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The U.S. Chamber of Tax Hikes

Posted By Ronald Utt, Ph.D. On July 21, 2011 @ 12:45 pm In Economics | Comments Disabled

Some national business leaders are outright opposing measures of fiscal responsibility. Fortunately, fiscal conservatives in Congress are fighting back.

Case in point: reaction to House Transportation and Infrastructure Committee (T&I) Chairman John Mica’s (R–FL) proposed six-year reauthorization bill, which limits transportation spending to the federal fuel tax revenues flowing into the trust fund. The U.S. Chamber of Commerce’s reaction was to label the proposal “unacceptable.” Apparently in their view, the proposal doesn’t spend enough money on the business community.

Chairman Mica quickly responded to the president of the Chamber on July 13, calling the reaction “most disappointing and a potential setback to enacting a long-term transportation reauthorization.” He continued:

During my years of service on the Transportation and Infrastructure Committee I have seen the National Chamber of Commerce evolve from an Association that would advocate strong infrastructure and responsible fiscal policy on behalf of its members to an organization whose primary purpose in the national infrastructure arena appears to be to lead the lobby for tax increases.

In contrast to the Chamber’s tax-and-spend advocacy, the House budget plan for fiscal year 2012 would cut all federal transportation programs by $29 billion, or 31 percent from this year’s level. And Chairman Mica’s six-year reauthorization proposal calls for spending $230 billion over six years for highway and transit, about $55 billion less than the 2005 reauthorization bill. Apparently fiscal prudence and targeted spending aren’t enough for the Chamber and some Committee members, who want to spend, spend, spend, and argue that raising taxes to do so is acceptable.

Chairman Mica also noted the Chamber’s earlier support for one of the most bizarrely extravagant and willfully ineffective highway bills ever put forward: the plan introduced by then-T&I Chairman James Oberstar’s (D–MN) draft reauthorization bill. That plan proposed to reduce the presence of cars by diverting more money to transit, passenger rail, bureaucracy, and “smart growth” housing policies.

As Mica noted, the Oberstar bill “proposed a large gas tax increase despite the fact that his legislation restricted the construction of any new highway capacity, purposefully stymied private investment in transportation infrastructure, expanded mandates on transportation enhancements such as graffiti removal, transportation museums, roadside landscaping…It would have funneled valuable resources into a proposed ‘Livability Initiative.’”

Mica further chided the Chamber, saying, “Despite these severe flaws, your organization enthusiastically encouraged support for the legislation based on the proposed increase in the gas tax to pay for these costly and unproductive measures.”

The Chamber is not alone in opposing the Mica Committee’s proposal. Some T&I Committee members, such as Ranking Member Nick Rahall (D–WV), lambasted the proposal [1] for not spending more.

Though the new House majority flatly rejects this big-government approach, the Oberstar plan still survives, reincarnate in the Obama transportation plan released in early February 2011.

The Obama/Oberstar plan proposed doubling transportation spending, directing much of that increase toward high-speed rail, transit, and planning projects—not highways. But because current federal gas tax revenues only cover half of the spending, the plan resorts to deficit spending and tax increases, conveniently “to be named later” to fill the gap.

 

Chairman Mica got it exactly right when he wrote that in “recent and coming elections, the priorities of the American Taxpayer have been and will be placed ahead of the unchecked desires of some in Washington to spend money that is borrowed to support our Treasury.” Mica said:

This new reality has proven to be frustrating for some in Washington who even fail to consider positive alternatives for supporting transportation projects and simply resort to deficit spending “come hell or high water.”

The Highway Trust Fund was at one time intended to be a true “user fee” system designed to benefit those it taxed; yet it has evolved over the years into a slush fund with less than 65 percent of its receipts dedicated to those who pay into the fund at the pump and much of that remaining money funneled into federally-mandated programs that states and localities would not otherwise prioritize.

Enough said. Chairman Mica’s forthright challenge to Washington’s vast, rich, and once influential highway lobbying community was desperately needed. He should be commended for standing up for taxpayers. Let’s hope that many of the other committee chairmen join him in standing up to the lobbyists, and that this becomes a bipartisan position as well.


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URL to article: http://blog.heritage.org/2011/07/21/the-u-s-chamber-of-tax-hikes/

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[1] lambasted the proposal: http://democrats.transportation.house.gov/press-release/committee-democrats-respond-republican-surface-transportation-proposal

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