Obama's Infrastructure Plan is Great; Here is How to Pay for it

Obama's got a plan, but he won't say were to pay for it. Here is an idea. I know its controversial.

Word slipped out yesteday that Obama's got a $175 billion stimulus plan to revitilize the US economy.  Much like the public works projects of the Great Depression, Obama wants to dedicate most of the money to building better new transportation infrastructure with significant funds also to be allocated to alternative energy sources.  It is a great idea and could put people to work and get the US focused on necessary transportation solutions for the future (high speed rail, etc.). Unfortunately, he doesn't know where the $175 billion is going to come from.

Just as Europe has moved ahead of the US in transportation, we need to look at funding this new transportation initiative the way that they do.  It won't be popular, but the only answer is to raise taxes - to tax existing inefficient use of transportation to pay for our plans for the future.  It isn't going to be popular politically today, but forcing the US to swallow a bitter pill will make Obama the hero of future generations.

Here's how I propose that it works.  The obvious first target is a Federal gasoline tax.  Even with gas at $4 a gallon, Americans were consuming 180 billion gallons of gas a year.  Each penny of a Federal gasoline tax would generate $1.8 billion a year.   A dollar tax would generate $180 billion, paying for this program entirely, without bringing gas prices near where they were 4 months ago.  Two dollars would generate $360 billion, paying for this program and much of TARP, and, if gas remains at $55/barrel for two years, will not set gas prices too far above where they were just recently.

Additionally, I would note that each penny charged to Americans to drive on highways would yield over $33 billion per year.  I don't like this as much because it doesn't promote efficiency the way that a federal gas tax does.

Although not palpable with GM and Ford on the verge of bankruptcy, a 1% tax on new automobiles would generate over $8 billion per year in tax revenue.

I know that this is all controversial.  I know that Obama would be perceived to be stabbing his constituency in the back (he isn't taxing the wealthy with this, but he is taxing the poor who depend on driving and driving inefficieny cars - often because they cannot afford efficient ones).  But, it is the right thing to do.  Europe has a lot of problems and shouldn't ordinarily be a role model for the US.  But, these aren't normal times.  And, as we move towards an efficient transportant infrastructure that they have, we need to pay for it through taxing of our old inefficient transportation vehicles and habits.

Ari Socolow
Ari Socolow: Ari Socolow is the Chief Economist and Editor-in-Chief at BestCashCow. He is particularly interested in issues relating to bank transparency and the climate crisis. Since co-founding this website in 2005, Ari has been frequently cited in the media as an expert on local and national savings accounts, CD products, mortgage and loan products and credit card rewards products.

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  • Randi

    January 16, 2009

    Jay, Have you ever listened to George Bush speak? thats all he says is ummmm. I am sure you can come up with something a little more mature to talk about than brainwashing.

  • JE.Smith

    January 19, 2009

    The "Socialist ideas" in this column will definitely help Remington's shares increase in value.Remington makes a fine 700 series "Thought Changer" as 64 plus million need there heads examined.No don't even come back with the "GWB" Horse dung.As he progressed socialism by spending extreme amounts of hard working citizens capital.So to the "Progressive"(not insurance)genius think tanks and O'shama zealots.Many "Proud Americans" have something for you.Believe it.History does repeat itself.

  • Joseph Zarcone

    January 24, 2009

    ha ha. No. I think that his infrastructure plan will create jobs in the short term. And by the way, he had every intention of taxing the American people. He isn't even cutting taxes. He's handing out tax credits a la welfare. If only 60% of the american population pay taxes, how are 95% of the people going to get a tax cut? They don't. They get free money.

  • Jason

    March 04, 2009

    How many times do liberals need to raise taxes thinking it will help pay for all the crap they have over spent on before they wake up? Raising taxes kills the economy. The rich won't pay any more on taxes! They will simply move their money and protect it. They didn't get rich by being stupid. The rest of us pay the price every time. Reducing the size of our federal government, cutting taxes (yes for the rich, they create the jobs people) and bullshit spending is how to stimulate the economy.

    We have had others try and do what Obama is doing in the past. Marching us toward Socialism that is. Wilson and FDR were two of the bigger offenders.

    Contrary to popular belief, FDR was one of the worst presidents this country had! He actually managed to make the Great Depression last longer than it needed to by increasing the size of government and increasing taxes thinking it would bring us out of the crap. And NO, WWII did not bring us out of the depression. Things truly didn't get better until FDR finally died.

    Obama is attempting and succeeding to do more than FDR did in making the government bigger. Obama and all the liberals are in an all out power grab right now. I don't care what party lines you vote, but the reality is that both the Republicans and Democrats are F@#king us all in the ass. We need to clean house people! We need people who truly believe in limited government, low taxes and a embracing of our founding documents. Forget "Red" and "Blue", Republican and Democrat. And for crying out loud, QUITE DRINKING THE FUCKING OBAMA KOOLAIDE! The guy is tanking this country worse than Bush managed to do. He is not the worlds savior. He is a not talent ass clown with zero experience and it is showing.

    Do me a favor. Look at the campaign promises he broke in the stimulus package. I have counted 7 in it. I am not going to tell you what they are because that would just enable all you lazy people out there who let the left winged media tell you how to vote. Start educating yourselves already! Enough with the ignorance. The idea was always "Self Government" not big government. Read up on your US history finally and turn OFF the fucking TV. Start using the brain in your head if you still have it. I know Obama is a great public speaker and has a lot of charisma. But wake up already! The next time he speaks, take emotion out of it and don't actually watch him. Listen to him only when he speaks. Then look to see what he actually does. He saying one thing and doing another. Typical politician yes. But it is worse than that.

    If we continue to let Obama and the rest of the government keep taking us down this path, this country will collapse upon itself just like Russia did.

    Now the President is only one problem that we have. Our Senators and Congress people are really the bigger problems. They may go to Washington with great intentions in the beginning. But once they get there, the machine starts working on them right away. What I mean, is they realize they have to always be running for re-election. They end up focusing on staying in office instead of why they are there. To serve the people! Imagine if these people had only one term or two to get things done. My guess is that they would be focused on their job not a bullshit campaign.

    Think back to this countries founders. They were farmers, lawyers, doctors, business owners etc. And when they went off to be representatives, they did just that. Represent! And when they were done, they went back to their businesses, Farms, Practices or whatever. It was not a fucking career for those guys. They felt it to be their civic duty. They served! It is time to change the term limits of these career politicians if you want to see real "Change". Washington can not be a career any longer. It has bread too much corruption.

    There, I feel a little better!

  • Duane

    January 20, 2010

    Great job Jason. You are a true insperation to all patriots. We will overcome this.

  • Christian Sluder

    October 27, 2010

    It's about time someone is doing something about the unemployment rate. I think this is a great idea, America needs to get back to work. LiUNA (Laborers’ International Union of North America http://bit.ly/9ZVcaM) estimates 1.5 million men and women in the construction industry are jobless. That's unacceptable, somethings gotta be done

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