Flashback: Ronald Reagan Touts Gas Tax Hike, Transit Funding as Job Creators

On January 6, 1983, the icon of the modern conservative movement, Ronald Reagan, signed legislation to raise the gas tax for the first time in more than two decades, devoting a portion of the revenue to transit.

We’ve been reading about this moment a lot, as the current GOP leadership in the House tries to undo Reagan’s legacy by eviscerating dedicated transit funding.

In this ABC News clip, you can see that Reagan touted the measure, a five cent gas tax increase, as an economic catalyst. It would raise $5.5 billion for transportation investment and result in 320,000 new jobs, the administration said. The measure even reserved one cent per gallon for transit, all for the cost of about $30 a year for the average driver.

Sounds like a win-win, right? After some initial resistance to the idea, Reagan eventually came around to that perspective, even if some special interest groups (truckers) didn’t.

What a difference 29 years makes.

8 thoughts on Flashback: Ronald Reagan Touts Gas Tax Hike, Transit Funding as Job Creators

  1. ronald reagan was a conservative who appealed to all folks because he was actually quite a fair and smart man.  today’s conservatives only are tied to religious fanaticism.

  2. Rob Viking,

    Congress would have to approve an increase in the gas tax.  The President would then be able to sign it into law.  Obama, of course, has no power to unilaterally make this happen.  Back in 1983, Congress was controlled by the Dems and they already supported this, so all Regain had to do was get a few Repubs. in the Senate to go along and it was law.  Completely different situation now.  No House Repub. will ever go along with this, so it is a dead issue at least until Congress has a massive Dem. majority.

  3. thanks for including this video – it really is instructive and informational.  However, in addition to creating the Mass Transit Account and raising the gas tax a nickel (which,BTW, Bush 1 did as well, and Clinton by almost that amount), the breadth of the gas tax increase under Reagan generally is not reported.  Considering that the existing gas tax was 4 cents, the increase was a shocking (can I use that word?) 125%!
    In regards to an earlier commenter that the legislature would have to approve it, I think the president always plays a leadership role – and in fact, he instructed LaHood to state that not only would there be no gas tax increase, there would be no vehicle mileage fee as well!

    I do give him credit for refusing to go along with the proposed ‘gas tax holiday’ that McCain supported in the 2008 campaign, and then supported by Clinton – Hillary that is.

  4. There’s a lot that’s misunderstood about Reagan, both by conservatives and liberals. 

    In any case, a gas tax increase is long overdue. This user fee is a tried and true idea. You pay for what you use. Because your preferred mode of transportation imposes negative externalities onto society, it should be taxed and the “green” alternatives subsidized. This is simple economic theory. 

    The problem is that the user fee has not kept pace with inflation and fuel efficiency standards. It has been eroded of its ability to maintain and build roadways. And it’s not as if you could eradicate the transit subsidy and the highway funds would magically appear and cover all roadway costs. You would still have major fiscal problems when it comes to roads.

  5. Spokker,
    Agreed; eliminating transit would not solve the fiscal problem with the highways.  Not by a long shot.  According to Subsidyscope.com we drivers only manage to cover 51% of the expense of our highways.  If we eliminate the transit funding, as well as other questionable items that some say shouldn’t be funded out of the Highway Trust Fund, that would only get us to 65%.  Still far short of actually paying for things.  And those numbers are based upon 2007 data, so no doubt they’re actually lower today.
    We haven’t raised the Federal fuel taxes in 19 years now; it last went up back in 1993 under President Bill Clinton.

  6. Boy, some people still don’t get it. If every cent of any tax (gas, cigs, liquor etc) went where it was supposed to go, we wouldn’t be in the place we are now. Until we stop politicians (dems and repubs) from raiding coffers and spending money however they want, we will continue to lose money from our paychecks until we have nothing left. Social security should not be broke, politicians took that money and spent it. Mark my words, if we continue down the path we are on now, our paycheck is going to go to the government, and they will determine how much we need to spend, save and invest. Then they will issue us a credit on a debit card. You can say I’m crazy if you want, but you watch and see if I’m wrong.

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