Obama Administration Refuses to Consider New Transpo Funding

Having entertained legislators' own ideas about how best to fund future transportation spending, the House Ways and Means committee turned to representatives from the administration and key interest groups today to hear their thoughts on the matter.

The
administration's view could not have been much clearer -- this business
is all very important, but we're not ready to commit to anything at
this time.

Roy Kienitz, the Department of Transportation's
Undersecretary for Policy, made it quite clear that the administration
is not prepared to support any of the new funding mechanisms proposed
-- not a VMT tax, not indexing the gas tax to inflation, and not taxes
on imported oil and refined gasoline.

Kienitz did leave the
door open to a tax on trading of oil futures, which he said the
administration would have to investigate thoroughly. A key concern is
that in a world where oil is traded on global markets, such a measure
would simply shift trading off of American soil.

Why the
stubborn refusal to engage in the funding debate? Ostensibly, the
administration is reluctant to adopt new taxes or fees amid recession.

But
this explanation rings hollow. Congress could easily delay the time at
which revenue-raising measures take effect until 2011 or later, as is
being done with funding mechanisms in the health reform bills under
consideration.

The president must know this. A reasonable
assumption is that he simply does not want to have a tax debate at this
time, not with other key priorities involving new tax burdens also
being considered.

With the administration all but
out of the discussion, the rest of the hearing seemed somewhat
academic, but the committee pressed on. The primary interest groups
are, not surprisingly, arguing for their own protection.

C.
Wick Moorman, CEO of the regional freight rail operator Norfolk
Southern, declared himself supportive of tax incentives for new freight
rail investments. Peter Pan Bus Lines President Peter Picknelly asked
that the intercity bus line fuel tax exemption be extended in any new
transportation bill reauthorization.

And Barbara Windsor,
there to represent Hahn Transportation and the American Trucking
Association, was quite adamant in expressing the trucking industry's
opposition to new revenue-raising measures.

ATA has endorsed
continued reliance on fuel taxes, but it strongly opposes use of a VMT
tax, or any tolling of lanes not associated with switching HOV lanes to
HOT.

Windsor also had sharp words for the Waxman-Markey energy bill recently passed by the House.

She
said she'd been told that it would result in an increase in diesel fuel
prices of between 70 cents and 90 cents per gallon for truckers
(numbers that are almost certainly incorrect; reports from the Congressional Budget Office
and other reputable sources suggest that the carbon prices necessary to
generate that increase in fuel prices won't obtain for decades).

Given
that America's trucking fleet averages about 6.2 miles per gallon,
according to Windsor, those higher fuel costs would be quite damaging
to the industry.

A more hopeful note was sounded by the
American Automobile Association's Robert Darbelnet, who noted that AAA
supported an increase in transportation investment and supported
measures to raise revenue to fund that increase.

Darbelnet
pointed out that the value of the federal gas tax has declined some 50
percent since it was last increased in 1993, thanks to inflation and
increased fuel efficiency.

Given improvements in
accountability and a comprehensive national transportation plan, AAA
could support an increased gas tax, a VMT tax, or congestion pricing in
places with alternatives to travel on priced roads.

All told,
it was plenty for the administration and legislators to chew on as they
attempt to fill the $200 billion gap between current revenues and
planned spending. One important thing to keep in mind -- while new
taxes might play poorly now, amid recession, recovery will almost
certainly result in higher oil prices, which will also make it
politically difficult to raise or introduce new taxes.

There's
never a perfect time to try to increase revenue. Hopefully leaders will
soon coalesce around a few good ideas, so they can begin the difficult
job of selling voters and interest groups on the necessary measures.