompting some Democratic senators to say they might support it.

Sen. Mark Udall (D-Colo.) noted the fiscal commission recommended that Congress “bite the bullet” and raise the tax, even though it would be unpopular at first glance.

But Udall thinks the public could be convinced.

“You’ll know it’s a user fee, it goes into our highways and our transit system. That makes sense. That’s the kind of thing that the public, if you show them the return on their tax dollars, they’ll be supportive.

“In the context of the deficit commission approach, where it’s all interlocking, I could support it,” said Udall.

Sen. Mark Pryor (D-Ark.) said he could support a gas-tax increase, “but it all depends on the details.”

“Gas prices are going up again and people are very sensitive to the price at the pump right now. But I will say this, the gas tax is your classic user fee,” said Pryor. “Unless you use the highways, you don’t pay the gas tax. And also, the good news is cars are becoming much more energy efficient — cars and trucks are becoming more efficient, so people are using fewer gallons per person per year.

“They may not be paying more in gas taxes per year because they’re more fuel efficient today than they were in the past,” he said.

Sen. Tom Coburn (R-Okla.), one of the most conservative members of the Senate, won’t rule out supporting a gas-tax increase as part of a broad deficit-reduction plan. His support could give Democrats important political cover.

Coburn is working with Democrats such as Senate Budget Committee Chairman Kent Conrad (D-N.D.) on a legislative package to implement the fiscal commission’s recommendations.

“It’s too soon to speculate about bill language. Everything is on the table. No sacred cow will receive amnesty,” said John Hart, Coburn’s spokesman.

Conrad said the gas tax is “not popular,” and might be an unfair way of raising revenue.

“With the advent of electric cars, with the advent of hybrids and competing fuels, a gas tax is increasingly separated from being a fair system for raising money for roads, bridges and the rest,” he said.

Senate Democrats are excited about an idea pushed by Sen. Mark Warner (D-Va.) and others to develop an infrastructure bank. The idea is to use government funds — about $50 billion — to seed a public-private partnership that would leverage funding from the private sector to build infrastructure projects.

The program is designed to multiply the power of government funding by spurring private investment, something many Democrats acknowledge is necessary for the economy to generate enough jobs to reduce unemployment rates.

Obama urged businesses earlier this week to “get in the game” and invest an estimated $2 trillion that they hold in reserves.

But a Senate aide familiar with the proposal said it was unlikely that an infrastructure bank could by itself cover the difference between a multi-year authorization bill and what’s now taken in by the Highway Trust Fund.

The Congressional Budget Office estimates the trust fund will need $34 billion over the next six years to maintain existing outlays.

The CBO estimated the cost of the six-year transportation authorization bill Congress passed in 2005 at $253 billion.