By Laura O'Neill, OOIDA government affairs counsel
Regardless of one’s party affiliation, filing into the nation’s capitol in anticipation of the president’s annual State of the Union address is a mesmerizing moment and enough to give any political junkie like myself goose bumps.
As I sat listening in the gallery audience of the U.S. House of Representatives, I heard the U.S. president acknowledge, for the first time in years, that transportation and infrastructure must be a priority. And that in order to look toward the future, we must jettison a crumbling framework in favor of first world innovation, not only for safety and efficiency but also job creation.
While transportation insiders were pleased to hear the president acknowledge the importance of infrastructure, we were also sobered by the question of whether we can actually pursue meaningful infrastructure improvements while seeking to cut federal spending.
The tone on Capitol Hill projected by the Republican House and the Democratic administration was evident in the president’s speech: We must freeze the budget and eliminate unnecessary spending.
Obviously, the parties will bicker as to what the definition of “unnecessary spending” is. The president proclaims it is subsidies for oil companies. Others insist across-the-board cuts are essential, including certain entitlement programs such as Social Security, Medicare and Medicaid.
Transportation spending is technically “off budget” – which means it is separate from the general treasury and won’t be subject to that “freeze” he mentioned. Regardless, if we are to engage in considerable infrastructure improvements one would assume we must pass a highway reauthorization bill.
That begs the question: How do we pay for it and keep the costs deficit neutral as the president, and the nation, seem to desire?
Truckers play a role in replenishing the Highway Trust Fund, in part, through a 24.4-cent diesel tax and a 12 percent excise tax on new equipment.
Many argue, though, that previous raids on the trust fund in order to address deficit issues in other areas have left the once robust fund depleted and without a funding mechanism able to address current demands.
This reality has left many to push for an increase in existing fuel tax rates, a proposal the administration has avoided. Even the mere mention of tax increases has caused a reauthorization bill to be tabled numerous times.
So, needless to say, now that the president has finally traveled down this road he has some serious questions to answer, or else this will be viewed as empty rhetoric.
In the absence of new fuel taxes, the president is left with a few existing options.
He briefly mentioned the first option: increasing private investment. The thought is enough to put any trucker instantly on guard. Privatization usually means more tolls. That increases the overhead for truckers, which in turn increases the amount consumers pay for items shipped by truck.
Not exactly a recession-friendly approach.
Another option is increased taxes on the price of oil per barrel. But as the nation moves away from oil in favor of alternative energy, isn’t this concept a temporary fix that will be just as antiquated and inefficient as the fuel tax?
In addition, a Republican-controlled House is likely to be more sympathetic to oil interests and not favor additional burdens, particularly if the president is already cutting oil subsidies.
Ultimately, I think we are going to see a combination of approaches because politics and economics will demand it.
I believe the president will attempt to live up to his promises on infrastructure in the name of job creation. We will see some old funding “friends” like privatization emerge and some new taxes introduced, although they will not likely be as simple as a fuel tax but rather complicated funding schemes.
One thing is assured in all this uncertainty. If you are a trucker, your bottom line will be affected by new tolls, taxes or other so-called user fees. To be certain your contributions go to highways – you must be engaged in the final decision-making. LL