As the subject seems to have finally changed in Washington, It may be time again to consider the actual problem with the economy, jobs. Yeah, sure, some tell us government debt, size and regulation are the problem. Some say jerking the safety net out from under the poor and elderly is the problem. When we are quiet and sitting in our thinking chair however, we all know we have a jobs problem. Yep, contrary to what some will tell you, the basic reason we have a debt problem is that ten or twenty million tax payers aren’t. There is also another myth floating around out there in political world. “Government cannot create jobs.” That myth ignores what I argue is probably the most visible example of how exceptional America really is.
Part of our exceptionalism is good ole government bid and gas tax payer financed Infrastructure.
Yeah, it drives conservative politicians crazy. Those politicians who can’t stand any kind of government program can’t deal with a transportation system which, in spite of them, works pretty well. Since they cannot bear to admit success, we hear them talk about gimmicks like toll roads and infrastructure banks. Truth is, the system of building and funding transportation is pretty simple. You drive, you buy gas, and you pay for road construction and maintenance. Some of the money we pay at the pump stays at the state or municipality and some goes to Washington. In Washington, people plan a National Highway System (NHS) because it would not make sense to plan a national system on a state by state basis. If the states help build the NHS they get the federal gas tax back. In its simplest form, that is the program which has worked for years.
At least it worked until politicians perverted the system.
Sometime after the early nineties, politicians decided to ask departments of transportation to continue to build, improve and maintain a dollar’s worth of roads for some fraction of a dollar. Instead of tying gas taxes to inflation they chose a flat rate gas tax and refused to raise it. In the early part of this decade, when hydrocarbon dependent building materials like asphalt, steel and concrete were doubling in price, transportation funding stayed the same. Another thing politicians did to transportation was intermittent funding. See, transportation is slow laborious process. Projects contemplated today will not be bid and constructed for years. Many times, to get good bid prices for the tax payer, the projects are divided into smaller pieces. Because projects have to be divided and the time it takes to complete projects is extended, properly planning projects requires uniform funding. The funding over the past two decades has been anything but uniform. Due to congressional bickering, stopgap or continuing resolutions (CR) have become the norm. When planning transportation, states need continuity not a new CR every month. States are not blameless in this new transportation world. Their politicians have also resisted gas tax increases since the early nineties.
State and federal politicians have failed the constituents in another crippling way.
Politicians have a way of subtly forcing transportation officials into building new capacity instead of maintaining existing transportation facilities. New roads get votes. Politicians love to attend ribbon cuttings on new bridges and roads. They especially love a ribbon cutting on a new road which the politician earmarked (but, that is another article for another day). Repaving a road, replacing and repairing old bridges doesn’t make headlines like a new road or bridge. This trend has piled up quite a list of undone maintenance work which is a debt just like the celebrated national debt. It is a bill our children will have to pay in gas taxes later.
A gas tax increase would the one of the purest least regressive tax increases which could be passed. If an increase was contemplated, indexing might be the least objectionable to politicians. This would be true because politicians could say no taxes would be increased until the price of hydrocarbons increase. Only when the costs of building materials increased again would higher taxes be required.
We understand, sadly, gas taxes will not be increased, no matter how many lose their lives on dangerous roads and bridges or how much economic damage occurs due to congestion.
With no gas tax increases on the horizon, the best jobs bill may be a six year highway bill at the new “debt reduction” price. This will again give certainty to the states to plan projects which will create jobs. Yes, government programs do create jobs. I am on the front lines every day and I can tell you unequivocally, road and bridge contractors have lain off and will continue to lay off workers until long term certainty is restored. Politicians have proven jobs are not a priority in the FAA debacle. Those same politicians will dodge the question of infrastructure jobs with toll roads and infrastructure banks. They will ignore a 200 year tradition of good infrastructure jobs and say things like government can’t create jobs. While they ignore or are in denial about the state of our infrastructure, we go backwards in job creation. While everybody in the world doubles us in infrastructure investment, our politicians find reasons to fight instead of creating jobs. Those politicians who really care about jobs will quit cracking jokes about whether or not a project is “shovel ready” and get down to the serious business of giving certainty to an industry which is on its last leg.