House Reps highways chair DeFazio solves highway/transit funding problem, he says

Rising Democrat Party legislative star Rep Pete DeFazio, chairman of the House Highways and Transit committee has introduced a bill, HR3379, which he says fully funds a huge expansion of US transport spending without costing consumers a cent. DeFazio's bill has the acronym LOPSIDED Oil Prices Act, 'lopsided' standing for Lowering Oil Price Speculation for Infrastructure Dedicated to Economic Development.

DeFazio is convinced his bill with new taxes on crude oil derivatives could raise $190b over six years, more than enough to fill a $140b 'gap' in surface transportation funding during that time.

DeFazio and transportation chair James Oberstar want US Government spending of $450b over six years (38% more than present spending) and wrote the $450b into their 775 page Surface Transportation Authorization Act. But the STAA bill provided no new revenue beyond existing gasoline and diesel fuel taxes only expected to raise $310b.

HR3379 introduced today by DeFazio would place a 0.2% transaction tax on crude oil futures contracts and a 0.5% tax on futures options contracts.

Crackdown on speculators

DeFazio said in a prepared statement:

"A transaction tax on crude oil securities will close the gap in funding a twenty-first century transportation system while lowering the price of oil.  Furthermore, it will crack down on oil speculators who are driving up the price of oil and causing massive volatility in the market.  This is a win/win.

Won't cost customers a cent

“My legislation will not cost consumers one cent.  It is a miniscule percentage on transactions by oil speculators and it will allow us to substantially increase our investment in our transportation infrastructure so we can move beyond the broken policies of the past toward a safer, cleaner more efficient transportation system for the 21st century.  

“Infrastructure investment creates jobs — particularly in the hard hit construction industry — jumpstarts our lagging economy and improves our long term economic viability at a time when it desperately needs a shot in arm.

Stimulus sans debt

“This is proven stimulus that is ready to go and will not drive us further into debt.”

$190b a "small burden"

DeFazio also claims:

"Taxing these derivatives of crude oil will reduce the price and volatility of the market.  It is the only revenue source that lowers the price of oil while raising revenue for the Highway Trust Fund.  The tax is simple; it imposes a small burden that penalizes short-term traders for speculating on the price of oil."

The congressman insists that the federal regulatory body, Commodities Futures Trading Commission can distinguish between legitimate hedgers such as airlines and railroads and "speculators."

His HR3379 exempts these so-called legitimate hedgers - strong contributors no doubt to Dem public servants and other progressive causes - from the derivatives taxes.

COMMENT: Rep DeFazio has got us thinking creatively. Toll revenues in the US must be running at around $120b over six years. Tolls in America could be abolished, using DeFazian arithmetic, by simply increasing his derivatives taxes by 50% - from 0.2% to 0.3% on crude oil futures contracts and from 0.5% to 0.75% on options.

Call it a Total Abolition Fund For Relief of Oppressive Tolls (TAFFROT).

Now there's a cause to gain true bipartisan support, another of those win/wins.

Of course if DeFazio's illegitimate traders moved their futures activity to commodities exchanges in Shanghai, London, Singapore and Hong Kong - benighted communities that coddle 'speculators' - the DeFazio bill might raise no revenue at all, not a cent for LOPSIDED or for TAFFROT.

TOLLROADSnews 2009-07-29