1

Time to ABOLISH the Federal Gasoline Tax

Written by Daniel Horowitz

The way to make infrastructure great again is to make localism great again.

One need not be a flaming states’ rights advocate to understand that something as local in nature as surface transportation can be dealt with more efficiently and effectively on the state and local levels. Which is why, if Donald Trump wants to make America’s infrastructure great again, he should return the gas tax revenue and responsibility of transportation to the states rather than increasing the federal debt and pumping more money into the insane system that indirectly controls every pothole from Washington D.C., distorts proper planning and decision-making, and prevents local communities from debating their priorities.

The interstate highway system was completed over 25 years ago. Yet the political class in both parties believes that K Street lobbyists and federal bureaucrats should run the transportation policy of all 50 states, despite the fact that each state has a unique geography, topography, population density, and cultural differences in travel. The result is a failed cycle of bailouts for the Highway Trust Fund (HTF), thanks to states relying on the inefficient quicksand of federal transportation policy. The question going forward is: Will we double down on raising taxes and/or increasing debt to fund endless bailouts of an inefficient system? Or will we give states full control over their own transportation so they can plan ahead according to their needs and have a debate over taxes and spending priorities where the options can be weighed in the most transparent fashion?

The truth about highway spending

Much as the payroll tax was sold as a pay-as-you go supply for Social Security, the 18.4-cent-per-gallon federal gasoline tax and the 24.4-cent federal diesel excise tax were promised to be used exclusively for highways and bridges. They collectively fund roughly 86 percent of the total HTF, while the remainder of revenue comes from excise and sales taxes on tires, tractors, and heavy trucks. And just as with Social Security, whereby 17 percent of the funds were later diverted to the disability program, roughly 20 percent of the highway funds have been diverted toward mass transit, due to urban pressure groups. Furthermore, according to the Heritage Foundation, Davis-Bacon Act age mandates jack up the cost of construction projects by 22 percent. The cost of our current environmental regulations is incalculable. This has created a dynamic where we spend about $55 billion a year from the highway trust fund while bringing in just $40 billion in revenue, resulting in a $15 billion annual shortfall every year.

The Chamber of Commerce and U.S. House Transportation and Infrastructure Committee Chairman Bill Shuster complain that we have not raised the federal gas tax in 25 years and that it has endangered our roads and bridges. But the reality is that we have not gone without the extra spending because we have bailed out the trust fund from general revenue whenever there was a shortfall. Since 2008, Congress has transferred roughly $143 billion of general revenues to the HTF, $71 billion in 2015 alone when it last reauthorized federal surface transportation programs and the gas tax through 2020. At the time, 24 percent of the bailout funds were funneled toward mass transit!

Thus, the case for returning transportation spending to the states is even more compelling than for education spending.

If we were to turn over the gas tax system to the states, states could set their rates to the same levels as the current combined federal and state gas tax rates. They’d thus be able to cover all of their needs simply by cutting out mass transit and Davis-Bacon regulations. As the Competitive Enterprise Institute observed, we are spending up to 28 percent of the highway funds (combined federal and state) on a method of transportation that accounts for less than two percent of all trips. Accordingly, most of the entire projected shortfall in the Highway Trust Fund is the result of increased spending on mass transit.

If states want to spend more money on mass transit, then they should have a local debate over cutting other spending or raising the gas tax over and beyond the current federal level. But it must be done at a local level. The problem with the current system and the one Trump wants to expand is that is makes the states reliant on the unpredictable and inefficient federal sinkhole. This hampers long-term planning and a sense of prioritization. In their alacrity to gobble up the short-term money before it runs out, state and local governments tend to use the federal funds on small-time and indivisible projects, such as incessant road repaving, instead of better-planned long-term projects. Or they funnel the money to special interests, such as mass transit. Ever wonder why there are buses running through your neighborhood where everyone has two cars? You have no input because there is free money coming from the feds.

What crumbling infrastructure?

The inefficiency of relying on the federal government for highway spending has made it harder to properly plan projects without needlessly creating traffic jams. It prevents states from planning long-term maintenance, which is a much bigger need than new infrastructure. Yet it’s hard to conduct ribbon-cutting ceremonies for an existing road, which is why so much of the federal funding is steered towards projects that are not a priority but that make headlines for politicians. Localism would force a “sink or swim” debate of prioritizing maintenance over new construction. On the other hand, spending more money and raising the gas tax at a federal level, as Transportation Secretary Elaine Chao is calling for, would shield politicians from having this debate. And even if locals ultimate feel that it’s worthwhile to build a new road, they can choose from a range of options, from short-term gas tax increases and fees to cutting other projects. It’s called self-governance.

Once states are empowered with the revenue and responsibility to care for their own local needs, there should not be a need for a massive spending increase in most states above and beyond the current levels. The premise that our entire surface transportation system is crumbling across the board and in need of trillions more from the federal government is a myth and will only exacerbate the existing inefficiencies. We have spent more money on transportation in recent years, and according to the Government Accountability Office, the share of structurally deficient bridges has dropped dramatically over the past decade.

According to Reuters, fewer than 20 of our nation’s 1,200 busiest bridges are structurally deficient. And the way to target their repairs is not by giving states unaccountable handouts but by forcing them to stand before their voters and properly prioritize these needs over other projects to which they inevitably steer funds under an open-ended federal entitlement. Basic maintenance of the highways we already have should be the responsibility of the local governments.

The good and bad of Trump’s transportation proposal

President Trump has the right idea about streamlining the permitting process, cutting regulations, and eliminating judicial meddling from junk lawsuits. He is also right to pursue private investments and lifting caps on tax-exempt municipal bonds so that states can lure private investors into these projects at lower interest rates. He should pursue these policies as a standalone initiative, along with eliminating Davis-Bacon regulations, without a massive new entitlement. The problem is that this will only happen by getting the federal government out of the way, not by making the federal government, the Department of Commerce in particular, the gatekeeper for grant programs to hold over the states. States must be given independence – with the opportunities AND responsibilities to force them to make the right decisions on their own.

Throwing more federal money at states, with federal bureaucrats setting the terms, will exacerbate the fatal flaw of current policy, which is the distortion of sound decision-making and prioritization at a local level. President Trump has identified the correct end goal by trying to leverage public-private partnerships, but the only way to ensure that outcome is by cutting off the federal spigot while simultaneously giving states all of the gas tax revenue. Trump’s blueprint rightfully recognizes that “states and localities are best equipped to understand the infrastructure investments needs of their communities.” But a $100 billion grant program that is a hybrid between Medicaid expansion and Common Core in terms of federal dictates is moving in the opposite direction.

As for other infrastructure, such as waterways and drinking water, according to the CBO, we already spend $416 billion in combined federal, state, and local expenditures. States have already been ramping up spending in recent years and account for three-quarters of the total sum. Why not put all of it on the states and make them completely independent for highway and road maintenance? U.S. Senator Mike Lee (R-Utah) and U.S. Representative Ron DeSantis (R-Florida) have a bill doing just that, while maintaining a small portion of gas tax revenue to be used for the few projects that are national in scope.

A true compromise between the increased spending and the better elements of Trump’s plan would do the following:

  • The increase in spending would be the last federal bailout, thereafter putting all highway spending on the states within five years.
  • Condition the spending increase on his regulatory reform as a single In other words, no new spending without the reforms attached.
  • The new spending should be used for highways, not mass transit.
  • Trump should publicly tout some other good reforms in his bill, such as selling off public lands and privatizing some airports and electricity facilities. Don’t just talk about increased spending.
  • Scrap the plan for a $50 billon slush fund for rural communities. The federal government already has enough subsidies for rural programs, and if there is a need for new roads, that must be handled on a state level. Instead, states have issues maintaining the roads they already have rather than a need for new ones, particularly in rural areas.

We wouldn’t want garbage collection to be run by the federal government, so why do we continue to depend on a broken Washington for local road and highway issues?


Take ACTION:  Click HERE to send a message to President Trump and to your U.S. Representative asking them to abolish the federal gas tax and let the states lead on planning and decision-making regarding road, bridge and highway infrastructure.  Urge them to reject the idea of raising regressive federal gasoline taxes which hit middle class and poor families the hardest.  Ask them to stop feeding an inefficient and bloated federal bureaucracy and instead return control to the states.


This article was originally published at ConservativeReview.com




The Illinois Pension Scam: Unconstitutional and Corrupt

Before citing a few facts and linking to a few articles from the Illinois Policy Institute, let me outline reality in simple terms: the pensions systems cannot be fixed. They need to be shut down, taxpayers should be cut free from the scam, and the state government should get out of the pension business. After decades, it has proven incapable of being trusted with tax dollars for employee pensions.

Some may think my position is extreme. I would argue that anyone pretending that the systems can be salvaged is dreaming “sweet dreams that leave all worries far behind” them.

They need to wake up. Bankruptcy laws exist for just this kind of  circumstance. The system is insolvent. Period. It’s not even close.

Another critical issue is also ignored: Looking at just the teacher union contracts with local school districts, they are premised upon the fiction that government employees and government officials (in this case elected school board members) can legally contract not only with under-aged Illinois citizens, but also unborn future taxpayers.

If contract law is to be applied properly, all the past, existing and current contracts would be voided. There isn’t one of them that has been signed in the past few decades that was not predicated upon the fact that future generations would have to pony up the billions of dollars needed to pay for generous health care and pension benefits once the contracted employees retired.

There is also a serious U.S. Constitutional issue regarding the unequal treatment that is being given to government employees. You can read about it here.

Regarding the Illinois constitution’s clause regarding diminishing benefits, how about we apply those words the same way our state constitution’s protection of religious liberty is being applied to Catholic charities and adoptionmarriage, and bed and breakfast owners.

The Illinois Supreme Court has ruled that Illinois taxpayers are on the hook for all the excessive benefits. Conservative legislators especially like to use the court as an excuse for failing to get real about the magnitude of the problem. The court should be ignored. We are not a country or state run by the courts, but rather by the people, and the Illinois Supreme Court doesn’t have the constitutional power to tax and spend.

If members of the Illinois Supreme Court would like to consult with Bill Zettler about common sense, I have his email address. They’d double their understanding of constitutional government in the process. The state’s constitution cannot produce a miracle. Economics always wins and if something is impossible, it won’t happen. Even if you’re saying it should from a seat on the highest court in the state.

As promised, here are just a few facts and a few links from the Illinois Policy Institute:

  • The problem facing Illinois’ five state-run pension funds is the unaffordable pension benefits that have been granted to government workers and government unions over the past several decades.
  • The generous rules on retirement ages, cost-of-living adjustments, or COLAs, and employee contributions have caused pension benefits to grow by more than 900% since 1987.

Some of the biggest drivers include the following facts:

  • 60 percent of state pensioners retired in their 50s, many with full pension benefits.
  • Over half of state pensioners will receive $1 million or more in pension benefits over the course of their retirements.
  • Nearly 1 in 5 will receive over $2 million in benefits.
  • Almost 60 percent of all current state pensioners can expect to spend 25 or more years collecting benefits, based on approximate actuarial life expectancies.
  • Due to automatic, 3 percent compounded COLA benefits, those pensioners can expect to see their annual pension benefits double in size.
  • The average career pensioner will get back his or her employee contributions after just two years in retirement.
  • In all, pensioners’ direct employee contributions will only equal 6 percent of what they will receive in benefits over the course of their retirements.

Those are all from this article, which includes this:

The generous retirement benefits pensioners receive are fundamentally unfair to the taxpayers who are forced to pay for them. Private-sector workers are expected to fund the pensions of state pensioners who can retire and draw benefits in their 50s, who can receive annual pension boosts that can double their pension benefits over the course of their retirements, and who get back what they contributed to pensions after only two years in retirement.

Now tell me, how can Republicans and conservatives serving in elective office in Illinois not be motivated to do something after reading just those facts?

A few more links from IPI:

Pensions Over People
The pension problem was created and has been fueled by weak politicians — men and women who decided their next elections were more important than the next generation.

Each Illinois Household on the Hook for a $56K in Government-Worker Retirement Debt
In just six years, the total debt Illinois households are on the hook for has jumped to $56,000, or 31 percent. That’s a $13,000 increase for each household. Total unfunded debt for state and local governments in Illinois now totals $267 billion.

Illinois Needs to End the Third-Party Payer Problem for Teacher Pensions
Illinois’ teacher pension system is structured to allow local school boards to agree to generous contracts, knowing taxpayers across the state will foot the bill.

For even more enjoyable reading, focus on “pension spiking,” the use of unused sick days to ramp up pension checks, and compare how Social Security measures up to being able to retire in your late 50s and get a pension that is an average of your salary for your final four years. Oh, and compare Social Security cost of living adjustments with that of the state’s 3% COLA.

Again, for the latest and best information the current state pension crisis, peruse the many articles at the IPI website.

As a footnote — other top shelf organizations have researched and reported on the government employee pension scam. Here are just three examples (follow the links to learn more from each group):

Mapping the $100,000+ Illinois Teacher Pensions Costing Taxpayers Nearly $1.0 Billion
By Adam Andrzejewski, the founder and CEO of OpenTheBooks.com.

The Heritage Foundation

And this problem is not unique to Illinois — visit Pension Tsunami to learn more.


Read Part 1 — There is No Excuse for the Failure of Reform

Read Part 2 – The Illinois Pension Scam: State Officials (Including Conservatives) Have Known About it for Many Years


A bold voice for pro-family values in Illinois!

Make a Donation

Click HERE to learn about supporting IFI on a monthly basis.