My latest on Fox News Channel was on the Highway Trust Fund’s alleged bankruptcy. It’s not a bankruptcy because there are no legal liabilities, but beyond that, this is a planned crisis.
Gas taxes are fairly stable and predictable revenue sources, so are tolls. If the money runs out early, it’s no accident, it’s a crisis designed to make the case for higher taxes.
This system is based on two fundamental principles: Federalism and the principle of benefits. Both come to us from the founders. President Eisenhower started this program because he learned as an officer that the United States road system fell far short of the needs for logistical purposes in fighting a war, so he proposed that, since national defense was a federal — not state — function, a national trust would be created which would be entrusted to use gas taxes only for the purpose of an interstate highway system. It was to be based on gas taxes and tolls to conform with the principle of benefits as presented by Adam Smith in the Wealth of Nations published in 1776.
It no longer functions that way. It has become a congressional slush fund, in which almost half the money is ladled out through the corrupt system of congressional earmarks. The next time you drive on a highway which is named after a politician, think corruption.
Time to shut it down. The proceeds of the tax should be automatically remitted to state governments, or better yet, regional planning agencies. And regulatory barriers to privatization strategies should be repealed. We’re broke. We can no longer afford to be stupid.
If you’d like to watch my discussion with my friend Neil Cavuto on Fox News Chanel about this issue, just click here. This article was reprinted by permission of the author and was originally published at Forbes.com.
Editor’s Note: Consider this from David Stockman’s article “The Madison County Bridges in Nowhere and the Perennial Myth of Crumbling Infrastructure.”
“Twenty percent of the nickel/gallon gas tax increase [in 1982] went to mass transit, thereby breeching the ‘user fee’ principle at the get-go, and paving the way for endless diversion of gas taxes to non-highway uses. Indeed, today an estimated 40% of highway trust fund revenues go to mass transit, bicycle paths and sundry other earmarks and diversions.”