Gas Tax Proposed to Pay for Transportation Bill

WASHINGTON (CN) - In an oversight hearing on how stimulus funds are being spent, the House Transportation and Infrastructure Committee unveiled a plan Friday to increase gas taxes to pay for a proposed $500 billion, 6-year extension of Recovery Act spending on the nation's roads, transit and high-speed rail systems.

Chairman James Oberstar (D-Minn.) noted that the Recovery Act funds have created or sustained nearly 350,000 transportation jobs, but said more money is needed to compete with expanding transport in European and Asian countries.

"We're just falling behind," he said, calling the $38 billion in stimulus funds slated for transportation "a drop in the bucket compared to what the European community is doing."

Oberstar said highway, transit and wastewater infrastructure needs long-term funding and fewer project delays, while witnesses at the hearing praised the 2009 Recovery Act for creating or saving jobs.

Nancy Richardson, director of the Iowa Department of Transportation, told the committee that transportation has received 6 percent of Recovery Act funds, but has contributed 14 percent of the 2 million direct jobs saved or created to date.

"I am happy to report that every state obligated every highway dollar they were eligible to receive and not one dime was turned back to Washington, D.C., for redistribution," she said.

Brad Miller, general manager of the Des Moines Area Regional Transit Authority, said the stimulus funds have allowed him to buy a sixth of his fleet of buses, and that he has replaced 80 percent of the buses that have run over their useful life.

Stephen Wright, vice president of a family-owned construction company, added that "as bad as things are right now, they would have been much worse without the recovery act."

But Oberstar said the current funds are not enough, and contrasted the $64.1 billion the United States has designated to transportation and infrastructure to the larger European and Asian investments.

He pointed to China's investment of more than $100 billion in stimulus funds on high-speed rail, including an 820-mile route from Beijing to Shanghai.

"They've made the investment," he said, noting that China has devoted 9 percent of its gross domestic product to transportation. "We have to move our goods more efficiently in this marketplace."

Oberstar added that the European community has aimed $1.4 trillion over the course of two decades to develop its transportation infrastructure, even building a canal between the North Sea and the Black Sea to move freight more efficiently.

The chairman ended the hearing by unveiling "for the first time" a plan that would direct the Treasury to issue $130 billion in bonds to the Highway Trust Fund, to be repaid at a later date by raising gas taxes.

"That would give us $450 billion over six years," Oberstar said.

His plan was met with nods of approval from all panel members except George Mason University economist Veronique de Rugy, whose slight French accent triggered an exchange, in French, with Oberstar. He complimented her on her English and said Normandy oysters were the best in the world, and she responded that his French was "very remarkable."

But de Rugy was less keen on his funding plan, saying the government simply doesn't have the money to pay for it.

She noted that the stimulus funds don't appear to be targeting areas with high unemployment rates, despite their goal of creating jobs. Her research also found a "slight positive correlation between the percentage of the district that voted for President Obama and the amount of stimulus funding that a district received."

However, she was quick to add that the "weak correlation" may be "coincidental."

Oberstar said the reauthorization bill is awaiting passage in the Senate.

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