Industry over a barrel

Aaron Lowe, vice president of government affairs for the Automotive Aftermarket Industry Association (AAIA), says his group doesn't have a position on raising the gas tax. "But the more they raise fuel taxes, the less people will want to drive, and people driving is what drives the aftermarket," Lowe explains. "In general, though, we want to see more investment in infrastructure. Our members must be able to move goods."

States, cities and counties contribute another $55 billion or so annually for road construction, either from their own gasoline excise taxes or other revenue sources. Gas tax revenues at all levels are dropping like a stone as high gas prices are causing motorists to buy both less gas and more fuel-efficient automobiles.

Looking beyond 2009, the commission predicts that the $85 billion a year likely to be available for road work for repair and to relieve congestion (which is estimated to cost the U.S. economy $200 billion a year) will fall about $150 billion a year short of what is needed. Raising the gas tax is part of the short-term solution.

In the long-term, the commission suggests replacing the fuel excise tax with a tax on vehicle miles traveled (VMT). In addition, it would also like to see a major reform in the way highway projects are selected and funded.

The shortfall has grabbed Congress' attention. Jim Berard, spokesman for the House Transportation and Infrastructure Committee, says "discussions are ongoing" on a way to close the $4 billion gap in 2009. "I expect some efforts to be made this year," he explains. "But the numbers we are getting from various sources in terms of the shortfall are all over the map."

Neither Democrats nor Republicans are anxious to increase any tax in this election year. On the other hand, federal funds for road projects are the kinds of dispensations both House and Senate members love to announce in press releases. Those projects help keep incumbents in office. Legislators also realize that the time lost in transporting goods over clogged highways and city streets is sapping strength from the U.S. economy.

Generally, Republicans prefer a free market solution to the funding needs of U.S. roads and highways. Transportation Secretary Mary Peters was one of 12 members of the Revenue Study Commission, and one of three dissenters from its recommendation to increase the gas tax. Peters argues that a greater dependence on tolls and public-private partnerships to build new roads will solve the long-term funding problem.

Democrats think free enterprise solutions will never solve highway infrastructure needs. Rep. Peter DeFazio, D-Ore., chairman of the T&I Highways & Transit Subcommittee, says, "Continuing to insist these initiatives can fix 100 percent of the problem is just a total denial of reality, which has been the hallmark of the Bush Administration. It's a shame and it's doing an amazing disservice to the future of our economy."

Stephen Barlas has been a full-time freelance Washington editor since 1981, reporting for trade, professional magazines and newspapers on regulatory agency, congressional and White House actions and issues. He also writes a column for Automotive Engineering, the monthly publication from the Society of Automotive Engineers.