Congress is urged to raise gas taxes

A day after President Obama proposed $50 billion in new spending on roads and bridges as part of his State of the Union Address, a leading business group called on the Congress to do something that hasn't been done in twenty years, raise federal gasoline taxes to pay for infrastructure projects.

"We've got to build and maintain a globally superior infrastructure," said U.S. Chamber of Commerce President Tom Donahue.

"I promise you, it will not get better while we sit here and look at it," Donahue added in a House hearing on how to fund the construction of new roads and bridges.

But while the idea of increasing the gas tax may make sense to some in the Congress, there is a pretty basic reason the tax hasn't been increased since the first year of the Clinton Administration - there is bipartisan opposition, demonstrated by the sharp elbows thrown at Donahue soon after his testimony at a hearing on Wednesday morning.

"Unfortunately, Mr. Donohue has lost touch with the business people he represents," said Rep. John Mica (R-FL), who expressed strong opposition to the idea of any gas tax increase.

Mica then went a step further in a written statement, urging the ouster of the national Chamber President - "it would be my hope that he can seek other opportunities for employment as soon as possible.”

Donahue and Mica weren't really expressing anything new, but it was a reminder just how tricky the idea of extra spending on roads and bridges still is in the halls of the Congress.

Here is an excerpt of Donahue's testimony:

"This is not a new position. The Chamber has been saying this to Congress every chance we can for years. We all know the dire condition of our highway and transit systems. It's going to make money to fix it – it's that plain and simple. The money is running out, so we need to phase in a moderate increase in the gas tax over a number of years and index it to inflation. Shippers and truckers are all on board to pay a little more as long as the money goes to where it's needed.

The issue of how to pay for more roads and bridges also was a reminder of one of the key missing ingredients in the State of the Union Address, which included a number of new projects but no cost estimates or plans on how it would be paid for by the Obama Administration.

"The President laid out a lot of new spending programs that we can't afford," said Sen. Rob Portman (R-OH), himself a former White House Budget Chief.

The Obama White House has been pushing for extra spending on roads and bridges for several years since the stimulus ran out, but has never really settled on funding.

For example, in the budget he sent Congress two years ago, the President's plans included $328 billion in funding over ten years for new roads and bridges.

But the President never told Congress where that money would come from.

"He is not in favor of raising the gas tax when unemployment is at 8.9%,” Senators were told in March of 2011 by Transportation Secretary Ray LaHood.

Fast forward two years, and the jobless rate is about one percent lower nationally, and the idea of raising the gasoline tax seems just as far fetched.

It's one reason toll roads have rebounded in recent years, as state and local governments see that as an easier way to bring in new revenue, rather than pushing for an increase in the gas tax.

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