Tags: Steve Malzberg Show | Larry Kudlow | GOP | senators | gas tax | hike

Larry Kudlow: GOP Senators Pushing Gas Tax Hike Lacks Sense

By    |   Tuesday, 13 January 2015 05:33 PM

Republican senators making a federal gas tax hike a centerpiece of their return to the majority makes no political or policy sense, economist and CNBC senior contributor Larry Kudlow told "The Steve Malzberg Show" on Newsmax TV Tuesday.

Kudlow singled out three GOP senators — Bob Corker of Tennessee, John Thune of South Dakota and James Inhofe of Oklahoma — and one in particular, calling the gas-tax hike initiative "Corker's Folly" despite considering the Tennessean a "friend."

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Kudlow said there are better ways, politically and fiscally, to guarantee solvency for the depleted Highway Trust Fund that pays for construction and repairs of the U.S. interstate road system.

"Let's just start with this political point: Why would a bunch of Republicans … lead the first couple of days of the new Republican Senate era with a gas tax hike?" he said.

"I mean, middle-class America, motorists, truck drivers, finally are getting a break in life," said Kudlow, noting the fall in gasoline prices — to which he also attributed the recent pickup in U.S. economic growth and job creation.

Given the relief that Americans are enjoying at the pump, "Why go there?" Kudlow said of the gas-tax proposal. "Why not talk about growth and opportunities and reforming government and tax reform, and a whole variety of things that would have an optimistic view. It just didn't make any sense to me at all."

Kudlow said that instead of taxes, a system of tolls paid by the actual users is the way to go long-term if, as estimates suggest, the trust fund will need $1 trillion over 20 years just for necessary repairs and upgrades.

"So you're going to have to go back to some kind of toll roads, some kind of E-ZPass, some kind of user fee," he said. "You can't penalize everybody at the gasoline pump. That's point No. 1.

"Point No. 2: The whole Highway Trust Fund has to be reformed," said Kudlow, declaring that it's time for the federal trust fund to be stripped of all the local non-freeway projects it has accumulated as obligations.

"What they've done in the last several decades is raise gasoline to finance various urban mass transit programs — high-speed trains to nowhere, bus lines, museums, parks, bike paths and a whole variety of things," he said.

"So I'm waiting for them to come up with a total reform plan that devolves most of these responsibilities to the state," said Kudlow. "If [California Gov.] Jerry Brown wants a $100 billion, high-speed bullet train to nowhere — if he wants that, then let Californians vote for it. Don't make the rest of the country vote for it."

As he wrote recently, Kudlow said that with some indexing for inflation, a Highway Trust Fund supported by tolls and rid of mass-transit goodies could become solvent and self-sustaining.

He praised a toll-road, user-based model in Indiana implemented under then-Republican Gov. Mitch Daniels.

"Why not look to public-private partnerships at the state level?" said Kudlow.

He also discussed a report that food stamp usage is at a historic high, with more than 46 million enrollees collecting federal food assistance for 38 straight months.

On food stamps "and a variety of other smaller entitlements related to welfare, disability insurance, unemployment insurance," said Kudlow, "we need reform."

He cited Rep. Paul Ryan, Wisconsin Republican and House Budget Committee chairman, as having "the right idea: We need to have incentives in the system, and we have to make sure that we're not paying people not to work."

"Under both [presidents] Bush and Obama, eligibility requirements have been widened, time limits have been increased," he said. "This runs against the Bill Clinton reforms of the mid-1990s. So why pay people not to work?"

"Obamacare is a perfect example," Kudlow added, referring to last year's Congressional Budget Office finding that the Affordable Care Act will cost the U.S. economy the equivalent of 2 million-plus full-time workers as people opt for government-subsidized health benefits over employment.

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Republican senators making a federal gas tax hike a centerpiece of their return to the majority makes no political or policy sense, economist and CNBC senior contributor Larry Kudlow told "The Steve Malzberg Show" on Newsmax TV Tuesday.
Larry Kudlow, GOP, senators, gas tax, hike
Tuesday, 13 January 2015 05:33 PM
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