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AASHTO Journal

Deficit Commission Includes Gas Tax Hike in Draft Proposal, U.S. Senators Also Call for Gas Tax Hike
The co-chairs of President Barack Obama's National Commission on Fiscal Responsibility and Reform released a draft plan Nov. 10 to reduce the national deficit and balance the federal budget. The draft plan included a recommendation to increase the national gasoline fuel tax by 15 cents starting in 2013. Former Sen. Alan Simpson and former President Clinton Chief of Staff Erskine Bowles suggest that the gas tax increase should be "dedicated to fully fund the transportation trust funds and therefore eliminating the need for further general fund bailouts."

According to the Simpson-Bowles proposal, the gas tax increase should be "dedicated to fully fund the transportation trust funds and therefore eliminating the need for further general fund bailouts."

The bipartisan debt commission was created by President Obama in February with the charge to identify policy improvements that will improve the nation's fiscal situation. The commission is scheduled to release a report in December that is expected to include recommendations on balancing the budget by 2015.

Last week, U.S. Sens. Tom Carper (D-Delaware) and George Voinovich (R-Ohio) went on record in support of a 25 cents-per-gallon increase in the federal tax on gasoline and diesel fuel. In a Nov. 5 letter to President Barack Obama's National Commission on Fiscal Responsibility and Reform, the senators suggested increasing the gas tax by one cent per month for 25 months, which would raise an estimated $270 billion over five years. The senators suggest dedicating 10 cents of the increase in gasoline tax to debt reduction ($83 billion over five years) with the rest being directed to support a new surface transportation authorization bill.

The letter states, "This proposal will fix the transportation program's major fiscal challenges. It will remove the approaching need for further General Fund transfers to the Highway Trust Fund, will provide additional deficit reduction, will supply essential investment for transportation infrastructure and will create more than 750,000 jobs."

The Simpson-Bowles draft proposal makes five basic recommendations for reducing the federal deficit:

  • Institute spending caps and make $200 million in spending cuts by 2015
  • Pass tax reform
  • Cut health care costs
  • Achieve savings from farm subsidies, military and civil service retirement
  • Shore up Social Security for next 75 years

The plan also claims to achieve nearly $4 trillion in deficit reduction through 2020 and to reduce the federal deficit to 2.2% of GDP by 2015, exceeding President Obama's goal of primary balance (about 3% of GDP).

11/12/2010
Questions regarding this article may be directed to editor@aashtojournal.org.