White House revisits gas-tax increase

Trump Tax Overhaul
White House chief economic adviser Gary Cohn

WASHINGTON – The White House is revisiting an increase in the federal gas tax to pay for infrastructure improvements President Trump promised to deliver on the campaign trail.

That news was conveyed to House members Wednesday in a meeting by Trump’s chief economic adviser, Gary Cohn.

“Probably whatever we end up being able to do in Washington, it’s going to take administration leadership to get out there and push for it,” said a GOP House staff member familiar with the long-standing resistance to a gas tax hike by many congressional Republicans.

After campaigning on a promise he would lure private capital to invest in infrastructure, Trump in late April said he would be open to bumping up the federal gas tax, which has not seen an increase since 1993.

Some Democrats, notable among them Rep. Peter DeFazio (Ore.), ranking Democrat on the House Transportation Committee, have fought an upstream battle to increase the tax.

“It’s totally inadequate if it’s 7 cents,” DeFazio said, alluding to the increase Cohn reportedly proposed. “With 7 cents, we wouldn’t be able to maintain the current level of spending.”

The fact that few people are aware of the federal tax was made evident last year when former Pennsylvania Gov. Ed Rendell asked a room filled with transportation experts how many of them knew the precise amount Uncle Sam collects at the gas pump.

Only three hands were raised. The tax is 18.4 cents per gallon for gasoline and 24.4 cents per gallon for diesel.

Congress has done endless hand wringing over infrastructure in the past decade, aware that the roads, bridges, transit networks, water and sewer systems and the electrical grid built after World War II have reached the end of their natural lifetimes and are no longer adequate for a population that has more than doubled since 1950.

For all the lamenting of their own inaction, the House and Senate have done little to generate new revenue for the sagging Highway Trust Fund, whose primary source of income has been the federal fuel tax.

With strong Republican opposition to a gas tax increase – even as more than two dozen states, including many red ones, bumped up their own gas taxes – highway and transit funding has been bolstered with what critics have dismissed as fiscal gimmicks.

Trump campaigned on a promise to raise $1 trillion for infrastructure, primarily by offering tax breaks to corporate investors. In an April interview with Bloomberg News, he said increasing the gas tax was “something that I would certainly consider . . . if we earmarked money toward the highways.”

When Cohn met with lawmakers Wednesday to push for that increase, he signaled White House eagerness for an initial legislative victory, one that would deliver on a Trump campaign promise.

“It’s certainly a potential door opening given that this came from Mr. Cohn,” DeFazio said. “This is a good and more realistic approach. We need to have a more robust discussion, the number would need to be higher, and it would have to be indexed” to inflation.

DeFazio earlier this year sent the White House a proposal with bipartisan sponsorship.

“Knowing the resistance on the other side of the aisle, I proposed the most minimalistic thing I could think of, which was indexation of the gas and diesel tax, capping the annual increase at 1.5 cents per gallon,” he said. “We would issue $33 billion a year of bonds over a 15-year period, raising approximately $500 billion.”

That bill has gotten no traction, although House Transportation Committee Chairman Bill Shuster (R., Pa.) says all means of infrastructure funding remain on the table.

“To do 7 cents, they need to roll Paul D. Ryan and others,” DeFazio said. “Paul believes that if it’s worth doing, the private sector will do it. I can’t even get him to agree to indexation of the gas tax.”

Ryan’s office referred inquiries to the House Ways and Means Committee and did not respond to DeFazio’s concern that Ryan opposed the increase.

Another Republican House staff member who, like his colleague, spoke on the condition of anonymity to speak candidly about the Cohn overture, called the conversation “hopeful.”

“It’s a good sign that the administration is still focused on infrastructure,” he said. “I think that’s the takeaway, and not so much anything that was discussed at any particular meeting.”