2012-09-17

Everyone Must Change Except Uncle Sam

Today's online version of The Wall Street Journal alerts me of a heretofore unknown fact: The gas tax is broken and needs to be fixed.

For as long as I can remember, the gas tax has been the closest thing I have been able to think of to a genuine, widespread, and successful user fee that really did succeed in raising large amounts of revenue in a way that nobody objects to.

I guess I am slow on the uptake. The Journal reports:
Transportation experts have been warning for at least a decade about the looming crisis in the motor-fuels tax. The federal tax, at 18.4 cents for gasoline and 24.4 cents for diesel, hasn't changed since 1993. As a result, the tax buys about half the concrete, steel and other materials it did 20 years ago.
That sure sounds like a problem. What could have caused such a thing?
The problem is twofold: First, the tax has failed to keep up with the rising cost of highway construction and repair. And second, improved fuel economy and the rise of hybrid and electric vehicles means that more driving won't be matched by higher gasoline sales, and that how much people pay for the roads won't necessarily reflect how much they use them.
Thus, as The Journal indicates, the reason the gasoline tax needs to be "fixed" is because government construction contracts are too large, and cars too energy efficient. The really amazing thing about this issue is that it highlights the tragicomic paradox of government.

On the one hand, government expects private industry - in this case, automoble manufacturers - to innovate endlessly, on the government's personal schedule. Let us not forget that the EPA and its political supporters routinely take credit for causing the auto industry to improve its fuel efficiency standards - without the benevolent EPA and government in general, we would be hopelessly stuck in the world of the Model T. The EPA sets fuel efficiency standards years in advance and requires the automobile industry to adhere, just somehow. Amazingly, the industry responds effectively, thanks to profit motive and private ingenuity.

And yet, on the other hand, the government itself refuses to innovate. The government itself will not economize. Its construction contracts increase year after year, with no watchdog group setting "infrastructure expense standards." As the cost of raw materials increases, the world's single largest producer of infrastructure plans and expenditures continues down the same fiscal path it was on twenty years ago.

The message here is that everyone must innovate - except the government. When costs rise so high that they can no longer be supported, it is the tax that must change, not the spending pattern. The government cannot think up new ways of designing highways to make infrastructure less costly - they must simply collect more money.