By Jim Berard (202) 226-5064
A proposal to suspend the federal tax on motor fuels will do little to reduce gas prices but will cost jobs and increase congestion. That’s the view of House Committee on Transportation Chairman James L. Oberstar (Minn.) and Subcommittee on Highways and Transit Chairman Peter A. DeFazio (Ore.).
Sen. John McCain (Ariz.) proposed the suspension of the 18.3-cent federal gasoline tax in an effort provide drivers with relief from high fuel prices this summer travel season.
Unfortunately, say Oberstar and DeFazio, the proposal would save most drivers less than $30 for the entire season, but would cost states billions of dollars in lost highway construction, highway safety, and public transit funding, and force the elimination of hundreds of thousands of construction jobs across the country.
Oberstar and DeFazio released the following joint statement:
Senator McCain proposes to suspend the 18.3-cent Federal gas tax from Memorial Day to Labor Day. The 18.3-cent gas tax rate was established in 1993, when the average retail price of a gallon of gasoline was $1.05. Since then, the average price of a gallon of gasoline has more than tripled to $3.39. Over the same period, the Federal gas tax rate has remained unchanged.
Senator McCain has said he doesn’t understand the economy. His gas tax proposal proves that point. The McCain proposal would:
*bring the Highway Trust Fund to the edge of insolvency;
*cost hundreds of thousands of family-wage, highway construction jobs;
*cut highway safety funding;
*increase the cost of congestion;
*do little for consumers; and
*provide another multi-billion dollar windfall profit for the oil companies.
The McCain proposal would bring the Highway Trust Fund, which finances Federal highway, highway safety, and transit infrastructure investments, to the edge of insolvency. It would cut Highway Trust Fund revenues by almost $3 billion per month. Under current law funding, that will create an estimated $12 billion shortfall in the Highway Trust Fund by the end of fiscal year 2009.
This shortfall will have very real, devastating effects for hundreds of thousands of American families. McCain’s proposal will eliminate approximately 300,000 family-wage, highway construction-related jobs. It comes at a time when, according to the Bureau of Labor Statistics, 1.2 million construction workers are already unemployed. In fact, the construction sector has the highest unemployment rate (12 percent) of any industrial sector.
Under President Bush’s stewardship, the economy lost more than 300,000 construction jobs in the last year. Sen. McCain proposes to “stay the course” and cost the U.S. economy an additional 300,000 highway construction-related jobs.
The McCain proposal would adversely affect highway safety. It would cut critical highway safety funding at a time when more than 42,000 people die and an additional 2.6 million people are injured on our highways each year.
According to the National Highway Traffic Safety Administration (NHTSA), 42,642 people died and 2.6 million people were injured in motor vehicle crashes in the United States in 2006. Traffic accidents are the leading cause of death of children in the United States and result in more permanently disabling injuries than any other type of accident.
NHTSA estimates that the economic cost of these crashes is more than $230 billion each year, or an average of $820 for every person living in the United States.
McCain’s proposal would also exacerbate the enormous cost of congestion of on our highways today.
According to the Texas Transportation Institute, the annual cost of congestion is $78 billion, including 4.2 billion hours of travel delay that resulted in an additional 2.9 billion gallons of fuel being used while Americans were stuck in traffic. On average, each urban motorist wastes 38 hours, 26 gallons of gas, and $710 struck in traffic.
The McCain proposal would eliminate necessary highway, highway safety, and transit infrastructure investments to help offset the enormous cost of congestion on our highways.
Despite it’s stated purpose, the proposal would actually do little for consumers. Instead, it is likely to turn into just another multi-billion dollar windfall profit for the oil companies. In 2007, oil company profits totaled more than $155 billion, including:
*ExxonMobil $40.6 billion
*Royal Dutch Shell $27.6 billion
*BP $17.3 billion
*Chevron $18.7 billion
*ConocoPhillips $11.9 billion
Since 2000, these five companies’ profits have totaled $595 billion.
The McCain plan does not require that oil companies reduce the price of gasoline, making it likely that oil companies would simply pocket the difference. That is what happened in 2001, when Illinois and Indiana suspended their motor fuel sales taxes. Research shows that the impact on consumers was minimal and infrastructure investments in those two states were shortchanged millions of dollars.
Instead of providing needed relief from high gas prices, McCain’s proposal would cost jobs, worsen congestion, compromise safety, and simply provide another windfall opportunity for the oil companies.
The McCain proposal is nothing more than an attempt to find a simple sound bite instead of a realistic solution. It brings to mind the words of H.L. Mencken, “There is always an easy solution to every human problem—neat, plausible, and wrong.”
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