Budget for Fiscal Year 2017
Posted: February 19, 2016
President Obama unveiled his budget for fiscal year 2017 last week. In it, the President proposes a $10.25-per-barrel tax on oil to help fund road and transit improvements. With gas prices below $2 per gallon in most places throughout the country, one may think this is the time to propose this idea. However, even though the tax on oil would be phased in over the next five years and is supposed to raise $139 billion for the highway trust fund, there is absolutely no chance this part of the budget will get passed by Congress.
Not only has Congress failed to increase fuel taxes to pay for infrastructure improvements, it also has allowed the existing federal gasoline tax of 18.4 cents, last raised in 1993, to be eroded by inflation. Obama's plan would amount to about 25 cents a gallon of gas when fully phased in.
Drivers saved more than $500 on gasoline last year. But the $10.25-per-barrel tax on oil will also raise prices for every product that relies on transportation, including food. Lower income Americans, who spend a larger percentage of their paycheck on these essentials, would take the biggest hit.
In my opinion, there are better ways to raise revenue without destroying jobs or raising consumer costs. If the government would open up the Atlantic, Pacific or eastern Gulf of Mexico to energy exploration, it's expected that would contribute $200 billion in government revenue. Removing barriers to energy infrastructure investment would unleash $1.15 trillion in private capital and generate $27.5 billion in average annual revenue - without costing any taxpayer dollars.
Even though an investment in infrastructure is clearly needed to improve transportation, I think there are better ways to raise revenue than to place an unneeded tax on a barrel of oil.
I thought it was telling that President Obama's budget achieves more than $955 billion in deficit reduction from reducing tax benefits for the high-income households.
RANDOM THOUGHT: I watched the Grammy Awards ceremony from Hollywood this week and realized that I didn't know many of the bands that were performing that evening. Actually, I knew a few of the musical groups, but sometimes, I just don't want to admit that I remember songs by David Bowie, Earth, Wind & Fire and The Eagles. I watch the Grammy Awards show to try to remain relevant, but all it did was remind me that I'm getting older.