This post originally appeared on Orphan Road.
An interesting disagreement has broken out between The Obama Administration and Congress over the next transportation bill. The 5-year bill is due for reauthorization in September. Obama (and Secretary LaHood) want to extend it 18 months, presumably to take a more comprehensive look after the elections. We discussed this on my weekly podcast, for anyone who’s interested.
Congressional Leaders on the transpo committee — Democrat Jim Oberstar and Republican John Mica (a rare pro-rail Republican) — don’t want to wait.
We don’t know exactly why the administration is keen to wait. All they’ve said is that they want to take a more comprehensive look at the bill in 18 months time.
18 months, of course, takes us to December 2010, which is conveniently right after the 2010 midterm elections, which might make it politically easier to raise the gas tax. Theoretically, the economy should have picked up some steam by then, so the idea of raising taxes could be more palatable.
Paradoxically, though, if the economy picks up, the price of gas will pick up with it. It’s already back to $2.65/gal nationwide, and over $3/gal here on the West Coast. By 2010, we could be back to $4 territory, as increasing demand pushes up against supply. I’m skeptical that Congress will be able to find that exact sweet spot, when the economy has improved enough to make raising taxes possible, but hasn’t improved so much that the price of gas makes raising the gas tax in particular politically feasible.
One final point on this: the U.S. government is now the majority shareholder of General Motors. GM is pinning its comeback on the electric Chevy Volt. The easiest and most effective way to sell the Volt is through high gas prices. If you’re Obama, and you want to sell thousands of Volts, there’s really only one way to make that happen: higher gas prices.
Update:The Transport Politic notes that, according to Sen. Boxer, the new bill is probably DOA in the Senate anyway.