Wednesday, January 14, 2015

Bumps on the Road

Gridlock in Washington contributes to gridlock on our highways.

The best supply chain can’t make effective links when shipments need to travel over crumbling, inadequate roads, or bridges that fail due to lack of maintenance.

The deteriorating state of this country’s transportation infrastructure can hamper the free flow of goods and choke off commerce. Fixing this problem, which is becoming more acute as shipping picks up in a rebounding economy, requires political courage from legislators in Washington – so don’t hold your breath.

For many in Congress, the calculation is simple: The risk of not being reelected because they supported raising the federal fuel tax is greater than any political shield or sense of rightness such support could provide. Despite another term being off the table, President Obama also has refused to support raising the tax and indexing it to inflation because of the political blowback for raising taxes — even those that fuel economic growth. For Congressional Republicans, of course, any tax hike of any sort is no more popular than, well, a congressman.

That the fuel tax — an 8.4-cents-per-gallon gasoline tax and 24.4-cents-per-gallon diesel tax, which goes to the Highway Trust Fund — hasn’t increased since 1993 is the main reason Congress has to use money from the general fund to fill the gap between HTF revenue and federal surface construction plans.

The U.S. spends about $53 billion on surface infrastructure annually but gets only about $35 billion of that from the HTF, according to investment research firm Stifel. To catch up with overdue repairs, the federal government needs to spend closer to $80 billion to $90 billion annually. We spend just 2.4 percent of GDP on infrastructure, according to the Council on Foreign Relations, compared to five percent in Europe, more than double. For China, the figure is about nine percent.

There are some signs our legislative logjam could be beginning to break up. In June, Senators Bob Corker and Chris Todd, a Republican and a Democrat, proposed raising the fuel tax, indexing it to inflation, and offsetting the move with other tax cuts. And this month, on “Fox News Sunday,” Sen. John Thune, a member of the Republican leadership, said while he is opposed to increasing the gas tax, lawmakers need to “look at all options. I don’t think we want to take anything off the table at this point.”

Even if Congress and the Obama administration give infrastructure proponents the bill they want, it will take years for intensified construction to provide the capacity. The new Tappan Zee Bridge being built across the Hudson River to replace the 60-year-old existing structure was commissioned in 2011, and will not open before 2017, at a cost between five and six billion dollars. Across the country, hundreds of bridge and roadway projects are needed to meet our surface transportation needs.

Sometimes “the extra mile” is bumpy. When you hit a pothole, or sit in a traffic jam, remember – it’s your tax dollars not at work.

Kirk Shearer

800-989-0054 x103

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