Our Chairman, John A. Simourian, shares his thoughts on repairing America’s transportation infrastructure & the economy
Last month, President Obama, while discussing his concerns regarding the record high cost of gasoline, stated there was no “silver bullet” to solve the U.S. addiction to oil. Further, he said the process will be long and his goal is to cut oil imports by one third by 2025 through a strategy that relies on alternative and renewable energy sources. With all due respect to the President, we need a solution now.
I think we are all aware of our country’s precarious condition. One of the major headwinds we face is being forced to accept rising fuel costs from a foreign monopoly – a monopoly that recycles our dollars to fund terrorist activities. The overarching question is will our current condition be the norm and is it a harbinger of our impending decline in wealth and power in the 21st Century because of our addiction to oil?
America needs a straightforward, immediate plan that can provide a bridge to the long-term solutions advocated by President Obama. During the past two years several well respected organizations published reports on the American economy and infrastructure investment and concluded that the solution to jump-starting the economy is to create permanent jobs (that can’t be outsourced) by investing $750 billion over 5 years in rebuilding and repairing America’s transportation infrastructure. The U.S. Department of Transportation estimated that each $1 billion spent on the federal highway system would create 30,000 jobs. Thus, $750 billion over 5 years would create 4.5 million jobs which would reduce unemployment 33% or 3 points, bringing the unemployment rate down to 6%. This major increase in employment would ignite a sequential chain reaction in our economy. Tax revenues, which would increase from the additional wages as well as consequential purchases of goods and services, would be used to pay down debt and restore America’s credit rating to positive. Demand for housing would stabilize and grow. This increased economic activity would propel an increase in bond and stock market indexes increasing the value of pension and retirement assets.
This all sounds good but the missing component in the solution is the money to fund the $750 billion infrastructure investment. I propose that the money be generated from a major increase in the federal fuel tax: the silver bullet!
The current federal fuel tax, which has not been increased since 1993, produces approximately $30 billion per year in tax revenues. That’s $120 billion south of the $150 billion needed for our economic revival. A 75 cent per gallon tax increase would produce the needed $120 billion per year and the cost to the average motorist, (assume 15,000 miles/year and 20 miles/gallon), would be $10.80/week.
I am well aware of the strong political opposition to an increase in the fuel tax. Both political parties have stated it’s “off the table” because the “American people can’t afford it in this economic crisis”. But that simply is not the case. On January 1, 2011, Congress gave each wage earner a 33% reduction in the employee Social Security tax, which gave $660 or $12.69 per week to a $30,000/year wage earner which would offset the proposed fuel tax of $10.80 per week. Unknowingly, Congress has actually prepaid the proposed 75 cent fuel tax increase. But because the Social Security tax expires on December 31, 2011, Congress needs to extend it for 5 years to run concurrently with the proposed 5 year infrastructure investment plan. Additionally, to make the 75 cent tax even more palatable, it could be bled into the system over an 18 month period resulting in a monthly fuel tax increase of only 4.2 cents/gallon.
Once this plan is in place, the benefits that will flow will be huge: automobile and truck manufacturers will be incentivized to re-tool to build fuel efficient vehicles to compete in miles per gallon; alternative energy will now become more competitive with oil and attract investment to build additional production facilities. These new activities will create more additional jobs to propel our economy. Lastly, the petro states will realize their monopoly on energy is history and their funding of terrorist activities will be limited by the declining value of their oil reserves and declining petro revenue. This might compel them to increase the supply of oil to receive today’s price rather than tomorrow’s which will put further downward pressure on the price of oil.
In summary, the 75 cent fuel tax – the silver bullet – will have a cost/benefit proposition that will look like this:
Cost to the American Motorist Benefit to America
75 cent tax minus 33% Social Security tax decrease = 0
Benefit to America
• 4.5 million Jobs
• Pension and Retirement Assets
• Debt Reduction
• Energy Independence
• Global Leadership
Contrary to the opinions and beliefs of both political parties, if this proposition was offered to the American motorist, my bet is they would respond with pride and patriotism, “Done deal!”
In order for this silver bullet to be shot into the economic and geopolitical mix, your voice is the gun that is needed to bring it to the attention of our political and industry leaders. I urge you to email this plan to your elected representatives to let them know of your enthusiastic support.
– John A. Simourian