Gas-tax hike is no holiday for Congress

A motorist reaches for his receipt after pumping gas into his Chevy Suburban at a Shell station in Chicago.

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KAI RYSSDAL: On the topic of things getting more expensive, remember the gas-tax holiday that was in the news a couple of months back? John McCain wanted to give drivers a break by suspending the 18.5 cents-a-gallon federal gas tax. Still does. Hillary Clinton said she was in favor. Barack Obama said he wasn't. Anyway, Congress never did anything about it and, in fact, now the talk on Capitol Hill is about raising the gas tax. Marketplace's Jeremy Hobson reports from Washington.


JEREMY HOBSON: The gas tax fills up the Highway Trust Fund, which pays for the nation's transportation infrastructure. But the gas tax hasn't gone up since 1993, despite rising costs for construction and cars that get better mileage. As a result, the fund faces a $3 billion deficit next year -- its first ever.

Jeff Solsby with the American Road and Transportation Builders Association says that means job losses, first and foremost in road construction.

Jeff Solsby: If nothing is done to address the looming Highway Trust Fund shortfall coming October 1st, you're looking at in the neighborhood of 486,000 jobs at jeopardy when states are immediately impacted with a 34 percent across-the-board cut in federal funding sent to states.

Job losses resonate on Capitol Hill. After all, the only thing as scary as raising taxes for a politician is a bunch of angry, unemployed voters. In the short term, Congress may pitch in money from general tax revenues to fill the gap.

As for the long term, there are a number of unpleasant options.

Geoff Yarema, who is helping Congress develop solutions for the Highway Trust Fund dilemma, says there could be increases in tolls, a vehicle-miles-traveled fee, and/or a higher gas tax.

GEOFF YAREMA: It is the most-conventional outcome. And because it's conventional, I suspect it will get very serious consideration.

But Yarema says even a gas-tax hike would be like putting a Band-Aid on a deep wound. Because down the road, we'll still be driving -- but we almost certainly won't be using as much gas to do it.

In Washington, I'm Jeremy Hobson for Marketplace.

About the author

Jeremy Hobson is host of Marketplace Morning Report, where he looks at business news from a global perspective to prepare listeners for the day ahead.

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