Joshua Schank is president and chief executive of the Eno Center for Transportation. Jeff Davis is a senior fellow at the center and editor of the Eno Transportation Weekly.
Can you name the U.S. president who raised taxes during a recession to fund increased infrastructure investment? Must be a real liberal, right?
Actually, it was none other than Ronald Wilson Reagan, in 1982. He made this tough decision to ensure we had adequate investment in our transportation network.
Reagan’s unlikely move is all the more amazing when you consider that he did it without facing the pressure of a potential shutdown of the federal highway and transit programs, as we do now.
By the end of this month, Congress will have to bail out the Highway Trust Fund for the seventh time since 2008. Since that time, Congress and two administrations have been unwilling to increase excise taxes on gasoline, diesel fuel and the trucking industry, which together raise about $40 billion per year. They have also been unwilling to decrease new spending commitments drawn on the trust fund or to make any significant effort to spend what we have more effectively. Thus we are stuck in what feels like a permanent stalemate. Congress is drifting toward yet another temporary bailout without addressing the nation’s long-term needs.
So, how was it that a famously tax-cutting, conservative president such as Reagan raised federal taxes on motor fuels by 125 percent? We had to go to the Reagan library in Simi Valley, Calif., to find out.
First, it is important to remember that while Reagan was concerned about the burden of general taxation, he often supported raising specific taxes to recover the costs of federal spending benefiting certain groups or sectors. In fact, in his very first budget, in April 1981, Reagan proposed tripling aviation gasoline and jet fuel taxes over time so the Federal Aviation Administration could recover the costs of providing air traffic control to private planes. That budget also proposed tripling the taxes and fees paid by barge operators on inland waterways and would have defrayed one-third of the Coast Guard’s operating budget through new fees charged to boat owners and operators. A tax increase on motorists and the trucking industry to defray increased costs of road construction was consistent with this philosophy.
Second, congressional Republicans have fundamentally changed their political approach since Reagan’s time. An internal whip count of House Republicans in April 1982 showed that more than 70 percent of them told their leadership that they would “favor some revenue raising measures” to fight the deficit. And Republicans on the Senate Finance Committee almost passed a bill in the summer of 1982 raising the gas tax for deficit reduction. Today’s congressional GOP is so viscerally anti-tax that even a Republican president as beloved within the party as Reagan would have difficulty replicating his successes.
Third, Reagan gave Cabinet secretaries freedom to speak their minds on policy in a way that seems almost unthinkable today. Then-Transportation Secretary Drew Lewis was publicly advocating for a gas-tax increase for almost a full year before Reagan approved the plan. Lewis was always careful to say, essentially, “the president has not signed on — yet,” but he was quite open about asking for help in convincing Reagan that a tax increase was the right move. Lewis’s experience stands in stark contrast to that of Ray LaHood, who as transportation secretary in February 2009 remarked that the government should explore a possible transition to a mileage-based road-use tax only to be instantly rebuked by President Obama’s press secretary.
Fourth, once Reagan made a decision to support a policy, he went all in. On Nov. 23, 1982, Reagan formally signed off in support of a gas-tax increase. A sophisticated Transportation Department outreach operation followed and was matched by a significant personal effort by Reagan. He gave speeches to interest groups, delivered a national radio address, made dozens of telephone calls and held meetings with members of Congress to raise support for the tax increase and for the public infrastructure spending the proceeds would support.
We are desperate for that kind of leadership today. The federal transportation program has lacked sustainable funding for so long that states and localities, which rely on federal funding for about 45 percent of their capital investments, cannot make effective long-term planning decisions. Meanwhile, our underinvestment in transportation is making us less competitive globally, as people and goods are delayed by antiquated systems designed and built decades ago.
Congress and the administration would do well to learn from the bold decisions made by Reagan and the 1982 Congress. They faced difficult obstacles, including a recession, growing infrastructure needs and political challenges. Yet they worked toward compromise and found a solution that sustained federal transportation investments for years. In the spirit of our 40th president, the time has come for Congress and Obama to show some courage and make wise investments in the nation’s future.