Wednesday, July 16, 2014

"Never Let a Serious Crisis Go to Waste" The Gas Tax Edition

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Definition of crisis (n)  
(Plural, crises)
 
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    cri·sis
    [ kri'ssiss ]

  1. dangerous or worrying time: a situation or period in which things are very uncertain, difficult, or painful, especially a time when action must be taken to avoid complete disaster or breakdown
  2. critical moment: a time when something very important for the future happens or is decided
  3. turning point in disease: a point in the course of a disease when the patient suddenly begins to get worse or better
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synonyms: disaster · catastrophe · emergency · calamity · predicament · crunch
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Early in the Obama Administration, incoming White House staffer Rham Emanuel famously stated, "You never let a serious crisis go to waste. And what I mean by that it's an opportunity to do things you think you could not do before..."
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Almost six years later, we find that this political precept continues to form the narrative of President Obama's second term.   
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If you are anything like me, you may also be 'burned out' by the number of seemingly endless Obama Administration Crises, but this one, WILL affect you directly.  This one will impact your life, your financial well-being, your ability to keep the job you like, and your freedom.  
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Hmm, come to think of it, MOST Obama Crises do this...  My apologies for getting you more upset than you most likely already are. 
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With the Obama bunch currently in DC, this 'Crisis-du-jour' is like an empty bus stop in NY city - if you miss this one, don't worry, the next one will come along and it'll 'get ya'...
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Today's crisis pertains to the soon-to-be-worst-than-expected-we've-run-out-of-money-to-maintain-our-highways because...
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  • Congress has mandated that cars be more fuel-efficient,
  • Congress has agreed to subsidize Hybrid / Electric vehicle purchases for the wealthiest Americans, and,
  • Because, in general, the economy still 'stinks up the place' and neither the President, nor Congress, knows what to do about it
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Yes ladies, gentlemen, boys, and girls, fuel tax revenues with which the government funds 'our crumbling infrastructure' (a.k.a.:  Highways and bridges) is going broke.  Even after the President told us about ALL of those 'Shovel ready projects' he was spending BILLIONS of TARP dollars on to save our roadways, well, it just isn't enough to save the roads which George W. Bush left in such disrepair for the new 'Hope and Change' guy.  (President Obama hasn't said this YET, but, don't worry, he will...  I'm just basing his future comments on his past in an effort to save some time later.) 
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Why are our roadways crumbling?  
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Take a moment to review the three bullet points above.  
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One, the President has increased CAFE standards for vehicles pretty much every time is is asked for his opinion.  The CAFE requirement signed into legislative reality by President Obama most recently?  By 2025, the Federal Government will REQUIRE that automobile manufacturers build cars which will, on average, get 54.5 MPG. 
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54.5 MPG!!!
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Yes, in 2012, President Obama signed legislation which requires that new autos sold in the U.S. get an average of 54.5 miles per gallon!  Yay!!! 
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Just to confirm that I'm not making this up, check out the announcement from the National Highway Traffic Safety Administration - they never kid around...
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NHTSA.GOV - Tuesday, August 28, 2012, Consumer savings comparable to lowering price of gasoline by $1 per gallon by 2025
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WASHINGTON, DC – The Obama Administration today finalized groundbreaking standards that will increase fuel economy to the equivalent of 54.5 mpg for cars and light-duty trucks by Model Year 2025. When combined with previous standards set by this Administration, this move will nearly double the fuel efficiency of those vehicles compared to new vehicles currently on our roads. 
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In total, the Administration’s national program to improve fuel economy and reduce greenhouse gas emissions will save consumers more than $1.7 trillion at the gas pump and reduce U.S. oil consumption by 12 billion barrels.  
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But here's the dig - in another article I stumbled across online, the author laments that BECAUSE vehicles get higher MPG in 2014 than they did in the 1990's...
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DN Editorial: Running out of gas on the fuel tax
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In 1993, Bill Clinton was president, "Seinfeld" was on TV and a cellphone was the size of a brick. It was also the last time that Congress raised the federal gasoline tax, which pays for roads, bridges and public transit. Over two decades, the cost of building and maintaining the nation's transportation infrastructure has gone up significantly, while the tax designed to fund the work has stayed flat: Drivers still pay 18.4 cents per gallon at the pump for gasoline and 24.4 cents for diesel.
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It should be no surprise, then, that the Highway Trust Fund is about to go broke. The U.S. Department of Transportation estimates that the fund could run out of money as soon as August, which means that states will not receive the federal dollars they've been promised until the fund is replenished.

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The gasoline tax generates about $35 billion a year, but the federal government spends $53 billion on highway and transit projects. Since 2008, Congress has transferred general-fund tax revenue to cover the shortfall. This year, gas-tax revenue is coming in even lower than projected.

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So which does the Federal Government want?  Higher mileage cars built by Unionized Workers, or increased tax revenues to pay 'Solidly Democratic Union Workers' to build (or rebuild) roads and bridges?
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The answer, of course, is 'both'.
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Democratic leadership (and sigh, even some Republicans) want to keep their 'Green Friends' happy by insisting upon higher mileage vehicles to save the Earth, save the Polar Bears, save the Whales, et al, but they are conflicted because when we drive higher MPG vehicles, we pay fewer tax dollars at the pump.  If the NHTSA estimates are correct and the higher CAFE standard means that we will be importing 12 BILLION fewer barrels of oil, DC will need to find a LOT of other revenue to throw at our roads.   
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How much is a 'lot'?
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BARREL REDUCTION CALCULATION:
12,000,000,000           x    19                               =           228,000,000,000  
(Reduction in Barrels)       (Gas Gallons / Barrel)            (Gallons Reduced)
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TAX REVENUE REDUCTION CALCULATION:
228,000,000,000         x   .184                             =          $  41,952,000,000
(Gallons Reduced)            (Federal Tax at Pump)           (Tax $ Lost)
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Reviewing the numbers above, the NHTSA estimates that they will LOSE more in tax revenues than they are actually collecting today, but since these numbers are coming from the Feds, WHY should we expect them to make much sense at all?  
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The article above implies that while the gas tax generates $35 BILLION per year, the Feds will LOSE almost $42 BILLION of these dollars in 2025.  Unless, of course, what the NHTSA 'meant to say' they meant the period between now and 2025 that they would reduce US demand for fuel by a total of 12 BILLION barrels...  But again, as these numbers are coming from highly-paid Federal Employees, why try to figure it out?  They're wrong any way... 
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Two, as you're already aware, the Federal Government will give tax filers a Federal Tax Credit if they buy what the IRS deems to be a 'high MPG vehicle'.  Since most of these vehicles cost anywhere between 25% to 50% MORE than a gasoline-powered vehicle, the Feds have decided to reward the folks who can AFFORD to spend $40k to $120k for an electric, or hybrid car.
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The Tesla S - Electric Sex on the Beach  ($69,900 - $93,400 MSRP)
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I'm thinking that if you can afford a car which cost more than my first newly-constructed home...  You probably don't need a tax credit to purchase it.  
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But hey, that's just me. 
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AND if you can afford to plug this bad boy in under the roof of your garage, just make sure you install the appropriate fire suppression equipment to go with it...  
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Why?  Because electric vehicles have a really bad habit of bursting into flames when you least expect it... 
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USATODAY.COM:   Feds open formal probe into Tesla electric car fires
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The National Highway Traffic Safety Administration said it has opened a formal investigation into the safety of the Tesla Model S electric car following two reports of battery fires after striking roadway debris.

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The agency said its safety investigation was prompted by recent "undercarriage strikes" in Washington state and Tennessee. In both cases, fires resulted after the cars both ran over debris on the road that pierced the battery compartment.

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Early Tuesday before NHTSA's announcement, Tesla CEO Elon Musk announced that he taking three steps as a result of the fires, but added that he stands behind their safety. The steps were:


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  • Higher ground clearance to make them less likely to strike road debris that can potentially penetrate the battery pack and ignite a blaze.
  • Asking federal safety regulators to "conduct a full investigation as soon as possible into the fires." Musk gave no hint that NHTSA was about to open an investigation.
  • Amending the cars' warranty to cover damage due to fire.
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Three, with fewer people driving, fuel sales will continue to diminish because, quite frankly, most folks have a hard time for paying $3.70+ per gallon to go anywhere just for the joy of 'the drive'.  When given the choice between getting a driver's license and getting a cell phone, most high school / college kids chose...  The Cellphone.  Oops, sorry, I meant to say 'Mobile Device' because no one wants a plain old flip phone any more.  I mean, who wouldn't want a device that allows the NSA to track you wherever you go?
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And hey, BONUS, when the Feds implement the NHTSA 'Mileage Tax' to bill you for the miles you drive, what better way to track you than to use your GPS-Enabled Mobile Device?  I just hope you don't FLY a lot because your bill is going to be HUGE.
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In the end, the Feds will find the money somewhere and we'll miraculously avoid the August Transportation shut down.  Then the question becomes, "Where did they find the money, and why didn't they plan on using it sooner?"
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There are movements within Government planning to double the Fuel Tax because well, "Clinton, and Reagan did it - and look how good their economies were?!?!?"  
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The major difference, I guess, is that this is neither a Clinton economy, nor a Reagan economy.  The past six years have felt a lot more like Carter's second and third terms to me, and even though they've done away with the official "Misery Index", it still feels like the pain needle's pretty much pegged in the Red.
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Happy motoring!
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