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Why Bush Is Right to Resist Raising the Gas Tax

Economists overwhelmingly support pricing and tolls

Ted Balaker
November 15, 2006

To many, George W. Bush is a dimwit who stands in the way of progress. Take the gas tax. Many smart people want to raise it. Even former Fed Chairman Alan Greenspan, a man of the right whose every utterance commands the world's attention, recently added himself to the list. But W. folds his arms and refuses to budge. It may look like obstinence, but this time the cowboy president may be on to something.

Many hope that higher gas taxes will curb American's appetite for driving. If we drove less, we'd pollute less and wouldn't have to worry as much about global warming.

A recent New York Times piece by Daniel Gross was typical. Gross pointed out that Europeans endure much higher gas taxes than we do. In the U.S. the state and federal gas taxes amounts to about 40 cents per gallon, compared to nearly $4 in Italy, France, and Germany. He also noted that the last time the federal government raised the gas tax was way back in 1993.

Then the surprising news: more right-leaning economists are saying it's time for a raise. It's not just Greenspan, but others like former Bush administration economists Andrew Samwick and Greg Mankiw, as well as prominent libertarian Tyler Cowen. It sure seems like a bipartisan consensus is emerging, one that makes Bush look like the Lone Star State loner.

Still, that doesn't mean he's wrong.

If there is a consensus among experts, it's for road pricing. A recent paper published in Econ Journal Watch found that economists overwhelmingly support pricing and tolls.

Suppose the price of bread were zero. At the grocery store you'd see a line going around the block. Just like in the old Soviet economy. Well, imagine if the price of highway access were zero�actually you don't have to imagine. Just look at the highway at rush-hour.

Our reliance on gas taxes means that drivers pay for roads when they're at the gas station, not when they're actually using them. The result is traffic congestion. And that congestion frustrates the environmental goals of those who support higher gas taxes. The Texas Transportation Institute estimates that each year idling cars burn 2.3 billion gallons of gas. That gas isn't taking someone to work or to a doctor's appointment, it's just wasted.

If our system were toll-based instead, motorists would pay for roads only when they actually used them. They would think more carefully before piling on the road at rush hour. Tolling, especially the kind of variable tolling used on the 91 Express Lanes, does more than give motorists speedy and predictable trips, it's also easier on the environment than stop-and-go traffic.

But if we boosted the gas tax we'd pump more money into a system in which decisions are based more on political pull than environmental concerns or motorists' needs. Just a couple decades ago, the federal highway bill was nearly pork-free. But the last one contained 6,000 earmarks amounting to about $25 billion. Raise the gas tax and we'll surely fund more bridges to nowhere and pork is just the beginning. More than a quarter of every gas tax dollar funds something other than highways and even much of the money that does go to roadwork is burnt up by bureaucracy. A former federal highway administrator reckons that federal regulations increase project costs by 30 percent.

And sky-high gas taxes havn't reduced driving as much as one might expect. Joel Schwartz points out that in Europe driving accounts for 78 percent of travel, only about 10 percent less than the U.S. And the Euros are gaining on us. Over there per capita driving has been increasing more than twice as fast as in the states. Higher gas taxes haven't spared them from pollution or traffic congestion either. In both cases, Europeans have it worse than Americans.

Economists also say that the gas tax will help the government's fiscal mess. Perhaps, but the fiscal mess can also be alleviated by turning highway facilities into revenue sources. Tolling for scarce highway capacity is good economics and good public finance.

Yet transitioning to tolls gets harder as gas taxes get higher. At $4.24 per gallon, Britain has Europe's highest gas tax. It's made tolling a tougher sell as Brits demand to know why they should pay more when they already pay so much. American reformers may regard tolling as even more of a political long-shot than raising the gas tax, but there are signs that motorists are warming to tolls. Users of High Occupancy Toll (HOT) lanes in Southern California and Minneapolis give them high marks and folks in places like Atlanta, California, Denver, and Washington, D.C. tell survey-takers that they prefer tolls to taxes.

When he opposes an increase in the gas tax is Bush being courageous or pig-headed? Who knows? Whatever his reasons he's making it easier to escape from an old system that doesn't work.

Reason Foundation's Ted Balaker is co-author of The Road More Traveled: Why The Congestion Crisis Matters More Than You Think, And What We Can Do About It (Rowman & Littlefield 2006). An archive of his work is here and Reason's transportation research and commentary is here.


Ted Balaker is Producer


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