THE GAS-TAX-and-highway-repair bill is rapidly turning into this year's biggest Christmas tree. So far, there have been three especially damaging additions.
While creating new jobs is not the purpose or likely effect of this legislation, every effort should be made to get as many jobs out of the program as possible. The best way to do it would have been to amend the Davis-Bacon Act, which, as currently applied, significantly increases wage costs on many construction projects.
Instead, the bill would actually make the situation worse by extending Davis-Bacon requirements to repair work now primarily done by small contractors who pay lower wages. It means that perhaps 40,000 fewer jobs will be created each year. If the unions try to tell you that Davis-Bacon doesn't drive up wages, ask them why they are pressing so hard to extend it.
Another self-defeating provision of the House bill would stiffen the "Buy American" limits on imported construction materials and rolling stock. That would also drive up construction costs, ensuring that fewer repair and construction projects are completed.
Still worse, the Senate bill fully exempts gasohol from the tax. That is a truly destructive amendment. For years American farmers have dreamed of a boom in gasohol -- one-tenth alcohol, nine-tenths gasoline -- to eat up their surplus stocks of grain and do for their prices what the two great oil crises of the 1970s did for oil prices. The chairman of the Senate Finance Committee, Robert J. Dole, is from a farm state.
Gasohol is already exempt from the present 4-cent federal tax. If it is exempted from the next 5 cents as well, the total exemption is worth 90 cents a gallon for the grain alcohol going into the mixture. Cars with gasoline engines can run on gasohol without modification. If this enormous new subsidy becomes law, two things will happen. First, there will be a huge swing to gasohol simply because it will be, courtesy of the U.S. Treasury, cheaper than gasoline. It is quite possible that the swing would be large enough that, far from raising new revenue, the bill would reduce the amount raised by the present tax.
Next, in the longer run, the subsidy would divert very large amounts of grain from the food supply to the highway fuel supply. It is hard to imagine a more wanton misuse of food, or a more foolish way to raise grain prices. If the gasoline bill is passed with the gasohol exemption, President Reagan would do well to veto it.