Engineering Inc - July/August 2019 - 10

Sustainable Fiscal
Solutions Highlight
Infrastructure Importance
By Erin McLaughlin

T

ackling long-term economic and
fiscal sustainability in the United
States is not a simple task. With the
benefits and drawbacks of the Tax
Cuts and Jobs Act of 2017 becoming
evident and the problem of a $22
trillion and growing national deficit
looming, economists and think tanks
in Washington, D.C., are searching for ways to address
these problems through policy action on infrastructure
and the built environment.
As part of that search to address these challenges to
the nation's economy, the nonpartisan Peter G. Peterson
Foundation brought together seven leading policy
organizations for the 2019 Fiscal Summit: Building
America's Future held in June in Washington, D.C. The
organizations represented a diverse political spectrum
ranging from conservative (American Enterprise Institute,
Manhattan Institute), moderate (American Action
Forum, Bipartisan Policy Center, Progressive Policy
Institute) and liberal (Economic Policy Institute, Center
for American Progress). A report from the summit,
"Solutions Initiative 2019: Charting a Sustainable
Future," as well as discussions from the event, show
consensus on economic and policy recommendations that
may significantly impact infrastructure. These include:
Implementation of a federal carbon tax. Six of the
seven institutions specifically call for a carbon tax, with

five providing quantitative details (see chart: Think
Tank Recommendations for a Federal Carbon Tax). As
the Bipartisan Policy Center (BPC) notes, a carbon tax
would "internalize the negative externalities associated
with carbon and spur innovation in sustainable green
or renewable energy technologies." Most of the other
institutions calling for the tax also recommend dedicating
prospective revenues to research and development around
technologies to fight climate change, as well as initiatives
toward clean energy infrastructure and resilient design and
construction.
Raising the federal gasoline tax. A gas tax increase
is proposed by several think tanks. The conservative
American Enterprise Institute details a 15-cents-per-gallon
increase in 2020 with future increases indexed to
construction prices. The BPC also calls for a one-time
increase of $0.334 per gallon, which would subsequently
be indexed to inflation, but notes that raising the gasoline
tax is not a sufficient long-term solution. "With rising fuel
efficiency and electric vehicle ownership, gas tax increases
cannot sustainably meet expected long-term infrastructure
needs. New, innovative funding mechanisms are necessary
to support these needs down the road," according to the
BPC. The Progressive Policy Institute notes this same
problem and calls for replacing fuel taxes with a vehiclemiles-traveled tax.
Budgeting ahead for disaster recovery spending.
With the increase in disasters over the last decade, there is
a call for a more institutionalized way
Think Tank Recommendations for a Federal Carbon Tax
of funding recovery packages. The BPC
suggests using dedicated revenues from
Organization
Base Year/2020 Carbon
Annual Increases to Carbon Tax
the proposed carbon tax to fund relief
Tax Proposal
After Base Year
and recovery efforts. The Economic
American Action Forum
$20 per metric ton
Chained consumer price index for all
urban consumers plus 5%
Policy Institute concurs-noting that
current one-time disaster relief packages
American Enterprise Institute
$25 per metric ton
Inflation plus 2%
are not sensible as funds will "surely
Bipartisan Policy Center
$25 per ton
2% per year (inflation-adjusted)
be needed as natural disasters become
Economic Policy Institute
$80 per ton
Rising to $120 per ton over time
more common because of global
Progressive Policy Institute
$30 per ton
Inflation plus 5%
climate change."
SOURCE: PETER G. PETERSON FOUNDATION

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