ATR’s warnings, that the Obama Deficit commission is a plan to raise taxes cloaked in the veil of bipartisanship (more on that here), were validated yesterday when the co-chairs of Obama’s deficit commission released their preliminary plan. The Simpson-Bowles plan includes billions in spending cuts—many of which were not actual reductions in spending—and raises taxes by a very real $100 billion a year.
Seemingly taking cues from the retiring Senator George Voinovich (R-Ohio), Simpson and Bowles included in their plan one of the most unpopular taxes in the country—a 15-cent increase of the federal gasoline tax. Proponents of this tax argue that it has not been raised since 1993 (heaven forbid!) and that the revenue would be spent on our nation’s infrastructure.
One school of thought is fearful that the highway trust fund will go belly-up. They accurately claim that the trust fund will be insolvent unless it continues to receive infusions of cash from the general fund or is the beneficiary of additional revenue. This is a red herring. The federal government will keep funneling money to the inefficient highway trust fund thereby preserving the status quo and effectively preventing reform or the implementation of cost saving measures.
People interested in saving the trust fund should first look to make it more efficient. One measure that would save taxpayers hundreds of millions of dollars would be to repeal the Davis-Bacon law. This holdover from the New Deal mandates that federal projects pay workers the “prevailing wage” in a region. When actually implemented, Davis-Bacon ends up inflating usually unionized workers wages, thus, raising the price tag on federal projects.
Repealing this law would bring down construction costs and give the federal government more bang for its buck. Furthermore, to focus on the $36 billion the CBO predicts the highway trust fund will need over the next six years misses the point—our government is currently spending a trillion dollars more than it takes in so nearly every program is technically insolvent.
Instead of lobbying for higher taxes, Simpson, Bowles, and Senator Voinovich should first look for ways to build America’s highways at lower costs. Once new projects are sufficiently scrutinized and deemed necessary, sponsors should look to cut spending from our current three trillion dollar budget and allocate new reductions towards necessary projects.