Monday, August 22, 2011


On September 30, unless Congress acts to extend it, the 18.4 cent Federal gasoline tax will expire. It’s hard to imagine an overt act more immediately damaging to our economy or more inconsistent with our long term economic needs.

The tax, which has not been raised since 1983, is clearly inadequate. In 2008, the Highway Trust fund – which is the fund intended to support transportation improvements in the U. S. – ran out of money. Spending from the Trust Fund has exceeded revenues since 2002. Although Congress has plugged the gap with revenues from the General fund, it has failed to come up with an integrated plan – and a funding program –to assure adequate maintenance of our existing assets and provide the improvements needed to assure competitive capabilities in the years ahead.

Allowing the gasoline tax to lapse would, among other things:

· Encourage people to drive more, thus worsening the already severe congestion that irritates us all – and costs more than $100 billion annually in extra fuel costs.

· Increase our negative trade gap, and increase our energy dependence

· Cost lots of jobs. $1billion in infrastructure spending supports about 25,000 jobs; if the tax lapses and we stop spending, hundreds of thousands of jobs will be in immediate jeopardy.

· Accelerate the already severe deterioration of existing bridges and highways

It’s hard to understand why anyone would even consider allowing the tax to lapse. Americans pay far less for gasoline than driver’s in other countries, and much less in fuel taxes as well. The recent Simpson-Bowles Commission recommended an immediate 15 cent per gallon increase in the tax; others have suggested more substantial increases. Everyone except politicians seeking votes seems to agree that our infrastructure needs immediate and substantial help.

It is clear that it does – and that the needed help will cost lots more than another 15 cents a gallon at the pump. In 2008 the national Surface Transportation Policy and Revenue Study Commission – a Congressional creation – recommended spending at least $225 billion annually, far more than we now spend. Various estimates put the bill for deferred maintenance of our highways and bridges in the neighborhood of $2 trillion.

In addition to needing lots more maintenance on our roads and bridges, we also need an integrated plan to upgrade and expand our capabilities in many areas. We need a plan that measures the adequacy of our highways, mass transit capabilities, airports, ports, communication systems, energy transmission systems, waste facilities, water systems, hospitals, law enforcement facilities and educational assets against those of other countries – and that provides for the many and substantial improvements needed to put the U. S. back in a position of leadership.

Around the world, our competitors are spending far larger shares of GDP on infrastructure improvements than the U. S. Brazil, India and China, are reportedly spending more than $1trillion annually! And we are clearly falling behind.

In 2005, the World Economic Forum rated the U. S. # 1 in economic competitiveness; today, we are ranked #15. Unless we fix the problem, we’ll rank even lower in the years ahead.

Solving the problem is a necessity if we want the country and our kids to have a satisfactory future– and stepping up to that necessity also represents an opportunity to solve one of today’s major problems. If Congress and the President were to come up with a national infrastructure plan this fall, and fund it at just $200 billion annually for the next ten years, we’d generate about 5 million new jobs.

Although it is clear that $200 billion will not be sufficient to meet the competitive challenge being mounted by others, it will be enough to provide a big chunk of the roughly 12 million jobs we’ll need during those ten years to put the currently unemployed back to work and provide opportunities for new workers. Moreover, the economic activity created and facilitated by that infrastructure investment will drive GDP growth, create lots of additional employment opportunities and – hopefully – provide the resources needed to build the capabilities not included in the initial plan.

Some will doubtless say we can’t afford it. In my view, these are investments we cannot afford to forego. Moreover, since we have spent or committed between $3 and $5 trillion during the last ten years in Iraq, Afghanistan and other military adventures – spending which has produced nothing and has yielded neither assets nor infrastructure to support our future growth – I just don’t buy the argument that we can’t find a way to finance the assets and capabilities needed to assure a decent future for our kids and grandkids.

Those interested in a more comprehensive examination of our infrastructure problem can find an excellent recent report here:


  1. Great piece on an extremely important issue. I find it amazing that more of the business community isn't out front on this given how important the national infrastructure is for the health of our economy. A failing infrastructure will have an immediate and deleterious impact on U.S. business.

  2. Your point about the gas tax is well taken and I believe the tax should increase to help cover cost of infrastructure work that needs to be done. However, if this happens we need some safeguards that insure that the money is spent on infrastructure repair/replacement. Our governments has a nasty habit of robbing funds from one source to pay for something else and this practice needs to be curtailed if not stop. Not only has this practice impacted the ground transportation infrastructure but it has adversely impacting both our Social Security and Air Transportation infrastructure. Normal citizens are expected to balance their check book and I think it is time the citizens demand the government do the same.

  3. Bob,

    There are a lot of people excited about your new blog. It's a great idea and your views are badly needed by this country on so many important issues of our day.

    Thanks you for doing this!



  4. Bob,
    As a current AA employee who worked under your leadership, it's clear you have not lost your touch. You hit the nail on the head. It's time to redirect our efforts toward our own needs, in our country to improve the lot of all American citizens and our next generations.
    Still willing to come back for the $1?


  5. I have heard that one objective of allowing the tax to lapse is to encourage the states to take up this pursuit themselves ... to levy their own taxes and maintain their own infrastructure. While this seems like a good idea on the surface, bringing the money and the responsibility closer to home, it is problematic in less densely populated states. A state like New York, with small geographic area and high population, would be able to collect adequate funds, however a state like Wyoming would presumably need to charge much more per gallon for the same results. I am generally for the federal government staying out of the way, but it looks to me that this is an area which - especially considering the needs of the interstate highway system - may be better served on a national level. Renew the tax, indeed, and let's add that 15 cents while we're at it!

  6. I've no doubt that when it comes to collect money, the Congress won't let the gas tax issue slide for very long if at all.

    Granted - it's sorely needed to maintain infrastructure but I can't imagine any collections being used as it should with the present group of cretins infesting the Capitol Building.

    An aside - Another AA employee from your time at the helm, Bob - we'd love to have you back.

  7. So nice to hear your words. It's been to long. I've got a dollar a day I would gladly give to you, along with 70,000 other employee's, for you to come back and make things right. I know you can do it, we know you can do it, even the board know's you could do it. Maaybe a judge will let you do it, or better... aapoint you to do it. Lord would that be beautiful. Even if you laid me off I would still be okay with that. Why? Cause I know you'll fix it, and I'll be back.

  8. A dollar a day X 78,000 employees = $28,470,000/year. You better grab that offer Bob before they change their minds.