The Trump administration hasn’t ruled out increasing the gas tax to help finance a $2 trillion infrastructure plan, but the idea has little support among officials who are wary of a politically risky move heading into the 2020 election.
A near doubling of fuel levies wouldn’t be enough to cover the additional cost over a decade of the infrastructure package, according to an internal administration document viewed by Bloomberg. Officials intend to pressure Democrats to come up with funding mechanisms that don’t risk undermining growth, according to six pages of a document marked as a pre-decision draft, which was written by the Office of Management and Budget last week.
The infrastructure plan the administration released last year was rejected by Democrats and others because it proposed only $200 billion in federal funds over 10 years, mostly in incentives to encourage spending by non-federal entities to reach a promised $1.5 trillion in investment.
President Donald Trump and Democrats are at a standoff over plans to restore and revamp the nation’s roads and bridges, stymied by the question of how to pay for it. One idea floated by Democrats and Trump himself months ago is to increase the 18.4-cents-a-gallon gasoline tax, which has remained unchanged since 1993.
Yet administration officials are concerned that raising fuel taxes would hurt rural and working class voters — a key Trump constituency — just as the 2020 campaign heats up, according to people familiar with the matter, who described the discussions on condition of anonymity.
An OMB spokesman didn’t respond to a request for comment.
Democrats have also warned that an gas-tax increase could harm low-income people. Senate Minority Leader Chuck Schumer of New York has said he’d only consider increasing the levy if it’s paired with a roll-back of 2017 tax cuts that benefited the wealthy -- something that Republicans flatly reject.
Trump is expected to meet next week with Schumer and House Speaker Nancy Pelosi to discuss financing for a public-works plan.
The parties last met on April 30 and Democrats said Trump had suggested a $2 trillion target. Before that meeting, Pelosi and Schumer laid out three priorities for an infrastructure initiative in a letter to Trump: new revenue to pay for “massive” infrastructure needs, a focus on climate risk mitigation and incentives to use labor and materials from U.S. companies owned by women, minorities and veterans.
Democrats are insisting that Trump present the funding options he could support as the starting point for the talks, saying that without the president’s leadership, other Republicans won’t go along -- especially if the proposal includes a tax increase.