The federal gas tax, which hasn’t been raised since 1993, currently stands at 18.4 cents per gallon. Revenue from that tax funds improvements of U.S. roads, bridges and mass transit systems but has left the government short of all the money needed to keep transportation networks in a state of good repair. According to the Congressional Budget Office, the Highway Trust Fund, which is largely funded by the gas tax, could be insolvent by the end of 2022.

Now a bipartisan group of senators is proposing raising the federal gas tax to fund infrastructure improvements. Proposals to raise the tax in the past have come up short and many Democrats — including President Biden — oppose the idea because it could place undue economic hardship on low- and middle-income Americans. But some conservative stakeholders and lawmakers say that raising the tax to stay in line with inflation or the current cost of living could avoid adding to the nation’s growing deficit.

“Because the gas tax is not pegged to inflation, its purchasing power has eroded significantly over the past 28 years, and the tax is now ‘worth’ 45 percent less than in 1993; if the tax had been indexed for inflation each year since 1993, it would be approximately 15 cents higher in 2021,” the conservative-leaning nonprofit Peter G. Peterson Foundation, which aims to promote awareness of America’s long-term fiscal outlook, states on its website. “The decline in purchasing power has important implications for the federal budget and our nation’s infrastructure.”

Others say the infrastructure improvements from a higher gas tax would spur economic development by reducing commute times and cutting back on automobile damage from rundown roads.

“When a mom is waiting to pick up her child at school and she has to commute an extra half-an-hour to get there, there’s a time-value for that mother that she could otherwise spend doing something productive,” Sen. Bill Cassidy (R-La.) said in a press conference.

Cassidy is one of the 10 senators from both parties who pitched raising the gas tax as part of way to pay for a sweeping infrastructure deal. However, extensive negotiations resulted in the gas tax being removed from the infrastructure plan, although the idea is still being discussed in other transportation and infrastructure legislation.

Forty-two states and the District of Columbia have raised the gas tax since 1993. Some business and trade groups, including the U.S. Chamber of Commerce, have backed the idea as an efficient “user pay” model. Ed Mortimer, the group’s vice president of transportation and infrastructure, told Politico that the “user fee works because it’s sustainable,” especially compared with borrowing money for infrastructure.

Many liberals, however, say infrastructure that will last decades does not need to be paid for up front.

“We should deficit finance infrastructure spending,” Sen. Brian Schatz (D-Hawaii) tweeted. “And characterizing paying in cash for physical infrastructure as some sort of adult, responsible position turns public finance and logic on its head. These are assets that will last decades, so should be paid over decades.”

There is also concern about the economic hardship a higher gas tax could create for middle- and working-class families. Senate Finance Committee Chairman Ron Wyden (D-Ore.) told The Hill newspaper it would be “a big mistake to go there when corporate [tax] revenue is down something like 40 percent in the last few years.” He added that it wouldn’t make sense to tax middle-class Americans when corporations also benefit from U.S. infrastructure but are paying overall lower tax rates.

The Biden administration does not support raising the gas tax because of the president’s commitment to not raise taxes for Americans making less than $400,000 a year. “After the extraordinarily hard times that ordinary Americans endured in 2020 — job losses, shrinking incomes, squeezed budgets — [Biden] is simply not going to allow Congress to raise taxes on those who suffered the most,” White House spokesman Andrew Bates told the Associated Press.

In August, the Senate passed a $1 trillion bipartisan infrastructure deal, which did not include a gas tax increase. Instead, it relies on funding sources including unspent emergency relief money, corporate user fees and future economic growth. The House still has to vote on that bill, which could lead to changes in the pay-fors. Democrats also plan to pass a separate $3.5 trillion budget resolution through a budget reconciliation process that would only require a simple majority in the Senate.

For more background, see the May 2018 issue of Congressional Digest on “U.S. Energy Infrastructure.”