If Congress won’t raise taxes on gasoline, will it slap a fee on oil?
That’s what President Obama will ask of lawmakers when he releases his final budget proposal next week, calling for a $10 tax on every barrel of oil to pay for a long-term infusion of spending on infrastructure. Coming from a lame-duck Democratic president, the proposal is, plainly, a non-starter in the Republican-led Congress. But the idea is sure to jumpstart the debate over energy and infrastructure in this year’s presidential campaign, and it signals a renewed effort to find a fresh way to pay for upgrades to the nation’s transportation system that both parties agree are sorely needed.
“Our transportation system used to be a source of competitive advantage for our global economy, but today we’re at risk of it becoming an Achilles heel,” Jeffrey Zients, director of the White House National Economic Council, told reporters on a conference call.
While both Democratic and Republican-led states have been raising the gas tax in recent years to pay for upgrades, Congress hasn’t touched the 18.4 cent-per-gallon gas tax in more than two decades, even as prices have dropped steadily to below $2 a gallon at the pump. On the surface, taxing a barrel of oil rather than gasoline should be an easier political sell. The levy would still be passed onto consumers in price increases, but it’s a less direct hit and would be broader than targeting only the heaviest users of streets and highways. Oil companies have always been ripe targets for Democrats, who have proposed windfall-profits taxes in the past.