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Some Conservatives Get Infrastructure Investment

November 17, 2010 By Conrad deFiebre, Transportation Fellow

As the Great Recession fades, though too slowly with millions still unemployed, governments worldwide are beginning to slash spending to rein in deficits. Conservative election victories this month suggest that Minnesota and the rest of the United States will be swinging big budget axes next year, too.

It’s already happening in Great Britain, where the new Tory-led government will eliminate some 500,000 public sector jobs. That’s stimulus in reverse, a risky prescription for continued economic recovery. Fortunately for the Brits, however, their resurgent conservative leaders plan to counterbalance the cuts with hundreds of billions of dollars in spending on infrastructure “even in these constrained times,” as Prime Minister David Cameron put it.

On transportation alone, the Tories have pledged to invest $47 billion over four years. That’s a rounding error shy of the transportation portion of the 2009 American Recovery and Reinvestment Act, AKA federal stimulus -- in a U.S. economy more than six times the size of Britain’s. And it’s just a sliver of the $315 billion in broader infrastructure improvements on the UK agenda, including water, digital and energy.

An equivalent initiative in the United States would reach $2 trillion, about the size of our nation’s infrastructure investment deficit, according to the American Society of Civil Engineers. Closing that gap would boost our prosperity both in the short term with jobs in the recession-wracked construction industry and in the long term with increased economic efficiency.

But so far we’re hard-pressed to hear many of our new state and national leaders advocate this wise policy direction. Most conservatives still follow the No New Taxes No Matter What playbook of Gov. Tim Pawlenty, who vetoed three transportation funding bills on the bogus grounds that they would hurt our economy. What actually hurt was two decades of disinvestment in roads and bridges as inflation sapped nearly half of the buying power of highway user fees – tax cuts on autopilot.

Acknowledgment of this policy dead end and calls for a corrective increase in federal fuel taxes that finance transportation construction and maintenance have come from prominent conservative quarters, notably the U.S. Chamber of Commerce, the American Trucking Association and, shockingly, the National Petrochemical & Refiners Association. These captains of industry know it’s been foolish to allow transportation revenue from the 18.4-cents-per-gallon federal fuel tax to dwindle in the face of inflation and higher-mileage vehicles ever since 1993.

Even the sainted founding father of modern U.S. conservatism, Ronald Reagan, understood this. As America was struggling to emerge from recession in 1982, President Reagan proposed and then signed into law a nickel increase in the gas tax.

It “will make truck transportation more efficient and productive for years to come,” the Great Communicator said in a radio address. “We will be preserving for future generations of Americans a highway system that has long been the envy of the world.”

To which Fred Barnes of the conservative Weekly Standard recently added, “The days of envy are gone. What’s required to restore a great highway system is a hike of 10 to 15 cents in the gas tax.”

Actually, it’s surprising that more on the right wing haven’t called for this, a proposal also made by President Obama’s bipartisan fiscal commission. The gas tax has been the workhorse of transportation infrastructure for nearly a century, and it has the advantage for many conservatives of being highly regressive – taking a bigger bite of income from the poor and middle class than from the rich. Meanwhile, however, two administrations in Washington have plugged holes in user-fee funding for transportation with billions in bailouts from progressive income taxes.

Conservatives shouldn’t like that. What they don’t like about the gas tax -- on the federal level, at least – is that a small portion of the revenue goes to transit, bikeways and walking paths, all considered obsolete by folks such as Barnes. (That’s not an issue in Minnesota, where the state Constitution dedicates every penny of fuel tax revenues to highway purposes).

Perhaps there’s room for bipartisan compromise here. A long-overdue increase in the federal fuel tax could come with a modest reduction in its share for non-highway projects, strengthening the user-pays principle in transportation, plus a tax credit to offset the burden on the low end of the income scale. A similar provision softened the Minnesota gas tax hikes enacted over Pawlenty’s objection in 2008.

Those increases, which still haven’t lifted our gas tax to the 50-state average, will continue to kick in for two more years. After that, we’ll need renewed attention to responsible funding of our economically vital transportation system. Here’s hoping our new leaders will follow the example of Britain’s conservatives and not the one in the Governor’s Mansion now.

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