Obama Picks Gas Tax For First Round of Fiscal Fight

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Power Play: Gas Tax Politics

President Obama wants Congress to quickly pass an extension of the federal gasoline tax, which is set to expire on September 30

Obama Starts Fall Campaign with Defense of Gas Tax

“Today, POTUS will call for extension of the transportation bill which expires 9/30. If not extended, nearly a million will be out of work. Normally, we wouldnt have to worry about this, but the FAA debacle shows we cant assume people wont use it as a chance to drive their agenda”

-- Tweet from White House Communications Director Dan Pfeiffer

President Obama wants Congress to quickly pass an unconditioned extension of the federal gasoline tax, which is set to expire at the end of the government’s fiscal year on Sept. 30.

The federal gas tax has been 18.4 cents per gallon since 1993 and generates more than $32 billion a year that is then mostly passed out to states for road construction and repair. About 15 percent goes to other federal efforts, like subsidizing public transportation or other efforts to discourage driving. The average American motorist pays about $100 a year in the federal tax.

Conservatives in Congress want to cut out the federal middleman and allow states to raise and spend their own road money. Not only would letting states collect the taxes directly reduce the money spent on federal behavioral engineering efforts (bike paths etc.), but would also allow states to avoid federal laws that require union workers be used on highway projects.

House Republicans already made a big change to the way highway dollars are allocated. Before the 2010 “shellacking” the Highway Trust Fund was a slushy spot. Influential appropriators worked hard to get the first spade full of dirt turned over on decades-long projects in their districts because they knew that they could, in essence, obligate the federal government. Then when bills came due, the Trust Fund would have to get a bailout from general revenues in order to complete already authorized projects.

Under the new Boehner rules, big projects have to be accounted for. Start a $10 billion project, budget $10 billion.

This has changed the way the highway appropriations process works. While fewer projects are being started, the intention is that more will be completed and that costs will be more predictable. Old-line appropriators resisted, to say nothing of complaints from contractors and unions who preferred the less-rigid requirements of the previous process.

When the Chamber of Commerce and the AFL-CIO join with the president today at the White House to call for the “clean” extension of the tax, many will talk about strange bedfellows, etc. But the large contractors and big unions have always shared an interest in maintaining the status quo. When tax advocates say “even the Chamber of Commerce favors increasing the gas tax” they act as if it were the Club for Growth. The Chamber represents its members, not a particular point of view, and its members like federal highway spending.

The extension of the gas tax, or, as the administration likes to call it, “the transportation bill,” will provide a key early measure of the state of the Republican caucus and the attitude of the president heading into a three-month-long battle with his congressional foes on debt, taxes and jobs.

How willing are House Republicans to resist the extension? How willing are Krugmanite liberals to call for an increase in order to finance more spending? How effective will Obama be in arguing that the status quo is as good as he can do?

The tax is the Obama agenda in microcosm: The program takes money from everyone to fund infrastructure projects, some environmentally friendly initiatives and treats union workers favorably. It also shows the challenge he faces in selling a broader program of tax increases for stimulus spending. Explaining to Americans why paying 18.4 cents more for a gallon of gas is no easy feat.

The way he fights for it will be revealing of his strategy for the rest of his fourth-quarter agenda.

Stimulus Seekers Target Fannie/Freddie Conservator

"It is a very slippery slope to say, 'Well, this would help.'"

-- Edward DeMarco, the conservator of mortgage giants Fannie Mae and Freddie Mac, talking to the Wall Street Journal about various proposals for stimulating the housing market

The emerging line from the White House about the president’s long-promised jobs plan is that it will be so modest that the president will dare Republicans to oppose it.

Partly because the president is committed to increasing taxes on top earners and partly because he is desperate for anything that will reverse dire consumer confidence numbers, Obama seems focused on making his third stimulus effort a potpourri of small-bore suggestions.

Unlike the first stimulus of February 2009, which was large and diffuse or the second one of July 2010, which was smaller but narrowly aimed at subsidizing the salaries of state and local government workers, this packages promises to be both small and diffuse.

Obama’s dogged effort to simultaneously defend his ideas on taxes and push for more spending leaves him with fewer options, causing him and his team to salivate over the potential stimulus that could spring from lowering the mortgage payments of millions of Americans with poor credit and/or upside down in their home loans.

But to do it, the president needs Edward DeMarco, the career bureaucrat who ended up as the final word on Fannie Mae and Freddie Mac after the government-funded but quasi-independent entities went kablooey because that had imprudently gobbled up bales of bad loans.

With more than $300 billion from taxpayers down the pipe bailing out the mortgage giants, DeMarco has a simple mandate from Congress as conservator: Limit losses and seek financial security.

Obama’s re-managing of the groups and a device to produce economic stimulation would seem to run afoul of that. Liberal economists and congressional Democrats are already training their fire on DeMarco as an obstacle to growth.

Having already been informed by Federal Reserve Chairman Ben Bernanke that it’s up to Congress for now to juice the economy, the Obama team will be bringing lots of pressure to bear on DeMarco to lower Fannie and Freddie’s risk thresholds in an effort to juice home prices.

Romney Shifts Campaign Strategy Amid Perry Surge

“We're pleased we were able to arrange our schedule so that Gov. Romney can attend Labor Day events in both New Hampshire and South Carolina."

-- Mitt Romney campaign spokeswoman Andrea Saul in a statement to the Washington Post on Romney’s decision to attend Sen. Jim DeMint’s candidate forum after initially declining the invitation

Mitt Romney could be the most disliked Republican in South Carolina since Abraham Lincoln, but the former Massachusetts governor would still be going to the Palmetto State anyway.

After months of sticking to a high-altitude, precision-bombing campaign, Romney is heading onto the GOP battlefield to try to stop the advance of new frontrunner Rick Perry. Stealth and savvy are giving way to direct confrontation.

Following Romney’s trip to the Veterans of Foreign Wars convention in San Antonio, Texas where he swiped at veteran Perry’s career as a politician, Romney’s campaign announced that the former frontrunner would undertake his next death-defying stunt: a trip to Tea Party Sen. Jim DeMint’s South Carolina Labor Day candidate forum.

Romney had ducked the event which is not only tilted toward the more conservative end of the GOP but is also in a state where the moderate Mormon trails conservative evangelical Perry by 20 points in the latest survey by Democratic firm Public Policy Polling.

Here you have the manifestation of the new Romney strategy of confronting Perry directly in hopes that a Tea Party schism stoked by Rep. Michele Bachmann could upend Perry and leave Romney in a position to run a national campaign, instead of his previous hopscotch strategy of aiming at New Hampshire, Florida, Michigan and Nevada among early primaries and then settling to outlast whomever is left standing from the more conservative wing of the party.

Since Perry is running a national campaign, Romney has seemingly decided to revert to one too. While this strategy exposes Romney to potentially embarrassing defeats in Iowa and South Carolina, the Perrypalooza has left him with few options.

Today’s Quinnipiac University poll shows Perry 6 points up on Romney and with very low negatives among national Republicans and in a statistical dead heat with President Obama among all voters. If the current trend line continues, Romney wouldn’t be able to muster the support to finance or staff the kind of strategic, long-range strikes he had originally planned.

With Perry campaigning in New Hampshire and Florida, Romney finds himself in a fight for political survival. As the establishment press escalates its campaign against Perry (today’s Washington Post offers a pair of columns by liberal writers simultaneously trashing Perry as too conservative and inconsistently conservative), Romney will find more fodder for his own attacks. Romney will have to help drive up Perry’s negatives (he hopes with Bachmann help to “rip his eyes out.”)

The other key element here: There are newly legalized super PACs in support of both Perry and Romney. With Romney on the attack and broadening the electoral map into a national contest with Perry, the PACs can be expected to engage in a bruising air war in support of their preferred candidates. Obama will be watching in hopes that money and ugly accusations keep flying for months.

Romney won plaudits from the political press and many establishment Republicans for avoiding the more conservative spots on the GOP primary calendar, staying focused on Obama and ignoring the rest of the field. How will they react now that Romney is ditching that plan in favor of direct confrontation with the Texas governor?

Slow-Motion Crash Still Unfolding at Holder DOJ

“We know we are being gamed.”

-- Rep Darrell Issa “On the Record w/Greta Van Susteren” talking about his allegations that the Justice Department has been stonewalling Congress on a botched Mexican gunrunning sting

Slow stubbornness has been the hallmarks of the Department of Justice under Attorney General Eric Holder. Whether it has been the effort to import terror detainees for civilian trials or the effort to alter drug law enforcement, the Holder DOJ has been engaged in long struggles.

That approach also carries over to the increasingly hostile relationship with Congress, particularly when it comes to Operation Fast and Furious and ATF sting operation that ended up sending lots of untraced guns into the hands of Mexican drug gangs. One of the guns was used to kill a U.S. border patrol agent and others have emerged in criminal investigations on this side of the border.

It was a fiasco that extended into the highest ranks of the agency and has caused a torrent of criticism for Holder’s department.

But only now, after nearly eight months of high-level investigations by congressional overseers, has Holder moved to react to the case, demoting the ATF boss who authorized the operation and replacing the federal prosecutor involved.

While some politicians favor quick action to cauterize scandals, others, like Holder, eschew sudden moves believing that it encourages antagonists and can start a feeding frenzy, leading to unfortunate media descriptors like “embattled” or “controversial.”

This is the problem that the Obama has with House Government Oversight Committee Chairman Darrell Issa. He is a one-man feeding frenzy.

And Now, A Word From Charles

"It turns out that on 9/11 we were the only victims. In keeping with the administration's entire philosophy, the president's philosophy of seeing nothing quite exceptional, unusual about the United States and sort of subsuming ourselves in the world, a kind of U.N. style -- we're all in this together.

On 9/11 we weren't. In fact, looking at this historically, it was the worst terror attack in American history, and it also was the largest attack anywhere in the world at any time ever -- you know 3,000 people, an enormous act of war. So it is not as if others who've had terrorist attacks as well, the Bali attack, the attack in Turkey and elsewhere, is on that scale."

-- Charles Krauthammer on “Special Report w/Bret Baier”