Long before anyone gave much thought to a viral pandemic or contemplated 20% unemployment rates or seriously considered passing along a $600 boost to unemployment checks or bailing out the airline industry, experts were fretting about the state of U.S. public infrastructure — all those roads and bridges, pipes and wires, runways and transit systems that keep the economy moving.
In addition to the need and opportunity, here’s another element that makes an infrastructure proposal especially inviting right now: Unlike other forms of stimulus spending, Congress could actually approach this in a fiscally prudent way. Instead of just printing money and adding to an already too-big federal deficit, Washington could incorporate a plan to pay for it. How? By agreeing to borrow money over a specified period of time with the expectation that it will be paid back as the economy returns to a more normal footing.
That’s not some pipe dream. That’s how government infrastructure spending works (or at least how it’s supposed to work). Think of it like a mortgage: Bonds are issued with a specified return to investors. The money goes into tangible assets. The borrower (that’s all of us) pay a little bit back each month over decades. That interest rates are currently rock bottom makes it all the more attractive.
One of the best ways to repay that debt can be found as close as your local filling station: The federal gas tax, the primary source of revenue for transportation infrastructure, has been frozen for 27 years at 18.4 cents for regular unleaded. Over that same time, inflation has risen more than 73%. There’s been a ridiculous disconnect between revenue and cost, especially when you factor in how greater fuel efficiency (as welcome as it’s been) has hurt tax revenues, too.
And here’s the really amazing point: America not only needs a higher gas tax, but there’s never been a better time to contemplate one. Right now, it’s not difficult to find a gallon of gas for less than $2. The national average as of this week, AAA reports, is $1.98, a wonderfully Orwellian coincidence.