Reps. Tom Latham (R-IA), at right, and Steven LaTourette (R-OH). (Photo: AP)

During a hearing today on the White House sustainability effort, which aims to combine federal transport, housing, and environmental resources in support of walkable, transit-oriented local development, Reps. Tom Latham (R-IA) and Steven LaTourette (R-OH) questioned the wisdom of spending money and attention on new programs when the nation's infrastructure funding shortfall remains unresolved.

"Unless you change the tax incentives from where they've been since the Second World War, [encouraging Americans] to live in single-family homes, you're not going to be successful," LaTourette said. The giant mortgage guarantors Fannie Mae and Freddie Mac, he noted, effectively require the continued popularity of suburban sprawl in order to keep the government's investment in them viable.

If the White House would tackle the problem of the highway trust fund's insolvency -- which affects bike-ped and road repair projects -- "I would not have a problem with" spending new money on sustainable development, added LaTourette. The Ohioan has vowed to "bring Republicans to the table" if the administration decides to pursue a new federal transport bill this year.

Latham, the senior GOP member of the House's transportation appropriations panel, was more cutting in his criticism of federal involvement in local land-use practices.

Referring to a "crisis" in federal transportation financing, Latham marveled at the administration's decision to focus on a "new boutique program" rather than crafting a replacement for the increasingly obsolete gas tax.

Roy Kienitz, the U.S. DOT's undersecretary for policy, did not dispute the two Republicans' assessment of a financing vacuum. "It was a great run for 45, 50 years, when you had a system whereby the amount of driving and gas people used grew along with the economy," Kienitz told the lawmakers. Now that relationship has unraveled, he explained, making the gas tax a poor revenue-raiser for transport projects.

But Kienitz had no answer for how the White House should solve the problem.

"The elephant in the room here is tax increases," he said. "I don't see the politics for that right now." Instead, the former adviser to Gov. Ed Rendell (D-PA) suggested that Congress should see the economic recession as a reason to "innovate" its transportation and housing policies.

Criticism from minority-party members such as Latham and LaTourette ultimately could have little effect on the White House' 2011 budget request of nearly $530 million for its sustainability work. The appropriations panel's chairman, Rep. John Olver (D-MA), is a longtime champion of walkable development who secured $150 million for the effort last year.

"We've had a whole generation when we've spent to subsidize sprawl into the suburbs," Olver said today. "The time has long since passed for sustainability."

Still, coming on the heels of bipartisan rural skepticism of the White House's move toward more competitive transport funding, the Republicans' comments could portend more political blowback for the idea of a yearlong delay in drafting new long-term infrastructure legislation.

Sen. Kit Bond (R-MO) (Photo: Politico)

But Transportation Secretary Ray LaHood's visit with Senate appropriators today was anything but humdrum, as Sen. Kit Bond (R-MO) challenged him repeatedly to defend the White House's efforts on sustainable development and high-speed rail.

Bond cited a recent Wall Street Journal editorial by Wendell Cox, a conservative pundit who has penned laudatory literature for road lobbying groups, in accusing the Obama administration of frittering away taxpayers' money on high-speed rail.

LaHood fired back, remarking wryly that Bond's home state sought high-speed rail grants and publicly celebrated its $31 million haul. "I got calls on this every day from senators and governors" clamoring for an opportunity to build inter-city passenger rail, LaHood said.

Answering Bond's charge that the rail funding process was less than transparent, the U.S. DOT chief threw in a bold claim: "I don't know of one lobbyist that darkened our door with an application … that came to our door with the idea they were going to have some edge."

A November investigation by the nonpartisan Center for Public Integrity found that more than 50 government entities and private companies have hired high-speed rail lobbyists, including the AFL-CIO, the Mayo Clinic, and overseas train manufacturers such as Siemens and Bombardier.

The sharpest exchange between Bond and LaHood came on the topic of walkable local development, which the U.S. DOT has worked to promote through $150 million in 2010 grants and an inter-agency partnership with housing and environmental protection officials.

"What is livability?" Bond asked LaHood, minutes after comparing the task of defining the term to defining pornography. (The origins of that reference are explained here.)

"Communities where people have access to many different forms of transportation, and affordable housing ... maybe they don't want a car, so they can walk to work or take mass transit to work," LaHood said, using the newly built-up neighborhood surrounding his office as an example.

Bond's reply summed up the challenge of crafting new federal transportation policy in an era marked by rural-urban-suburban culture clashes. "I've got a lot of constituents for whom livability means having a decent highway," he said. "They've got to drive between one town and another town."

LaHood gamely tried to put Bond's criticism in perspective, noting that highways received the lion's share -- $27 billion -- of the transportation funding in last year's economic stimulus law.

Yet Bond only dug in his heels, arguing that Americans had shown their eagerness to use roads and bridges but would not embrace rail or walkable infrastructure. "When did it become the responsibility of the federal DOT to build sidewalks?" the soon-to-retire senator asked, before LaHood that reminded him Congress set up dedicated funding for pedestrian improvements nearly 20 years ago.

(from left) Sens. Lindsey Graham (R-SC), Joe Lieberman (I-CT), and John Kerry (D-MA) (Photo: Getty Images)

Over the weekend, the first hints of the trio's potential strategy were revealed to The Washington Post -- and new pricing for transportation fuel could play a major role (emphasis mine):

According to several sources familiar with the process, the lawmakers are looking at cutting the nation's greenhouse gas output by targeting, in separate ways, three major sources of emissions: electric utilities, transportation and industry.

Power plants would face an overall cap on emissions that would become more stringent over time; motor fuel may be subject to a carbon tax whose proceeds could help electrify the U.S. transportation sector; and industrial facilities would be exempted from a cap on emissions for several years before it is phased in.

The concept of an across-the-board tax on fossil fuels used for transport is not new. Exxon CEO Rex Tillerson backed it in October, aligning his company with the stance of some environmental groups and causing debate over his motivations.

But Tillerson's endorsement proposed rebating a carbon tax back to consumers rather than letting it "becom[e] a revenue stream for other purposes," making it far from clear whether the three senators could win support for giving more new money to electrified transportation. (By way of context, electric cars received more funding in the first six months of the Obama administration than the Federal Transit Administration's annual budget.)

Physicist Joseph Romm, who blogs on every twist of the climate debate for the Center for American Progress, described the Post story as a "trial balloon" for the senators' plan and warned that the end of the cap-and-trade concept would hardly silence critics who are working to re-brand emissions caps as a closet "gas tax":

My sources say that what they’re proposing isn’t actually a carbon tax on gasoline, nor is it the original cap-and-trade proposal, but something in between.  Since the notion is complex and confusing — and no final decisions have been made — I won’t try to explain it fully here. ...

While some oil companies may support this approach, my guess/fear is ExxonMobil/API will simply attack the new bill as a gasoline tax — indeed, that may be their plan.

As Romm points out, the devil is in the details: How would a new fuel tax be structured? Given how many lawmakers acknowledge (if reluctantly) that the existing gas tax is the most practice way to pay for a comprehensive new federal transportation bill, imposing a new motor fuel fee could hurt the three senators' chances with their infrastructure-minded colleagues.

Putting aside the possible merits or drawbacks of Kerry, Lieberman, and Graham's approach, the Post story reveals a political climate that may be ever-so-slightly shifting in favor of passage of a climate bill this year. Senate Majority Leader Harry Reid (D-NV) reportedly told Kerry last week to intensify work on the "tripartisan" deal in hopes of bringing legislation to a vote before the November midterm elections.

The prospect of an eventual move away from the gas tax and towards a fee on vehicle miles traveled (VMT) has sparked consternation from some well-known bloggers this week, with Matt Yglesias asserting that "a VMT [tax] has no advantages whatsoever over higher gasoline taxes" and Andrew Samwick suggesting that declining fuel tax revenues mean that tax rates need to go even higher.

Leaving aside the political challenges facing a 10-cent gas tax increase, as suggested last year by the National Commission on Surface Transportation Infrastructure Financing (a similar panel of experts called for a gradual 40-cent hike in 2008), significant questions surround the gas tax's viability as a long-term revenue raiser for infrastructure improvements -- regardless of how high it goes.

Take the example of Oregon, the first state to levy a fuel tax in the year 1919. Now the state's gas tax ranks 21st in the nation, but it began planning ahead for a VMT tax nine years ago after repeated attempts to raise fuel fees ran into political opposition. In its final report on the state's "road user fee pilot program," the Oregon DOT noted that gas tax revenue couldn't keep pace with the rise in fuel-efficient autos (see the above chart).

The state DOT's report, written by James Whitty of the innovative partnerships office, took a candid look at the upsides and downsides of the gas tax (emphasis mine):

From the standpoint of tax policy, the gas tax is close to perfection. Nearly all the hallmarks of good tax policy can be found in Oregon’s efficient gas tax collection system. The gas tax has the inherent flaw, however, of lacking a direct nexus to road use. As a consequence of this flaw, it will become obvious in 10-15 years, if not earlier, that the gas tax has failed its originally intended purpose as a reliable source of revenue for the state's road system.

That absence of a "direct nexus to road use" is a concept not easily understood by many Americans, especially drivers long inundated with misleading claims that the gas tax constitutes a user fee. As Ryan Avent has explained on this page, a user fee assumes that everyone on the road pays for the time they spend and the burden they place on it.

But while 25 gallons of taxed gas will last for an estimated 725 miles in a 2010 Ford Escape hybrid SUV (at a combined 29 miles per gallon), the lighter 2010 Ford Mustang (estimated at 19 miles per gallon) would go just 425 miles while paying the same amount of gas tax. The heavier car ends up putting more stress on the road while paying less for it. Is that an equitable system of maintaining the transportation network?

As Oregon discovered with its VMT pilot program, the gas tax and a mileage fee can be charged at the same time by tallying miles traveled at the pump based on a system of local zones, similar to what some areas use for taxicab charges. As the website Portland Transport showed in a pictorial post from 2007, congestion-pricing features could be added to customer receipts in a separate column from the VMT tax and gas fees.

So perhaps the question isn't whether to sell the public on a viable VMT tax as a replacement for the gas tax, but how to make both policy tools work effectively in tandem.

As for the civil-liberties ramifications of VMT charging, it's hard to see American drivers who have already embraced the Garmin GPS and the Onstar navigation system -- which connects you with a live "advisor" -- rejecting en masse one more device in their vehicles. Especially if that device helps fund transportation more equitably.

Late Update: The National Surface Transportation Infrastructure Financing Commission (the other panel of transport experts referenced above) made the case against indefinite reliance on the gas tax in its most recent report, noting that the indirect connection between fuel fees and road use could particularly impede smarter urban investments:

Because revenues from the gas tax are not related to where the vehicle is driven or the costs of providing the roads in that area, motor fuel taxes can also lead to less efficient system investment, particularly in urban areas with high congestion levels where direct user fees could pay for most or all of new project costs. As a result, efficiency in the choice and prioritization of projects depends on administrative and political choices that may not be closely related to “where” the revenues are raised. ... Reliance on motor fuel taxes generally provides a weak proxy for capturing the costs of environmental damage and other negative impacts such as contribution to congestion and system wear and tear.

"We will bring Republicans to the table," Rep. Steven LaTourette (R-OH) said last week. (Photo: Cleveland.com)

Republicans in the House mounted a surprisingly vocal opposition to the first short-term extension in September, suggesting more resistance to come when Democrats in both chambers attempt to agree -- sometime before February 28 -- on legislation giving another planning reprieve to local transportation officials.

Even calls for a new extension by the road and business lobbies, reliable campaign donors to Democrats and Republicans alike, have fallen on deaf ears as lawmakers brace for a midterm election season dominated by anti-incumbent sentiment. Politico noted today that the GOP is preparing to oppose a $20 billion-plus infusion of taxpayer money to the highway trust fund, citing "concern about rising deficits."

That politically motivated foot-dragging is in some ways a nod to the extent and complexity of Washington's transportation financing problem. Rescuing the highway trust fund again may be a bitter pill to swallow, but with congressional leaders unwilling to look at a gas tax increase -- and no certainty that such a hike would even get the job done as Americans drive less in more fuel-efficient cars -- lawmakers have little to lose by extending the highway-centric 2005 transportation bill again this month, effectively hitting the snooze button on infrastructure policy.

Still, not every Republican is opposed to making the hard choices necessary to raise revenue for a new transportation bill. That was the message that Rep. Steven LaTourette (R-OH) delivered to Transportation Secretary Ray LaHood during a recent House Appropriations Committee hearing. As LaTourette told his former GOP colleague (emphasis mine):

[E]ven though I have the greatest respect for you and the president ... kicking this can down the road to March 2011 is irresponsible. This has to be worked out. This isn't a problem that you're all of a sudden some light bulb's going to go on after listening for 18 months. We knew it when we passed [the 2005 federal transport law], we knew we were going to have this problem [with financing].

And I'm telling you, as I told Mr. Oberstar, we will bring Republicans to the table. I get that the Democrats are scared because of some of the election results, they don't want to have a tax increase on top of the other things that are going on around here. But the fact of the matter is, it's time for leadership on this issue, and it is irresponsible, in my opinion, to not deal with this.

LaTourette added that LaHood may be under pressure of his own not to put the White House on record in favor of a new tax increase -- even one that might help break the transportation financing logjam. "Early in your tenure," LaTourette told LaHood, "[you] made some observations about [the prospects for a] vehicle miles traveled [tax]. I got the feeling you were summoned down to the White House pretty quickly after that, and you stopped talking about things like that. But it's got to be done."

Could LaTourette's confidence translate into GOP support for new taxes to help pay for the next long-term transportation bill? A tax increase of some kind is likely the only chance Congress will have to close the $140 billion-plus gap between estimated gas tax revenues and the six-year legislation envisioned by the House transportation committee.

But Republicans won't have to consider coming "to the table," in LaTourette's words, if Democrats stay silent on the issue before the midterm elections. And LaHood's preferred extension timetable of spring 2011 still may be too early for gun-shy lawmakers to sit down and solve the government's transportation funding problem.

"March of 2011 will be a new Congress," Rep. Tom Latham (IA), the senior Republican among House transportation appropriators, told LaHood . "Lord knows what's going to happen. That really kicks it, probably, another year down the road."

House Speaker Nancy Pelosi (D-CA) (Photo: mlive.com)

Well, there certainly has been advocacy for such a position. It does not, certainly, have a majority in the Congress of the United States at this time. So we want to approach this in a way that is comprehensive, that certainly keeps in mind of concerns of the consumer, the concerns of the industry, and of the environment.  This is not to say one idea is better than another — it’s just to say that at the present time, there are other initiatives that we have.

Pelosi added that she had met earlier in the day with Debbie Stabenow, one of Michigan's two Democratic senators, to discuss the climate bill pending in the upper chamber of Congress. Stabenow is a vigilant protector of her state's auto industry and last year signaled that she ultimately would have voted no on cap-and-trade legislation.

"[W]e’re hopeful that some of the initiatives that are in that [climate] legislation — when it passes and is signed into law — will address some of the same concerns that a gas tax would," Pelosi said.

But for now, her answer should be considered equally relevant to the stalemate over the next long-term transportation bill. Without congressional willingness to pay for the legislation, through a gas tax increase or similar new charge, it's unlikely to come up until next year.

Congress isn't eager to raise fuel taxes to pay for transportation -- but what about the states? (Photo: Pop and Politics)

So as Congress and the Obama administration declining to debate a gas tax increase to pay for the next federal transport bill, how are the states coping?

Some are taking the plunge that Washington won't, debating new user fees on fuel and driving. Others are simply spending less on maintaining existing infrastructure that is bordering on disrepair. To get a taste of the local developments, let's take a quick tour of the transportation-financing crisis as it's unfolding outside of D.C.:

In Kansas, state lawmakers are debating alternative proposals to raise gas taxes and car registration fees to help close a transportation budget that has seen [PDF] $229 million in funding cuts over the past year.

In Virginia, planned transportation cuts over the next six years total $4.6 billion. The planned extension of Washington D.C.'s Metro to Dulles airport will push local tolls 25 cents higher this week, with a planned doubling by 2012. The state gas tax: 40th-highest in the nation, according to the Tax Foundation.

In Georgia, a new report from the state transportation director endorses new revenue-raising methods equivalent to a 1 percent sales tax and warns that the current gas tax -- which only meets half of existing infrastructure maintenance needs -- may fall short of federal matching requirements as soon as 2012.

In Michigan, an $84 million transportation budget gap for the current fiscal year is expected to cause the loss of $475 million in federal funding. Looking only at maintenance needs, the state fears the share of roads in good repair to fall from 92 percent to 66 percent over the next four years.

In New Jersey, debt service and interest payments on nearly $11 billion in bonding is set to swallow the state's entire transportation trust fund for 2011, prompting much hand-wringing as new Gov. Chris Christie (R) prepares to take office. Christie campaigned on a promise not to raise the state's gas tax, which ranks as the nation's 47th-highest.

In South Dakota, a bipartisan panel of legislators is moving forward with a proposed 10-cent increase in the state gas tax, imposed in two phases, to help raise $240 million for transportation. Other revenue-raising tactics on the table include higher vehicle license fees and new-car excise taxes. The measure could face an uphill battle, however, with a two-thirds majority needed for passage.

In Iowa, a state budget gap estimated at $500 million or more has persuaded Gov. Chet Culver (D) to propose that state troopers be financed by the transportation trust fund -- which would leave less money for maintenance of roads and bridges. Bipartisan support for a gas tax increase that materialized last year reportedly has evaporated in the face of a Culver veto threat.

Transportation Secretary Ray LaHood (Photo: Getty Images)

In his remarks at a Fort Worth transportation meeting, first reported by the local Star-Telegram, LaHood stopped far short of reversing the White House's stated opposition to raising the federal gas tax, which has remained at 18.3 cents per gallon since 1993.

But LaHood appeared to edge the door open to a solution to the nation's transportation funding crisis -- provided that lawmakers swallow their re-election concerns and acknowledge that the current gas tax is no longer raising enough money to run an effective system.

Here's what LaHood said today (emphasis mine):

To index the federal fuel tax [to inflation], that's something Congress is going to have to decide. As we get into the reauthorization bill, the debate will be how we fund all the things we want to do. You can raise a lot of money with tolling. Another means of funding can be the infrastructural bank. You can sell bonds and set aside money for big projects, multi-billion-dollar projects. Another way is [charging motorists for] vehicle miles traveled. The idea of indexing the taxes that are collected at the gas pump is something I believe Congress will debate. When the gas tax was raised in 1992 or 1993, in the Clinton administration, there was a big debate whether it should be indexed. At that time, they thought there'd be a sufficient amount of money collected. Now we know that isn't the case. That is one way to keep up with the decline in driving, and more fuel-efficient cars.

A rendering of the proposed Moynihan Station (Photo: The Real Deal)

In Minnesota this week, reporters heard House transportation committee chairman Jim Oberstar (D-MN) tell a local conference that he would introduce a two-year front-loaded bill next month and aim to follow up with a four-year transportation bill -- including the broad policy reforms he once hoped to pass in 2009.

Any near-term infrastructure legislation lacking those policy changes likely would run its money through existing federal transportation formulas that tend to favor roads over transit and don't include a "fix-it-first" mandate to prioritize repairs.

But even if Oberstar's long-term reforms are left out of a front-loaded bill, lawmakers are not doomed to use outmoded formulas that shortchanged urban areas during the early months of the economic stimulus effort.

A framework already exists for the merit-based selection of infrastructure projects: the TIGER grants, which offered $1.5 billion in stimulus money to transport plans that would create the most jobs and deliver the biggest livability benefits, whether they dealt with transit, ports, bridges, or roads.

The TIGER grants, which the U.S. DOT sees as a first step towards more accountable transportation funding, attracted a clamor of interest -- $57 billion in applications were filed for the $1.5 billion pot, including a bid to jump-start New York's long-planned Moynihan Station.

Given that Obama administration officials already have their TIGER evaluation process in place and are almost certain to turn down bids from otherwise worthy projects, Congress could easily expand the grant program as part of any front-loaded infrastructure stimulus.

Prioritizing employment and sustainability in the selection of transportation projects, rather than the same old funding formulas, would be a potent down payment on future federal reforms.

The myth that U.S. roads "pay for themselves" thanks to user fees is a subject that's likely familiar to many Streetsblog Capitol Hill readers -- but just how much of the nation's highway funding is provided by charging drivers?

The answer may surprise even active critics of the current asphalt-centric transportation system. Between 1982 and 2007, the amount of federal highway revenue derived from non-users of the highway system has doubled, according to a study released today by Subsidyscope.

Analyzing Federal Highway Administration data dating back to 1957, the dawn of the Interstate system, Subsidyscope researchers found that non-users of the highway system contributed $70 billion for nationwide road construction and maintenance in 2007. In 1982, by contrast, highway contributions from non-users totaled just $35 billion (in 2007 dollars).

Today's study also found that the share of road funding generated by user fees fell to 51 percent in 2007, down from 61 percent just a decade earlier. (The accounting used by Subsidyscope, a joint project of the Pew Charitable Trusts and the Sunlight Foundation, accounted for the use of about one-sixth of federal gas tax revenue to pay for transit.)

What has caused the government's increasingly rapid dependence on non-road user fees -- which more often than not take the form of direct transfers from the Treasury -- to pay for roads?

Subsidyscope points out that the federal gas tax has stayed stagnant since 1993, rapidly losing value as inflation climbs, but the growing popularity of bond issuances as a way to pay for new roads is also a factor. According to Subsidyscope's research, the value of new bonds issued to pay for highways reached $24.7 billion in 2007, up from just $6 billion in new bonds issued in 1982 (converted to 2007 dollars).

Bond offerings, which often represent states and localities playing a greater role in transportation planning, do not guarantee that users will be paying for new highway construction -- rather, bonds depend on market conditions to allow a successful leveraging of debt, and the recent economic downturn has forced many governments to limit their bonding plans.

Deputy U.S. Transportation Secretary John Porcari (Photo: DayLife.com)

Roy Kienitz, U.S. DOT's undersecretary for policy, told Boxer that the cancellation of $8.7 billion in contracting authority -- which took effect when Congress passed the first of two stopgap federal transport law extensions in September -- is forcing a 30 percent cut in local spending power, although each state will feel the effects at a different pace.

"It's pretty important when we see that we're giving the states 30 percent less than they should be getting," Boxer replied, asking the administration for help in marshaling support for a six-month extension of the 2005 transport law.

She added that senators would appreciate White House assistance in ending "the standoff" with the House, where transportation committee chairman Jim Oberstar (D-MN) continues to call for passage of his new six-year transport bill.

Boxer described the House approach as: "Let's just bring it to a crisis point, then we'll go double the gas tax and solve the whole problem." She noted that Democrats lack the votes for that strategy in the Senate (and likely the House as well).

But the administration gave a fairly lukewarm answer to Boxer's urging. Deputy Transportation Secretary John Porcari restated the White House's endorsement of an 18-month extension before conceding that a six-month window is "better than a 30-day."

In a startling tonal contrast, Porcari acknowledged minutes later that America is dangerously "behind the curve" on infrastructure investment.

"We're clearly not doing right by the next generation with what we're doing now," he said.

The lack of sustainable funding remains the biggest obstacle to taking up a new long-term transportation bill, and Boxer nodded to that fact by asking the administration to begin working on alternatives to the federal gas tax -- which has remained at 18.3 cents per gallon since 1993 and lost value as fuel-efficient cars become more popular.

"[A]t the end of the day, we need to think outside of the old ways," she said. "So far, there hasn't been a lot of ideas forthcoming [from the White House], because there are a few other things on the plate -- and I get it. But this needs attention."

Sen. Tom Carper (D-DE), a member of the environment panel, asked Kienitz whether the administration was planning for a new transportation funding mechanism. "We're working hard to prepare internally," Kienitz replied, before adding that "none of that" is close to the form of an official proposal. 

When Carper asked if Congress should do more to press Obama aides into action, Kienitz's response was palpably deliberate. "We ... always appreciate your wise direction," the U.S. DOT official said.

The White House's rationale for its proposed 18-month delay has long been that officials need time and space to craft a sweeping, reform-minded transportation bill. Kienitz gave a hint as to what such legislation might look like when he told Carper that it would be appropriate for Washington to set national performance targets for roads, transit, and ports -- an issue that remains controversial for some industries but has support in the Senate.

Of course, progress on the next bill will be difficult to achieve without putting an end to the recent run of stopgap extensions of the 2005 transportation law, which was heavily tilted in favor of new highway projects and has lost purchasing power as the cost of construction materials swells along with inflation.

No matter what happens, the Obama administration has a limited window to begin pressing for a deal between the House and Senate. The current extension of transport law is set to expire one month from today.

Montgomery County Council President Phil Andrews (Photo: MoCo Council)

But political will, not fuel efficiency, is proving the most powerful deterrent to a gas tax hike. Members of Congress freely admit they lack the votes to pass one, the Obama administration has already ruled one out, and many state officials are equally resistant to asking voters to pay up-to-date prices for using local roads.

In Maryland, for example, local officials are acknowledging that transportation projects will stall without the extra money generated by raising the state gas tax, which has remained at 23.5 cents per gallon since 1992. From the front page of today's Washington Examiner:

Maryland is long overdue for an increase in the gas tax to help build new roads and ease congestion, Montgomery County Council President Phil Andrews said Monday. ...

Andrews' comments echo the sentiments of many elected officials in the District's suburbs, who said their constituents would be happy to pay an extra nickel or dime per gallon of gasoline if it meant spending less time sitting in some of the country's worst traffic.

The Examiner reports that the leaders of the Maryland and Virginia state Senates are on board for higher state gas taxes. But both states' governors are decidedly uninterested.

New Virginia Gov.-elect Bob McDonnell (R) credited his infrastructure policy with helping lead him to victory. As he summed it up in a weekend interview with CNN: "New money for transportation, while protecting education funding and not raising taxes."

And Maryland Gov. Martin O'Malley (D), who is up for re-election next fall, sounded a similar note in the Examiner:

"It's certainly not something we're considering right now," said ... O'Malley's spokesman Shaun Adamec, who added that there was little "appetite or desire" to raise taxes in the current economic climate.

State legislators could be forced to change their approaches to the gas tax if more areas are unable to meet their requirement to match federal transportation aid; in fact, 15 states are already running out of matching funds. But in the meantime, raising taxes will continue to rank among politicians' least favorite solutions to the problem.

Barbara Windsor of the ATA, at right, with Sen. Kit Bond (R-MO). (Photo: ATA)

But for the ATA, more expensive diesel fuel isn't always a bad thing -- only when it results from putting a price on carbon.

The truckers' group supports increasing the federal diesel fuel tax, which has remained static for 16 years at 24 cents per gallon, but only "so long as the revenue is not diverted to other causes," as ATA's chairman explained this month.

So the ATA is in favor of putting a price on high-emissions diesel fuel, but only when the resulting revenue is used to advance transportation policies that meet with the trucking industry's approval. What makes the truckers different, then, from any other D.C. interest group that lobbies tooth and nail for its own bottom line?

For one, the ATA-endorsed claim that the climate bill amounts to a "$3.6 trillion gas tax" uses inflated estimates that differ markedly from those used by the independent Congressional Budget Office (CBO) and the Environmental Protection Agency (EPA).

Both the CBO and EPA have found that acting on climate change would lead to fuel price increases of around 25 cents per gallon by 2030. Meanwhile, diesel prices rose by 56 cents per gallon over a span of just three months this spring, a phenomenon the ATA chalked up to oil speculators. (The ATA has yet to endorse Rep. Pete DeFazio's [D-OR] proposal to tax oil speculators to pay for infrastructure improvements.)

Secondly, Windsor told the Senate today that as an alternative to passing the climate bill, the ATA would support continued use of SmartWay, a voluntary emissions reduction incentive program created by the trucking industry and the EPA. In fact, SmartWay is expanded in the Senate climate bill, with a competitive financing program established for the EPA to reward commercial shippers that use cleaner transportation methods.

Of course, such SmartWay financing would likely benefit electrified freight rail as a workable alternative to trucking, which now carries more than 80 percent of the nation's freight, according to Windsor. Freight rail also stands to gain from the climate bill's set-aside of nearly 3 percent of emissions "allowance revenue" for greener transport.

Perhaps, then, the prospect of competing with freight rail is driving the trucking industry's climate stance as much as any anticipated increase in diesel prices.

Sen. Kay Bailey Hutchison (R-TX) (Photo: GOP Lounge)

How did Hutchison and Bond get to their $3.6 trillion total, which their report calls "relatively simple and straightforward to calculate"? They simply multiplied their estimate of how much fuel the U.S. would consume between now and 2050 by their estimate of the per-gallon gas price increase that would result from an economy-wide emissions cap.

Hutchison and Bond got their numbers from the National Black Chamber of Commerce (NBCC), a business group that released projections on the cost of the House climate legislation at around the same time it joined the official astro-turf lobbying campaign against the bill. The NBCC's analysis, produced by consulting firm CRA International, is one of many competing cost estimates for the climate bill, each of them relying on different assumptions and models that claim to predict the future price of carbon under the pending legislation.

In fact, the NBCC analysis states (in Appendix C) that it has assumed higher CO2 allowance prices than the Environmental Protection Agency (EPA) analysis of the same House climate bill, thus resulting in higher estimates for the plan's impact on real-world carbon prices.

What does the EPA say about the House climate bill's likely effect on fuel prices? Its analysis found a 25-cent per-gallon increase by 2030, or less than three pennies per gallon per year -- small potatoes compared to the oil price swings of recent years, as the Pew Center on Global Climate Change pointed out.

Center for American Progress senior fellow Joe Romm has delved further into the claim, promoted by the oil industry, that a cap on carbon emissions would increase gas prices. Using the non-partisan Congressional Budget Office's estimate of allowance prices, Romm found a per-gallon gas price increase similar to the EPA's.

Still, it's unlikely that Hutchison and Bond would be fazed by economic models that discredit their case. Although they told reporters at today's event that they support cutting carbon emissions, the first page of their report makes clear that they dislike the very idea of more moderate energy consumption:

Advocates of climate change legislation want to increase the price of traditional forms of carbon-based energy, such as coal and oil, so that consumers are forced to respond by using less of those forms of energy. Policy-makers call this putting a price on carbon. Economists call this sending a price signal. The bottom line is that the price of energy will go up.

More expensive energy from climate legislation can be seen as a new national energy tax on American consumers and workers.

Late Update: Senate Foreign Relations Committee Chairman John Kerry (D-MA), the lead sponsor of the upper chamber's climate bill, came out swinging in response to Hutchison and Bond's report.

"Let’s actually have a debate based on reality,” he said in a statement that accompanied a rebuttal from his office. Check it out after the jump.

Gas tax? More like a $700 rebate…
-          Let’s get one thing clear: There is no tax increase anywhere in the bill. Plain and simple.
-          To get these astronomical numbers, the rightwing assumes there will be no innovation or progress in the next 20 years — now that’s simply un-American. Our most efficient cars today are 20 to 70% more efficient than the most efficient 20 years ago.
-          If you assume that progress continues as our fuel standards improve, every American household actually gets more than $250 in savings from this bill.
-          And if you combine that with the programs this bill creates to improve energy efficiency in our homes, every American household will receive over on average $700 in savings, every year.   

Illinois Sen. Dick Durbin (D), at right of President Obama, who was then the state's junior senator. (Photo: Brittanica)

Durbin's remarks came at the Tri-State Development Summit, a gathering of midwestern business and political leaders. The Herald Whig of Quincy, Illinois, had the story -- and took note of Durbin's candor on the need for a gas tax increase to fund the upcoming legislation:

We have to pay for it, and paying for it may mean an increase in the federal gas tax. Nobody wants to say those words. I've said them to you because unless we're honest about this, we're not going to see an (adequate) federal highway bill," Durbin said ...

Durbin told reporters that a consensus must be reached between business, labor and community leaders to support a fuel tax increase "to stimulate new job creation in America."

The transportation plan was set to expire Oct. 1, but it has gotten a one-month extension at the current funding level. House Transportation Chairman U.S. Rep. Jim Oberstar, D-Minn., wants to nearly double the size to $500 billion to catch up on crumbling infrastructure, but White House officials have suggested they want to delay work on the bill for 18 months.

Durbin said he wants to see Congress pass the bill by early next year.

Could Durbin's acknowledgment of the tough choices ahead help push the administration to accept a shorter postponement of the next transportation bill -- say, 6 months or a year, as Sen. George Voinovich (R-OH) has suggested? The answer may well depend on how the White House responds to pressure from Republicans, as well as some Democrats, to enact more economic recovery legislation in the wake of continued job losses.

If a second shot of stimulus finds favor, it's more likely to come in the form of extra infrastructure spending than as another large, stand-alone bill. Of course, there's no guarantee that such extra spending would be balanced between transit and highways, especially considering the lopsided affair that was the first stimulus.

But Durbin's talk of a gas tax increase obscures an even more uncomfortable truth: a simple hike in the per-gallon levy is probably not enough to sufficiently fund the next transport bill, given that Americans are driving less in more fuel-efficient vehicles.

A study by the American Association of State Highway and Transportation Officials (AASHTO) [PDF] found that a 10-cent increase in the gas tax, coupled with indexing it to inflation, could be expected to raise $90.5 billion over the next five years. Coupled with an estimated $255 billion that is expected to come from the existing gas tax, that leaves a gap of $105.5 billion between available financing and House transportation committee chairman Jim Oberstar's (D-MN) new proposal.

Rosenthal attributes much of this difference to behavioral factors relating, it seems, to Europeans' unique tolerance of inconvenience. She writes:

But even as an American, if you go live in a nice apartment in Rome, as I did a few years back, your carbon footprint effortlessly plummets. It’s not that the Italians care more about the environment; I’d say they don’t. But the normal Italian poshy apartment in Rome doesn’t have a clothes dryer or an air conditioner or microwave or limitless hot water. The heat doesn’t turn on each fall until you’ve spent a couple of chilly weeks living in sweaters. The fridge is tiny. The average car is small. The Fiat 500 gets twice as much gas mileage as any hybrid SUV. And it’s not considered suffering. It’s living the dolce vita.

She later adds:

Also, in Europe, the construction of most cities preceded the invention of cars. The centuries-old streets in London or Barcelona or Rome simply can’t accommodate much traffic — it’s really a pain, but you learn to live with it. In contrast, most American cities, think Atlanta and Dallas, were designed for people with wheels.

What makes this particularly remarkable is that she opens the essay by discussing an experience she has in Stockholm, in which she insists on taking a taxi from the airport, which ends up being much slower and more expensive than the train.

Brad Plumer frames the piece as a fascinating read in light of the "lifestyle taboo," writing:

It's not considered the height of political savvy here in the United States to point out that European lifestyles are greener than our own. Don't expect that line in an Obama speech anytime soon. Too many facets of European life—the cramped apartments, the clotheslines for drying laundry—would likely strike suburbanites as inconvenient, burdensome, or even downright primitive...

Rosenthal wonders whether similar measures could fly in the United States: "I believe most people are pretty adaptable and that some of the necessary shifts in lifestyle are about changing habits, not giving up comfort or convenience." Maybe so, but this sort of talk still tends to be taboo in mainstream U.S. green circles. Josh Patashnik wrote a terrific piece for TNR last year on Arnold Schwarzenegger's brand of "pain-free environmentalism" in California—it's all just peachy to talk about swapping out coal-fired plants for solar-thermal stations, but ixnay on trying to rein in suburban growth or coax people into smaller homes.

I see several problems with Rosenthal's essay and with Brad's framing of it. One is that it's not really correct to attribute the huge gap in per capita emissions between America and Western Europe to the charming European habit of drying their clothes on clotheslines.

As Brad notes, power sources play a major role, whether one is talking about greater use of natural gas, the French nuclear industry, or Iceland's geothermal capacity.

Climate is extremely important. Western Europe is fairly temperate relative to much of America (and especially compared to the dirtiest parts of the country). In the same way, Californians are much greener than Texans, thanks to the moderate conditions along the heavily populated Pacific coast, which reduce the number of days on which home heating or cooling is needed.

But there are lifestyle issues involved, particularly where transportation and land use are concerned. And contrary to Rosenthal, it isn't that Europeans have opted for inconvenience. Rather, they have chosen different conveniences, as her Stockholm air train anecdote makes clear.

It is incorrect to say that an overabundance of land drove America to sprawl, and to drive. The Netherlands is dense of necessity, of course, but in Britain and France and Germany there is ample countryside, which might easily be home to sprawling subdivisions.

But Western Europeans have largely chosen not to encourage such growth, opting instead to tax gas at high rates, invest in transit, and protect center cities from the threat of urban freeways.

I think it is very difficult, objectively, to demonstrate that their choices have produced ways of life that are clearly less convenient than American lives. It is clear that Europeans tend to have better health outcomes than us, and they die in car accidents at much lower rates, and of course they're enjoying levels of wealth similar to our own while producing half as much carbon.

The obvious retort to this line of thinking is that perhaps that's all true, but like it or not America is now sprawling, and any effort to make the country greener by pursuing European land use and transportation options would be very difficult. In a similar vein, it is argued that attempts to push Americans into such a life via gas taxes or carbon prices would wind up being very painful.

But this is not quite right. As I have pointed out before, America will more or less need to build itself all over again by 2050 in order to accommodate population growth. Just because most of America is currently sprawling doesn't mean that most of the America built between now and mid-century has to look the same.

It's also not clear that increasing the push factor on households has to be especially painful. Taxes on drivers can be levied in a progressive fashion, if some revenues are used to fund transit options while others are refunded to lower and middle income households to help offset the added cost of driving.

Congestion tolling would mean higher government revenues and reduced driving, but it would benefit rich and poor alike. As with tax revenues, tolls could be used to provide a cushion against the increased cost for lower income families and increased investment in transit. Higher income households (which will tend to place a greater value on work hours lost to congestion) would enjoy a speedy ride into the office.

If the federal government worked to address limits on urban growth in green cities like New York and San Francisco -- limits which also serve to make housing in such places extremely expensive -- then America could grow denser and greener by improving access for middle-income households to some of the most dynamic metropolitan economies in the country.

Perhaps not all of the policy changes needed to reduce America's carbon footprint will be a walk in the park, but efforts to improve land use and transportation decisions are likely to be some of the most benefit-rich aspects of the climate change fight (as you'd think most people would realize, given the obvious pain of congestion, high gas prices, driving fatalities, and isolation among those unable to drive, among other things).

This storyline -- that changing lifestyles to enhance walkability will be painful -- makes it harder to pass good metropolitan policies and easier for politicans to fall back on the lame argument that Americans simply won't tolerate anything other than the sprawling suburban patterns which have dominated new development in recent decades.

And by reinforcing the idea that some of the most promising and least painful policy changes that can be made are unlikely to "work" here in America, writers and politicians alike ensure that more of the hard job of cutting emissions will fall to the parts of the economy where there are no good alternative options, and where change will be painful for households.

Rosenthal's essay is odd yet revealing. She instinctually attributes European greenness to practices Americans would dub backward, while pretending that the very convenient and green transport options she finds are built, and presumably used, by Europeans based on some peculiarity in their culture that we lack.

But we could build trains! In any given legislative sessions bills are introduced that would move the country toward the level of convenience Rosenthal enjoyed in her train ride to the Stockholm airport. It's just that they don't pass, because "it's not considered the height of political savvy" to embrace those policies, because Americans seem to think that their American-ness will render such conveniences inconvenient.

"Trains won't work here," because "Americans love their cars," and so high quality rail lines aren't built, and so Americans continue to drive. And then we sit around wondering what it is about the European character that makes them enjoy using clotheslines so much.

Tom Friedman (Photo: IvyGate)

According to the energy economist Phil Verleger, a $1 tax on gasoline and diesel fuel would raise about $140 billion a year. If I had that money, I’d devote 45 cents of each dollar to pay down the deficit and satisfy the debt hawks, 45 cents to pay for new health care and 10 cents to cushion the burden of such a tax on the poor and on those who need to drive long distances. 

The first and most obvious thing to point out is that it's far more likely that Tom Friedman's mustache will be elected president than it is that Congress will approve a five-fold increase in the federal gas tax, even one phased in over a decade or more.

There is a reason that gas taxes have not been increased in 15 years: expensive gasoline in America is incredibly politically unpopular, and not without reason. Increases in gasoline prices are painful for American households, precisely because the nation is so dependent on driving.

That's the tricky part. Prices need to be higher to reduce dependence on gasoline, but that very dependence makes price increases political suicide. What is needed is either an extremely gradual increase in gas taxes (on the order of the rate of inflation plus 1 percent per year), or increases in market prices (for which politicians will still be blamed), or an indirect levy of some kind that will act to reduce consumption.

A second point is that a $1 per gallon tax on gasoline and diesel fuel won't raise $140 billion a year for very long. Why? Because consumers respond to price shifts, and they respond a lot to large price shifts.

In 2007, the average, inflation-adjusted price of a barrel of oil was about $67 per barrel, and Americans consumed about 20.7 million barrels of oil per day. In 2008, the price of oil averaged about $91 per barrel (which translates into a gas price increase of about 60 cents per gallon), and consumption fell by more than 1 million barrels per day, to the lowest level since 1998.

The price goes up and consumption goes down, reducing the revenue one earns from the increase in price. What's more, the short-run demand response will often be mild relative to the long-run response.

Faced with an increase in the price of gas, households can't do all that much in the short term to respond. They may cut out unnecessary errands, or carpool, and if they live in an area with good transit access, they'll likely increase transit ridership.

But because of the household location decisions made in recent decades, most households will have few ways to reduce gasoline usage immediately. Consumption will fall, but not by much.

If months pass and the increase persists, then responses will grow more dramatic. Households will trade in gas-guzzlers for more efficient vehicles or buy bicycles. Consumption declines will increase.

And if increases are expected to be permanent, the long-run responses will be significant. Households may begin to choose home or job locations that minimize driving or that allow for use of transit, walking, or biking. Communities may begin designing themselves differently and increasing transit service.

And ultimately, consumption may fall to near zero.

That doesn't mean that driving will fall to zero. Vehicle miles traveled per person will almost certainly decline in such scenarios, but the inevitable switch to electric vehicles or those using alternative fuels will allow millions of Americans to continue getting around by car.

But that won't do a thing for the $140 billion in revenue that Friedman would promise to debt retirement and health care. And whatever portion of transportation budgets is reliant on fuel taxes will be likewise destroyed. So what he might have written is that real men tax gas and then prepare to tax something else.

That something else will probably have to be driving itself, or congestion, or both.

It would be a good idea to charge drivers for their use of the road whether or not there was a gas tax revenue crisis. Congestion costs Americans billions of dollars a year -- a burden on wallets and economic activity that will persist even after the carbon has been wrung out of the transportation sector.

Of course, we run into trouble in assessing congestion fees just as we do with gas taxes. A fee high enough to reduce congestion is one high enough to deter driving -- which is to say, one that is felt and reviled by drivers. That will not be popular.

Even if some share of gas tax revenues is refunded to low and middle income drivers (as it should be), and even if good transit substitutes are built (as they should be), the effect of the increased cost will be to force some behavioral changes -- economically efficient and environmentally beneficial ones, it should be noted, but behavioral changes all the same.

And change is not nearly as welcome as last November's election might have led you to believe (as this summer's political shenanigans should convince you).

And so the best hope for funding is likely a combination of small measures which ramp up over time. Congress, in considering how to fund the next transportation bill, shouldn't be looking for a funding magic bullet; anything that suddenly raises a lot of money will be politically toxic.

A better idea is to focus on small increases in gas taxes along with a rollout of VMT-taxes that begin at low levels -- too low initially to do much about congestion. It will amount to less than anyone in policy-making circles really wants, but it will be a start.

(Image: CleanTechies Blog)

But some in Washington's business lobby -- the crowd that wielded major influence during the Bush years and still holds sway in the Obama administration -- disagree with that assumption.

"The stimulus package will not carry us through," Jay Timmons, executive vice president at the National Association of Manufacturers (NAM), told reporters this afternoon. "It was merely a downpayment. In order to reap the benefits of the Recovery Act, we need to continue the investment."

Timmons, along with U.S. Chamber of Commerce president Tom Donohue and AAA vice president Kathleen Marvaso, spoke out to support House transportation committee chairman Jim Oberstar's (D-MN) plan for a three-month delay in crafting the next long-term bill, rather than the Senate's preferred 18-month postponement.

The business groups' argument was simple: when the White House is heavily invested in getting the country back on a strong economic footing, it would be self-sabotage to delay a new transportation bill for too long.

"We can't have the economy we want with the transportation system we have," Marvaso said. "Transportation funding should not be considered a luxury."

The $48 billion in transportation stimulus aid -- just $8.4 billion of which went to transit -- comprises just six percent of the total package's $787 billion price tag. To help pay for more infrastructure investment, NAM and the Chamber have offered to get behind an increase in the federal gas tax; Donohue was reluctant to mention what size hike he was endorsing, but he said that "a penny is a waste of time" and "40 cents [per gallon] is a big bite."

But the devil is in the details for the business lobby's gas tax advocacy. Both Timmons and American Trucking Association chief Bill Graves said their support would depend on how much Oberstar's new transportation bill focused on their core priorities (read: more money for roads).

And with the Chamber undercutting its own members' climate change efforts by mounting an occasionally bizarre campaign against the House climate bill, it's far from clear that the group would support Oberstar's proposal for a minor increase in transit's share of federal funding. The business lobby is certainly stepping on the Senate's transportation message, but that may be all it can get done before the extension battle comes to a close next week.

The president on the links. (Photo: Gawker)

According to the energy economist Phil Verleger, a $1 tax on gasoline and diesel fuel would raise about $140 billion a year. If I had that money, I’d devote 45 cents of each dollar to pay down the deficit and satisfy the debt hawks, 45 cents to pay for new health care and 10 cents to cushion the burden of such a tax on the poor and on those who need to drive long distances.

As it happens, Friedman had the perfect opportunity to talk about his views during a long day of golfing with President Obama and Transportation Secretary Ray LaHood.

The Nation wondered why the White House has focused its media courtship more on "traditional newspapers" rather than the bloggers who helped power Obama's election victory, while Politico's Michael Calderone declared that Friedman's audience with Obama had vaulted him "to the front of the access line."

But if Friedman's tee time with the president -- said to be a fan of the columnist's latest book, Hot, Flat, and Crowded -- is truly a mark of increased influence, one supposes it's only a matter of time before Obama and LaHood reverse their strong opposition to a gas tax hike to pay for long-term infrastructure investment.

Ah, to be a fly on the wall...

Do federal gas taxes really charge "users" of the highway? (Photo: CAP)

The Interstate Highway System accomplished all of this [construction of the system] without any subsidies. Federal highway user fees paid for 90 percent of the cost of the system, and state highway user fees covered virtually all of the remaining 10 percent.

This brings up an interesting question: What is a user fee? Common sense would suggest that a user fee is a fee paid by a user of something in order to use that something. A common example might be a train fare. When one wants to ride a train, one purchases a ticket. One doesn't purchase a ticket if one doesn't want to ride the train, and one doesn't ride the train without a ticket. A ticket is specifically meant to extract a fee from a potential user, that that user might then be allowed to use the train.

So do gas taxes count as highway user fees? Well, one might pay gas taxes even if one never uses highways. You pay the gas tax on gas used to drive down local roads or private driveways, or to power lawnmowers and tractors that never even see publicly-funded blacktop.

And one can use highways without ever paying gas taxes. Anyone able to obtain a vehicle powered by natural gas or electric batteries or canola oil can ride on the federal highway system for thousands of miles and never pay one cent to do so.

So gas taxes are not user fees. Indeed, the lack of actual user fees is one reason American highways suffer from severe congestion problems; when you give away something valuable for free -- like scarce highway space -- it ends up seriously over-consumed.

As a thought experiment, let's consider a world in which federal gas taxes functioned more like a user fee. That is, let's imagine that when drivers fill up, they pay a federal gas tax only on the gasoline consumed while driving on federal highways. That's still not really a user fee, but it's a little closer.

Light vehicles traveled a total of around 2.8 trillion miles in 2007, of which about 23 percent were driven on interstate highways, according to the Department of Energy. If we divide the total number of miles driven on interstates by the weighted average fuel economy of cars and light trucks, we find that about 31 billion gallons of gas were consumed on highways in 2007. That's a lot!

Next, we know that the Federal Highway Administration budget is around $39 billion. If we assume that truck and diesel revenues are unchanged, then we have about $24 billion in highway funding to be covered by a tax on those 31 billion gallons of gas, for an estimated gasoline tax of about 80 cents per gallon.

That's an extremely rough estimate. In fact, the nation's light vehicle mileage includes some diesel-burning engines. If we adjusted the calculations to reflect that, the estimated tax rate would be higher. Highway fuel economy is also higher than the average figures, which means that the calculations above probably overstate the gallons of gas burned on highways. This, too, means that the estimated gas tax rate is too low.

An appropriate gas tax rate to cover the annual highway budget -- which many argue is far too small -- would be on the order of about $1 per gallon.

All in all, this should illustrate that if you set aside all the O'Toole hand waving about trust fund revenues shifted to other modes, you still wind up in a world where federal roads come nowhere near paying for themselves.

One final point: We learned last year that it doesn't take much of an increase in the price of gas to generate reductions in VMT and increases in transit use. If we adjusted the current price of a gallon of gas to reflect an appropriate federal gas tax, gas would be selling for nearly $3.50 per gallon, on average.

With gas at that price, travelers would drive less and use transit more often. During the gas price spike last year, we saw a number of transit systems enjoy high demand during peak periods, to the extent that fares might easily have been raised to reduce system overcrowding.

In other words, what transit systems can charge riders depends upon what the government is (or isn't) charging drivers. This is exactly what we'd expect; if Coke began heavily subsidizing its sodas, Pepsi would have to find a way to cut its prices or face going out of business.

What we see then is that there are two funding equilibria. If drivers pay a fair price for the use of roads, then highway revenues rise and transit fares can rise until both modes are full but not congested. This is the high revenue equilibrium.

But if drivers don't have to pay a fair cost for the use of roads, then highway revenues will be low, roads will be congested, and transit systems will have too little ridership, such that transit systems will be unable to raise fares without losing riders to the already congested roads. This is the low revenue equilibrium, and it's a bad place to be -- inefficient use of all modes, costly road congestion, and a constant shortage of funding for needed infrastructure maintenance and investment.

That's where we are now.

When Congress finally gets around to crafting a transportation reauthorization, it would be nice if they recognized some of these dynamics. America needs smarter infrastructure investment rules, but it also needs smarter revenue-raising methods. If you get the money the right way, that makes it easier to spend the money the right way.