Why Bush Is Right to Resist Raising the Gas Tax

Economists overwhelmingly support pricing and tolls

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 an award-winning filmmaker, journalist, and founding partner of Korchula Productions, a film and new media production company devoted to making important ideas entertaining.

Ted is the director of Can We Take a Joke?, a Korchula Productions feature documentary about the collision between comedy and outrage culture featuring comedians such as Gilbert Gottfried, Penn Jillette, Jim Norton, Lisa Lampanelli, and Adam Carolla. Ted is producing Little Pink House, a Korchula Productions feature narrative about about Susette Kelo's historic fight to save her beloved home and neighborhood. The film stars two-time Academy Award nominee Catherine Keener (Capote, Being John Malkovich, The 40-Year-Old Virgin) and Emmy nominee Jeanne Tripplehorn (Big Love, The Firm, Basic Instinct).

Ted produced the award-winning shorts The Conversation and Cute Couple. He is an executive producer on the feature documentary Honor Flight, and produced the film's first trailer, which attracted more than 4.5 million views. The Honor Flight premiere attracted an audience of more than 28,000 and set the Guinness World Record for largest film screening in history.

Ted is a founding member of ReasonTV, where he produced hundreds of videos and documentary shorts, including Raiding California, which introduced a nationwide audience to the Charles Lynch medical marijuana case.

Ted is co-creator of The Drew Carey Project, a series of documentary shorts hosted by Drew Carey, and creator of the comedic series Don't Cops Have Better Things to Do? and Nanny of the Month.

His ReasonTV contributions have been featured by The Wall Street Journal, MSNBC, Fox News Channel, and on the he John Stossel Special Bailouts and Bull, a first-of-its-kind joint project between ABC News and ReasonTV.

During Ted's tenure, ReasonTV received the Templeton Freedom Award for Innovative Media and in 2008 Businessweek recognized his short Where's My Bailout? (created with Courtney Balaker) as among the best of bailout humor.

Prior to joining Reason, Ted spent five years producing at ABC Network News, producing hour-long specials and 20/20 segments on topics ranging from free speech to addiction.

Ted's written work has appeared in dozens of publications, including The Los Angeles Times, The New York Times, The Huffington Post, Reason magazine, The Washington Post, and USA TODAY. He is the author or co-author of 11 studies on topics ranging from urban policy to global trade, and his research has been presented before organizations such as the Mont Pelerin Society and the American Economic Association.

Ted is co-author (with Sam Staley) of the book The Road More Traveled (Rowman & Littlefield, 2006), which Chapman University's Joel Kotkin says "should be required reading, not only for planners and their students, but for anyone who loves cities and wants them to thrive."

Ted has appeared on many radio and television programs, including ABC World News Tonight and the CBS Evening News, and has interviewed hundreds of thinkers and innovators, ranging from X Prize recipient and private spaceflight pioneer Burt Rutan to Templeton Prize-winning biologist and philosopher Francisco Ayala.

Ted graduated Phi Beta Kappa from the University of California, Irvine with degrees in political science and English.