Paul Krugman: We're on a Road to Nowhere


Building and maintaining good roads never used to be in the least bit controversial. This is America, after all. Car culture rules!

But as Paul Krugman points out in his column Friday, even the simplest, no-brainer decision that everyone knows would help this country on its pot-holed road to recovery can't get made in a do-nothing Congress committed to failed austerity economics and thwarting economic recovery under their sworn enemy Obama.

The big topic is how an unprecedented plunge in infrastructure spending worsened and deepened the economic crash of 2008, which further weakened the economy in both the short and long term ("Well played," Krugman writes, ruefully.) The specific topic is a seemingly uncontroversial one: 

The federal highway trust fund, which pays for a large part of American road construction and maintenance, is almost exhausted. Unless Congress agrees to top up the fund somehow, road work all across the country will have to be scaled back just a few weeks from now. If this were to happen, it would quickly cost us hundreds of thousands of jobs, which might derail the employment recovery that finally seems to be gaining steam. And it would also reduce long-run economic potential.

And here's a quick primer on how roadwork usually gets paid for:

Road spending is traditionally paid for via dedicated taxes on fuel. The federal trust fund, in particular, gets its money from the federal gasoline tax. In recent years, however, revenue from the gas tax has consistently fallen short of needs. That’s mainly because the tax rate, at 18.4 cents per gallon, hasn’t changed since 1993, even as the overall level of prices has risen more than 60 percent.

Crazy, right? Especially when there are myriad reasons, as Krugman points out, for raising the gas tax, from climate concerns to reducing dependence on Middle Eastern oil to not having to drill as much at home or spoil wildernesses.

Krugman is a realist, though. No one is going to raise gas taxes here and join the rest of the civilized world. There is, fortunately another way to pay for road repair:

Congress can and has topped up the highway trust fund from general revenue. In fact it has thrown $54 billion into the hat since 2008. Why not do it again?

But no. We can’t simply write a check to the highway fund, we’re told, because that would increase the deficit. And deficits are evil, at least when there’s a Democrat in the White House, even if the government can borrow at incredibly low interest rates. And we can’t raise gas taxes because that would be a tax increase, and tax increases are even more evil than deficits. So our roads must be allowed to fall into disrepair.

If this sounds crazy, that’s because it is.

Roads. Everyone—Republicans, big business, even the Koch brothers—likes roads. What gives?

Krugman concludes:

What’s useful about the looming highway crisis is that it illustrates just how self-destructive that political choice has become. It’s one thing to block green investment, or high-speed rail, or even school construction. I’m for such things, but many on the right aren’t. But everyone from progressive think tanks to the United States Chamber of Commerce thinks we need good roads. Yet the combination of anti-tax ideology and deficit hysteria (itself mostly whipped up in an attempt to bully President Obama into spending cuts) means that we’re letting our highways, and our future, erode away.

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