Driving With Tax Freedom

Tax Freedom Day

How sad is it that we have to work nearly 1/3 of the year just to fund the government?  And, this year the date of April 18 is 5 days later than it was last year.  Things don’t look better for next year either, especially with Obama Care fully kicking in.

I had the wonderful opportunity to chat with Elizabeth Malm, Economist with the Center for State Tax Policy at the Tax Foundation on my local radio program about Tax Freedom Day and what it really means. Listen by Clicking Here.

Nonetheless, Tax Freedom Day has come and gone, so as you drive down the road the remainder of this year you can now rest easy because you are finally driving for yourself and not the government.


Random Tolling

How do you pay for a bridge that was constructed before funding was secured?  You toll an entirely different road of course!

The 520 bridge in the Seattle area is just this project.  One plan to pay for the bridge, which also has experienced $100 million in engineering snafu’s, is to toll Interstate 90 to help pay for the $1.4 billion shortfall.

This proposal, and how we arrived at this point, is just too outlandish to write about…..so why not listen….

Learn more about this “fundamentally flawed” proposal, as well as other disturbing and related issues with this project by listening to my interview with Paul Guppy, VP of Research for the Washington Policy Center (originally aired on my local radio program, In The Booth).

Click Here to Listen: Bad Tolling Plan

I’ve long been an opponent of toll roads in most cases.  Proponents of toll roads generally argue tolls are nothing more than a “user fee,” while I argue the gas tax is that “user fee” – unfortunately states and the federal government generally don’t use the gas tax entirely for what I believe it’s intended purpose is, to fund highways.  This proposal, however, takes the idea of tolling to an entirely new disturbing level.

Diesel Price Outlook

My latest article in Canada’s Western Trucking News (March 2013) addresses the outlook for diesel prices.




The good news – barring any major global events affecting oil supply, diesel prices should remain fairly steady with only moderate increases over time.  There are some indications diesel fuel prices could even decrease in the short term (though I would not hold my breath for that to happen).

Read the column by clicking here.

 

 

Transportation Infrastructure / Amtrak #Fail

  As the country approaches yet another fiscal cliff (though this time it is called a sequester), the President’s 2013 State of the Union Address outlined an aggressive program to address America’s deteriorating transportation infrastructure.

  The President said, “America’s energy sector is just one part of an aging infrastructure badly in need of repair. Ask any CEO where they’d rather locate and hire: a country with deteriorating roads and bridges, or one with high-speed rail and internet; high-tech schools and self-healing power grids. The CEO of Siemens America – a company that brought hundreds of new jobs to North Carolina – has said that if we upgrade our infrastructure, they’ll bring even more jobs.”

  Specifically, the President proposed “a “Fix-It-First” program to put people to work as soon as possible on our most urgent repairs, like the nearly 70,000 structurally deficient bridges across the country.”

  Although it is difficult to disagree with the call to improve America’s infrastructure, it’s also unfortunate that no specific plan was proposed to pay for these improvements. The fact that the country is likely to experience a sequestor whereby $85 billion from the budget will be slashed, resulting in a loss of 750,000 jobs (according to the Congressional Budget Office) and a lower economic growth rate, it’s unlikely any meaningful infrastructure improvement funding will occur.

Amtrak  Fortunately, there is still hope for the President’s call for high speed rail, right? At least that segment of the transportation industry will see a benefit, right? Well, perhaps not. A recent column by Daniel Hanson, and economist with the American Enterprise Institute, calls for an end to Amtrak. One might wonder why when Amtrak posted its best year in 2012 since 1975- it only lost $361 million.

  Yes, it ONLY LOST $361 Million in 2012 – it’s best year since 1975. Given the relative success, or lack thereof, of the Amtrak system, why would high speed rail be a priority? Will it suddenly become profitable (or at least break even)?

  At minimum, I agree with Hanson in that Amtrak should be required to submit a legitimate business plan to Congress showing how it will be in the black – even with federal funding.

Listen to my interview with Daniel Hanson discussing Amtrak and its financial comparison to the Interstate system. (From my local radio program)

  The President’s call to action on infrastructure improvements with no specific funding mechanism, the upcoming sequestor with no solution in sight, and the failed Amtrak program, highlights the need for the American citizenry to demand real leadership both in Congress and in the White House.

Increasing Fuel Taxes

My latest column for Challenge Magazine discusses state and federal fuel taxes.  While it is apparent there will be an increase in some form of fuel tax, especially at the state level, it’s currently unclear as to what that impact will be on the trucking industry.

In my column, I write, “From my perspective, it’s far easier to accept tax increases from state governments than the federal government.”  And, “Hopefully this will result in improved highway infrastructure, but unfortunately it will also likely result in increased costs to consumers – even those consumers the president has promised not to raise taxes on.”  I also reflect upon Congressman Tom Graves fuel tax devolution proposal from the last Congress – perhaps its time to take a closer look at that.

Click Here to Read the full article here at Challenge Magazine.


Keystone XL – Approve It!

Keystone Oil Pipeline Contruction - North Dakota; Copyright © TransCanada Corporation. All rights reserved.

The TransCanada Keystone XL Pipeline Project had been the source of much controversy during President Obama’s first term.  Opposed by environmental groups, touted by the energy industry, the debate is endless.  The Governor of Nebraska had to address to pressures from environmental interest groups in 2011 and ultimately denied a pipeline siting permit for the project that stalled the remainder of the planning.

Beyond state siting issues, the US State Department must also issue a Presidential Permit for the project (because it crosses international borders).  The President has enjoyed the cover of the state of Nebraska’s delay since 2011, but that delay is now over.  On January 22, 2013, Governor Dave Heineman gave approval for the pipeline’s siting through Nebraska.  The new path avoids the controversial “Sand Hills” area of Nebraska.

Read the Governor’s Approval Letter by clicking here.
Read TransCanada’s Statement on the Governor’s Approval by clicking here.


On the same day Gov. Heineman approved the pipeline, White House Press Secretary Jay Carney was asked if we could expect the project to move forward now.  Carney largely avoided the answer, suggesting these things take time, and reminding folks that the Obama Administration blames the Nebraska Governor for the delay.  “One of the things that delayed or postponed this process had to do with the opposition of the Nebraska Governor and others in that state to the route that Keystone was proposed to take, the pipeline was proposed to take,” said Carney.  The “others” mentioned by Carney will likely oppose the pipeline regardless.

   If the President’s State of the Union is any indication, it’s unlikely he will move quickly on giving final approval for the pipeline.  The only comments related to energy security or independence in that address were directed at “green energy.”  “The path towards sustainable energy sources will be long and sometimes difficult.  But America cannot resist this transition, we must lead it.  We cannot cede to other nations the technology that will power new jobs and new industries, we must claim its promise,” said Obama.

Read the President’s State of the Union Address by clicking here.

What the President and others in the Administration need to understand is that no matter how promising new energy technologies might be in the future, the United States and the globe are largely a carbon based society.  To do anything significantly different that would truly eliminate the need for carbon based energy will take much larger investments and infrastructure than most are willing to discuss.  That, in part, is why we need to continue to look at new energy technologies while still working to become more energy independent in the current reality.

  We need the Keystone XL Pipeline Project to be approved.  As such, I send kudos to my old friend, U.S. Senator John Barrasso and about 52 other Senators for sending a letter to President Obama encouraging him to “finish the review process and approve the Keystone XL pipeline by the Administration’s own March 2013 deadline.”

Read the text of the letter by clicking here.

  The letter concludes, “After four and a half years of stude, we urge you to stick to your deadlines.  The American people need a timely decision on the Presidential Permit.”

  I would argue that the American people not only need a timely decision, but they DESERVE a timely decision.  Far too often government delays important decisions in the name of appeasing certain interest groups.  Any delay in approving this project only hurts the American people.  The American people deserve the 5000-6000 temporary construction jobs; the American economy deserves the private sector investment of $20+ billion; states and communities along the pipeline route deserve the $585 million in new taxes; and the nation deserves strengthened energy security with the pipelines 1.1million barrels per day capacity (with contracts to support it).

Learn the facts by clicking here.

   Mr. President, approving the pipeline is good for America!


2012 Election – Now What

By Michael Howe

The 2012 election is over, the results – for the most part – are in, so now the question becomes “what does this all mean for the trucking industry?”

The one thing we knew for certain prior to the results being announced was that we would have a new Secretary of Transportation.  Current Secretary Ray LaHood had already made his intentions clear that he plans to step down at the end of President Obama’s first term.  When that will happen exactly is somewhat unclear, but certainly within the first few months 2013.  Will policies change much at the DOT?  Probably not.  There will continue to be an emphasis on stronger safety regulations for the trucking industry, concerns about infrastructure and more.  What will matter with the new Secretary is the level of emphasis placed on each area.

With the Federal Motor Carrier Safety Administration (FMCSA) I would be surprised if current Administrator Ferro did not continue in that role for at least another year or two, unless the President decides to elevate her to Secretary (which I also doubt).  Under Ferro’s Administration the FMCSA has not been shy about shutting down high risk truck and bus companies.  In addition, FMCSA continues to work on EOBR mandates, Distracted Driving regulations, and of course the cross border program.  They also continue to research the Hours of Service regulations.

Outside of the bureaucracy, President Obama’s economic and tax policies create some concern for trucking companies.  This goes back to the old adage of the only thing you can count on are death and taxes.  Well, it’s the taxes part – specifically increasing taxes – that are most worrisome to the trucking industry.


In a second term Presidents don’t have to worry about re-election, so there is a tendency early in the term to be a little more aggressive.  The first 2-3 years might be the time when President Obama makes a big move on climate change issues.  Any such legislation from Congress or regulation from the EPA such as a carbon tax, stricter emissions regulations, or other climate related regulations would undoubtedly result in increased cost pressures on the trucking industry.

Fuel prices will continue to be a concern, though they would be a concern with whoever was in office.  The real issue here is what is our nation’s energy policy?  The Keystone Pipeline likely won’t easily become a reality – ok, it likely won’t become a reality at all.  You can also expect the administration to look more at fracking and perhaps work to impose regulations on that.  We’re not going to see a significant increase in domestic drilling and offshore drilling permits, so the largely unnecessary dependence on foreign oil will continue.  Expect prices to continue rising, fluctuating for seasonal demands, but rising overall.

Congress really didn’t change much either.

In the US Senate the Democrats were able to pick up 2 seats, though they are still far shy of the 60 seats needed to stop a filibuster.  This is interesting because with a filibuster the Republicans will still be able to prevent legislation of force a compromise.   Something to watch, however, will be an early attempt by Democrats to force a vote on limiting filibusters.

In the US House, Republicans retained control.  Rep. John Mica, Chair of the Transportation Infrastructure Committee (and friend of trucking) was re-elected, as was another friend of trucking Rep. Tom Graves.  Obviously there are other “friends of trucking,” but these are just two who I found to be of interest based on my interviews with them.

So, the end result – not much has changedWe have the same people in charge that were in charge before the election.  This is the same group of leaders that negotiated themselves into the corner that is the looming “fiscal cliff.”  This is the same group of leaders that has been largely unable to pass any meaningful long term highway bill (and no, the recent one was not long term in my opinion). 


Major issues facing the trucking industry in the next 6-12 months:

  • Fiscal Cliff
  • Electronic On Board Recorders (EOBRs)
  • Hours of Service (possibly)
  • Cross Border Trucking with Mexico
  • Who is the new Secretary of Transportation?
  • New Environmental Regulations
  • Additional Distracted Driving Regulations
  • Tax increases?
  • Infrastructure Funding
  • Fuel Prices / Energy Policy

And how will the trucking industry fare with any or all of those issues?

With Congress we have and will continue to have gridlock.

With the President, we have an administration not afraid to impose costly regulations on the trucking industry, and because Congress is in a perpetual state of gridlock there is little hope they can effectively legislate a way out of the costly regulations.  With the President, we have an administration not afraid to propose tax increases, and because Congress is in a perpetual state of gridlock they are almost always in a situation where a forced “compromise” is necessary to get anything done, thus opening the door for less than industry friendly proposals.

In essence, buckle up…….we may need to steer around a pot hole or two.


Related articles of interest:
Rough Road Ahead (Fiscal Cliff), Challenge Magazine October 2012
FMCSA’s Safety Resolve, Challenge Magazine November 2012
Talking Safety with Anne Ferro, Challenge Magazine June 2012
A Conversation with Ray LaHood, Challenge Magazine March 2012


Obama: You Need The Government

It was at a campaign even last Friday (July 13) that President Obama let his true feelings about small business be known.  In his speech, Obama said, “If you’ve been successful, you didn’t get there on your own.”  “If you’ve got a business — you didn’t build that. Somebody else made that happen.”

If you are an owner operator or small fleet / large fleet owner, stop right here and think about that – according to the President, it is NOT your hard work, money, and initiative that made your business possible, it’s the government.  WOW!


Many of you have already heard the comments, and there are some out there that defend the President suggesting he was simply saying that it’s because of government programs that individual imitative leads to success.  Well, I take issue with that.  Government only exists because of the personal initiative of our Founding Fathers.  It’s the taxes government collects from those who are successful that allows government to exist.

For trucking, not that he was addressing trucking specifically, Obama said, “Somebody invested in roads and bridges.”  Does he forget that it’s the fuel taxes, tolls, license fees, and other taxes from individuals and corporations that pay for those roads and bridges?

Interestingly, on July 11, FMCSA Deputy Administrator William Bronrott testified before the House Committee on Small Business.  In his remarks, Bronrott comments on how the FMCSA’s Compliance, Safety, and Accountability (CSA) program is impacting small business.  He commented on how cognizant the Administration is of needing to minimize the impact on small businesses – but why does he care, if as Obama suggests, government is the source of all things good?

Whether it’s the large trucking carriers like JB Hunt, Swift, or others that were started by individuals, or the many small fleets and owner operators (FMCSA’s database indicates 85% of registered carriers have 5 or fewer units), Obama wants you to send him a thank you letter and more money to fund the government. 

From my perspective, it’s time for this administration to move out so we can get new leaders who value the American way of life, which includes recognizing the importance of the entrepreneurial spirit that helped found this country.  It’s NOT the government that founded the entrepreneurial spirit.



Gas Prices and Energy Policy

Michael Howe Hosts "In the Booth"Hosting a local public affairs radio program offers many opportunities to interview policy leaders on a number of issues.  Occasionally, these issues touch topics that are likely of interest to my friends in the transportation industry.

This past week I had the great fortune of conducting two such interviews.  My guests were U.S. Congressman Tom Graves (R-GA) and former U.S. Congressman Bob Beauprez (R-CO).

Congressman Tom Graves (R-GA)
Congressman Graves

His name is likely familiar to my readers because it wasn’t that long ago I wrote a blog post giving him kudos.

In my radio interview we spent time discussing fuel taxes and his proposal to devolve the federal fuel tax back to the states – essentially giving control of much needed highway monies to a government closer to the people.

On the Highway Bill, Graves said, “It seems like every time this (highway bill) reauthorization comes around states are wondering what is going to happen. And why should they always be looking to the federal government to act….”

Regarding the Obama Administration’s energy policy and statements by Secretary Chu about gas prices: “What it really tells you is that…we do not have an energy plan and that the Administration has not put forth an energy plan but they have an agenda. The Secretary laid out what that agenda was, and that was not to see (energy) prices go down.”

Listen to the Graves segment here:  Congressman Tom Graves – ITB031012


Former US Congressman Bob Beauprez
Former Congressman Beauprez

This may also be a familiar name to my Challenge Magazine readers as I referenced him in one of my prior columns.

I invited Bob on my show to discuss one of his recent columns, “Obama’s Energy Policy: the dots don’t connect” (as printed in his online conservative policy e-Newsletter, “A Line of Sight”).

Regarding the near term future of energy prices as a result of the Administration’s energy policy, Beauprez said, “Hang on to your wallet if you can, it could get much worse.”

On the Administration’s solution to high energy prices, “What’s his (Obama’s) answer (on how to address energy price pressures)? He’s out there again demonizing the oil companies and talking about raising taxes rather significantly on the oil companies.”

Listen to the Beauprez segment here:  Bob Beauprez – ITB031012



Fuel Tax – Time to Devolve

Kudos to U.S. Congressman Tom Graves (R-GA) for his efforts to change the way fuel taxes are imposed and collected!  His proposal devolves this authority back to the states, and from my perspective, this makes a lot of sense.

I’ve written on multiple occasions that the current fuel tax is not being used for its intended purpose and is therefore resulting in increased costs to truckers.  A quick look at the history of the tax shows that the purpose was to build highways (here’s another good history)!  One can argue whether or not this task is complete, but it is plain to see that fuel tax monies are no longer used primarily for that purpose.

Instead, over 15% of the federal gas tax and about 12% of the federal diesel tax are set aside for mass transit (local traffic).  Furthermore, other “highway” funds are somehow justified to be used for items such as bike paths and walkways (presumably under the guise of alleviating highway congestion).

So, the fuel tax has evolved from a funding mechanism for the federal government to build and maintain highways, to a way to fund some infrastructure repair, mass transit operations (which then use local roads and rails), and even bike paths and walkways.

I’ve long argued that using the gas tax for its intended purpose would help alleviate the need for toll roads and increases in both state and federal highway funding (June 2009, Challenge Magazine, Driving Through DC).  Certainly with more fuel efficient cars, and even electric cars, fuel tax revenue may decline, but perhaps that is why we should look at a new way to fund infrastructure improvements/maintenance – but that is a story for another day.

Right now I am most intrigued by Congressman Graves’ proposal to devolve the national fuel tax back to the states.   With Congress perennially unable to pass a new long term highway bill, this proposal would give states the certainty they need when planning major projects.

Unfortunately, I doubt Congressman Graves’ proposal will be successful – though it certainly warrants very real discussion because, as I concluded in a November 2008 Driving Through DC column, “there are two things certain about the Highway Trust Fund: It will always have earmarks, and it is likely that the current funding mechanism will not be adequate in the future.”

Guess what, the future is now!

The trucking industry should unite behind true reform of the highway trust fund, and Congressman Grave’s proposal is a good start.  Remember, as P.J. O’Rourke said, “When politics are used to allocate resources, the resources all end up being allocated to politics.”