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Gas tax increase in infrastructure deal a trap, Trump advisers warn

November 13, 2018

President Trump and congressional leaders have sounded optimistic about their ability to strike a deal to rebuild America’s crumbling infrastructure, but advisers to the White House warn that Democrats are trying to spring a gas tax trap on the president to sabotage his 2020 re-election bid.

Mr. Trump and congressional leaders emerged from the midterm elections, in which Democrats seized control of the House, saying a massive infrastructure program topped the list of issues where they could find common ground in a divided government.

Talk around Washington quickly turned to raising the federal gasoline tax as a go-to fountain of funding for roads, bridges and transit projects.

“There has to be real money, real investment,” Rep. Peter A. DeFazio, the Oregon Democrat in line to become chairman of the House Transportation and Infrastructure Committee next year, told reporters shortly after the midterms.

Mr. DeFazio said Mr. Trump would have to be “fully on board” with any gas tax increase to get a deal.

He noted that California voters this month rejected a repeal of a fuel tax increase that the state Legislature passed last year.

He scoffed at Mr. Trump’s plan for a $1.5 trillion program that relied heavily on public-private partnerships, known as P3s, and leveraging more spending by state and local governments.

That plan got shelved this year mostly because of opposition from Senate Democrats who wanted $1 trillion in direct federal spending that likely would have piled on debt.

“We’re not going to do pretend stuff like asset recycling. We’re not going to do massive privatization,” Mr. DeFazio said.

Grover Norquist, president of Americans for Tax Reform and an informal adviser to the president, said Mr. Trump knows that any tax increase would sabotage his 2020 run.

“Tax increases are fatal to people’s political careers,” he said. “All the effort of the Democratic Party will be to get Trump to betray his supporters and specifically his middle-class supporters by giving into a gas tax or something like a start to the process of raising the corporate income tax.”

He noted President George H.W. Bush’s re-election loss after breaking his pledge for no new taxes in a budget deal with a Democrat-run Congress.

“If there is one thing that Trump prides himself on it is being smarter than the Bushes. So he is not going to make the rookie mistake that George Herbert Walker Bush did and betray his constituency and raise taxes,” Mr. Norquist said.

Still, rebuilding America’s crumbling highways, airports and inland waterways remains a top campaign promise that Mr. Trump has yet to fulfill.

Mr. Trump said Democrats will have to come to the negotiating table now that they run the House.

“Now we have a much easier path because the Democrats will come to us with a plan for infrastructure, a plan for health care, a plan for whatever they are looking at, and we’ll negotiate,” Mr. Trump said in a post-election press conference.

A potential deal on infrastructure is enticing to the White House, even though the administration last year batted away proposals for a 7 cent increase to the gas tax.

The tax, currently 18.4 cents a gallon for gasoline and 24.4 cents for diesel, has not been raised since 1993.

America’s urgent need for infrastructure upgrades are well-documented.

More than 140,000 bridges need repair or replacement, and 40 percent of the highway system requires rebuilding, according to federal data.

Last year, the American Society of Civil Engineers’ annual Infrastructure Report Card gave the U.S. a D+, including a D+ for the power grid, a D for airports and a D- for transit.

Pressure for a compromise on infrastructure that includes taxes isn’t coming only from congressional Democrats.

Thomas J. Donohue, president and CEO of the U.S. Chamber of Commerce, prodded Republicans to make concessions for an infrastructure deal, which he put at the top of his to-do list for the next Congress.

“They’ll have to make some trade-offs, but there is a real chance to finally do it,” he wrote in a commentary on the chamber’s website. “Republicans are going to have to accept that we need more revenue from dedicated user fees. Democrats are going to have to accept that private investment must be a big part of the solution. Both sides should look at this as an investment in our nation’s long-term competitiveness and future prosperity.”

It’s the same trade-off suggested by David Beaudreau Jr., who represents energy and transportation industries at D.C. Legislative and Regulatory Services, a bipartisan lobbying and government relations firm.

“If Republicans are willing to consider a small increase in the gas tax and Democrats have some openness regarding P3s which have been a focal point for the administration, I think there’s a possibility that they can come up with a plan to fund infrastructure improvements,” he said.

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