Virginia Republican gubernatorial candidate Bob McDonnell’s new ad claims that Democrat Creigh Deeds’ policies would bring $7,800 in higher taxes over four years for Virginia households. The ad would be devastating, if it were true.
Fuel for Frustration
Deeds has never proposed a "billion dollar gas tax increase," as the ad claims. It’s true that many transportation experts and legislators in Virginia have said that an additional $1 billion per year is needed to widen highways, repair bridges and make other fixes to ease the state’s notoriously knotty traffic problems and maintain what’s already in place. The current 17.5 cent gasoline tax, the main source of funding for roads in Virginia, brought in only $851 million last year, which means generating an additional $1 billion would require a gasoline tax increase of more than 100 percent. That’s equal to a gasoline tax increase of around 20 cents per gallon, as the ad says – if the money is to raised solely through that tax.
That’s not the plan Deeds has set out, though. Deeds, in the plan he outlined in late September, has proposed assembling a bipartisan commission to come up with a transportation plan for the state, and wrote in a recent op-ed in the Washington Post that he’d sign a bipartisan plan "even if" it included higher taxes. But he didn’t say that any such plan would have to rely on the gasoline tax alone, and he also said the solution would have to be a "bipartisan compromise":
Deeds, Washington Post, 23 Sept: The day after I’m elected, I will begin assembling a bipartisan commission to craft a comprehensive transportation package. Like Gov. Baliles did, I will appoint Republicans, Democrats and independents along with private-sector leaders and transportation experts. The commission would begin work in December and issue its report early next year.
All funding options are on the table except taking money from education and other obligations met by Virginia’s general fund.
I will not let lawmakers go home until we pass a comprehensive transportation plan — our economic future depends on this.
Let me be clear regarding taxes. I will sign a bill that is the product of bipartisan compromise that provides a comprehensive transportation solution. As a legislator, I have voted for a number of mechanisms to fund transportation, including a gas tax. And I’ll sign a bipartisan bill with a dedicated funding mechanism for transportation — even if it includes new taxes.
The day after Deeds’ piece ran, the editors at the Washington Post wrote approvingly of his plan, and of the political risk he took by raising the possibility of a tax hike, in an editorial titled "Honesty on Transportation: Mr. Deeds has Leveled with Virginia Voters. Will They Listen?" The piece had nothing good to say about McDonnell’s transportation plan:
Washington Post editorial, 24 Sept: [Deeds'] stance is nothing more or less than common sense: Virginia needs tens of billions of dollars in new revenue for roads, and it will not materialize without asking taxpayers — the same taxpayers who rightly groan about traffic — to foot a good part of the bill. Still, by articulating that position in plain English on the opposite page Wednesday, Mr. Deeds showed political guts, which is more than one can say for the smoke-and-mirrors, wing-and-a-prayer approach to transportation endorsed by his opponent, Republican nominee Robert F. McDonnell.
Besides, even though Deeds has committed himself to higher taxes if that’s the plan he’s given, raising the gasoline tax by 20 cents per gallon isn’t likely to be part of any such bipartisan blueprint, given Virginia’s recent history. The state has one of the lowest motor fuel taxes in the nation because all attempts to raise it since 1986 have been stymied in the legislature.
Caps Off to Miscalculation
It’s also wrong for McDonnell to say that cap-and-trade legislation will cost families $6,800, even accepting that the figure covers four years. Nothing that is pending in Congress or that has been proposed by Obama is projected by any nonpartisan source to cost that much.
It’s true, as we’ve noted, that Deeds was one of 40 members of a commission on climate change convened by Virginia’s current governor. The commission was tasked with coming up with ways to reduce greenhouse gas emissions 30 percent by 2025, in accordance with the Virginia Energy Plan. The panel, in recommendations released last December, said that Congress should pass legislation that "[e]stablishes a mandatory economy-wide cap and trade program to reduce greenhouse gas emissions."
But Deeds has said that he doesn’t endorse the bill that passed the House this spring. In fact, he said that he opposes it and any such legislation that raises costs for American families during tough economic times.
Even if Deeds supported the House bill, though, the ad greatly overstates its cost, assuming it to be roughly $1,700 annually for four years. As we’ve written previously, that price tag comes from a CBS News blogger’s simple division, which uses as its starting point a Treasury memo that wasn’t an analysis of legislation proposed by lawmakers or Obama. For one thing, the memo, which was obtained by a conservative group using the Freedom of Information Act, didn’t take into consideration rebates to customers that are in the House bill and the president’s model.
We’d also note that in an earlier ad, McDonnell’s campaign cited an analysis of the House bill by the conservative Heritage Foundation to claim that cap-and-trade would cost Virginia households a much smaller amount, $532. That was before the Treasury memo was released. Now McDonnell is using the larger number, even though it is less tethered to any pending proposals.
The numbers we rely on come from the nonpartisan Congressional Budget Office, which says that purchasing power of the average household would be cut by $90 in 2012 and $925 by 2050, averaging out at $455 per year for the entire period.
The ad’s claim that cap-and-trade could cost Virginia up to 56,000 jobs is one we’ve seen before, in another McDonnell ad. It comes from a study commissioned by the National Association of Manufacturers and the American Council for Capital Formation, both of which oppose the bill. Job figures are notoriously difficult to estimate, however, and this one comes from a partisan source. CBO has said that jobs will be created as well as lost; the 56,000 figure doesn’t take that into consideration.
The Incredible Shrinking $7,800
There’s no question Deeds supports a costly highway plan that will have to be paid for somehow, and that he has voiced support in the past for cap-and-trade. But this ad’s $7,800 figure is mostly hot air. Deeds hasn’t come out in favor of doubling the gas tax. And he hasn’t proposed, and Washington isn’t considering, cap-and-trade legislation that would raise energy costs for families by $6,800. Not even close.