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Palace Coup: President Ronald Reagan and the Surface Transportation Assistance Act of 1982

A Change at the Top

Following congressional approval of the Surface Transportation Assistance Act (STAA) of 1982, the White House announced that on December 12, Secretary Lewis had submitted his resignation to the President, effective February 1, 1983. Lewis explained that the time to leave was appropriate because the Administration had "accomplished many of the objectives we discussed at the time you first asked me to join the Cabinet." He thanked the President for his support ("even the most difficult problems can be handled when you have the solid backing of the President") and listed some of their accomplishments. He did not include the surface transportation bill, which had not yet been approved at the time of his letter.

The President accepted the resignation on December 27 so Lewis could "take on a major challenge in the private sector." He said he appreciated the Secretary's advice and assistance on transportation issues, including:

Most recently, your determination to focus public attention on the need to repair and maintain our nation's interstate highway and mass transportation systems resulted in the passage of the Surface Transportation Assistance Act by the Congress. The passage of this Act is a fitting capstone to your long record of achievement as Secretary.

Lewis would become chairman and chief executive officer of Warner Amex Cable Communications, Inc., a partnership of Warner Communications and American Express. The company (known today as Time Warner Cable) was the Nation's fifth largest cable operator, with 1.1 million subscribers in 27 States. It also operated program services such as Nickelodeon and The Movie Channel. (Lewis would leave the company in 1986 to become chairman and chief executive officer of the Union Pacific Railroad, a post he held until 1997.)

At the start of a news conference on January 5, President Reagan announced that he would nominate Elizabeth Hanford Dole to serve as Secretary of Transportation. Dole, who had married Senator Dole in December 1976, was a graduate of Duke University and Harvard Law School, having also earned a master's degree in education at Harvard. She had served in the Nixon Administration (assistant to Nixon's advisor on consumer affairs, 1971-1973) and as a member of the Federal Trade Commission under Nixon and Ford (1973-1979). At the time of her nomination, she was serving as the President's Assistant for Public Liaison in the White House.

The United States Senate confirmed Dole as the eighth Secretary of Transportation by a unanimous vote on February 1, 1983. On February 7, Supreme Court Justice Sandra Day O'Connor, the first woman to serve on the Supreme Court, administered the oath of office to Secretary of Transportation Elizabeth Hanford Dole, the first woman to hold that post. Mrs. Dole's mother, Mary Hanford, held the Bible while President Reagan and Senator Dole looked on. Secretary Dole thanked the President for the opportunity and promised that "I will give you my very best effort, with the help of God, and that I will strive to uphold the traditions of excellence which have been established at the Department of Transportation by my predecessors."

(Secretary Dole served through September 30, 1987, earning a reputation as the "Safety Secretary," in part because of her crusade against drunk driving, in cooperation with citizen groups such as Mothers Against Drunk Driving, and advocacy of safety belts and airbags. She resigned to help Senator Dole in his unsuccessful run for the Republican presidential nomination in 1988. She served as Secretary of Labor under President George H. W. Bush (January 25, 1989 – November 23, 1990), before leaving to become president of the American Red Cross. In 1999, she left that post to seek the Republican Party's nomination for President but ended her campaign in October 1999 largely because of fundraising difficulties. When Senator Helms announced that he would not seek reelection in 2002, Mrs. Dole won the election to replace him. She took office in January 2003, serving one term before being defeated by her Democratic opponent, Kay Hagan, on November 4, 2008.)

Surface Transportation Assistance Act of 1982

During the January 5 news conference announcing Dole's appointment, the President was asked about the tax increases in the surface transportation bill:

Q. Mr. President, perhaps the question of higher taxes fits into the category of decisions which haven't been made, but we all hear, of course, that you are adamantly opposed to it. I was wondering how ironclad is that opposition and your commitment not to raise taxes, particularly in view of the fact that a year ago you voiced such a commitment and then again in September you did and we did have two different sorts of tax increases last year?

The President. Well, the one tax that I know many of you have portrayed as in keeping with my saying it would take a palace coup, when I said that, the gasoline tax was being proposed as just a part of general revenues. But for more than a year—it was a year ago that Secretary Drew Lewis presented the plan and the necessity for rebuilding our roads and our highways and our bridges, because we're faced with the possibility of tragedy in some instances. And I asked him more than a year ago if he would wait a year and bring that back again, and he did. And the proposal was, as we called it, a "users fee" to differentiate [that] this is not a tax for general revenues. This is a tax to do this particular task, which will now very shortly come under the direction of Elizabeth Dole.

He added that increasing taxes was not, in his view, the way out of a recession. His tax cuts were intended to restore the economy, which would help reduce the deficit, half of which was due to the recession, he said. As for the other half of the deficit, he was working to reduce government costs:

But the real answer to the deficit is recovery of the economy, and therefore whatever we do, we must not be tempted into some temporary treatment of a deficit before us. We want them reduced, but what we must do is get the economy restored on a long-time, permanent basis, and everything we do must be directed toward that.

The following day, January 6, 1983, President Reagan signed the 1982 STAA (Public Law 97-424) in the State Dining Room at the White House. Surrounded by Vice President George H. W. Bush, Secretary Lewis, Secretary-designate Dole, and a bipartisan array of congressional leaders, the President said:

Today . . . America ends a period of decline in her vast and world-famous transportation system . . . . [We] can now ensure for our children a special part of their heritage—a network of highways and mass transit that has enabled our commerce to thrive, our country to grow, and our people to roam freely and easily to every corner of our land.

He cited the job creation statistics, as well as a provision that extended unemployment benefits through March 31, 1983, for people who had exhausted their unemployment insurance. The new law would bring relief to those seeking work, but "its principal benefit will be to ensure that our roads and transit systems are safe, efficient, and in good repair." This was important because "our transportation system affects our commerce, our economy, and our future."

The 1982 STAA retained the basic structure of the Federal-aid highway program during a 4-year authorization period, through FY 1886, while increasing overall revenue. In addition to increased funding for Interstate Construction and 4R, the legislation increased funding for the Highway Bridge Replacement and Rehabilitation Program (HBRRP), addressing the other part of the "crumbling infrastructure" crisis.

In accordance with the compromise reached with Secretary Lewis, the STAA temporarily waived the State matching requirement for FY's 1983 and 1984, at a State's request. The waiver applied only to obligations in excess of the FY 1982 obligation ceiling where matching funds are unavailable, with a requirement for repayment. The Act also ensured a minimum allocation to ensure each State's percentage share of apportionments would be at least 85 percent of estimated Highway Trust Fund contributions. After apportionments were made in the core program categories, the FHWA was to allocate additional funds to States that had not yet received their minimum allocation. The additional funds could be used at the State's discretion for any project eligible under the core categories.

The STAA also created a Mass Transit Account in the Highway Trust Fund for capital mass transit projects. One penny of the 5-cent gas tax increase would be credited to the new account. The 4-year authorizations covered a discretionary capital grant program for transit capital projects to be funded from the 1-cent account, and a block grant formula program, with funds available for capital and operating assistance.

All other revenue from highway user taxes would be credited to what became known as the Highway Account in the Highway Trust Fund. The tax increases would go into effect on April 1, 1983, except for the Heavy Vehicle Use Tax, which was phased in beginning July 1, 1984, at $1,600, gradually increasing to $1,900 on July 1, 1988, and the graduated tax on tires over 40 pounds beginning January 1, 1984. Changes in truck taxes included a 12-percent sales tax on new trucks applicable only to vehicles greater than 33,000 pounds gross vehicle weight and trailers over 26,000 pounds.

To the relief of historic preservation interests, Section 4(f) was left in tact. The proposal to limit coverage of historic properties to National Historic Landmarks was not included in the House or Senate versions of the bill. The interagency review of environmental impacts was included in the Senate version, but the Conference Committee dropped it from the final bill.

During the evolution of the legislation, the 1982 STAA had incorporated Subtitle E for "Miscellaneous Provisions" unrelated to surface transportation. The extension of Federal unemployment benefits, was included as demanded by Democrats who made their point by helping four conservative Republicans continue their filibuster. Subtitle E also allowed a tax deduction of as much as $2,000 for expenses incurred attending conventions or business meetings on U.S.-flag cruise ships destined for U.S. ports or possessions; reduced the burden of back taxes on three California public utilities; and authorized fuel-assistance payments by public utilities or suppliers of home heating fuel to be excluded as income when the Federal Government computes benefits from welfare programs.

Addressing Trucking Issues

The 1982 STAA included major changes for the trucking industry. Aside from the tax changes, it allowed twin-trailer combination trucks on any segment of the Interstate System and set a minimum trailer length of 28 feet for doubles and 48 feet for single trailer combinations with no length restrictions permitted on the tractor or overall configuration. The Act also made mandatory the previously permissive maximum weight limits of 80,000 pounds gross, 20,000 pounds single axle, and 34,000 pounds tandem axle on the Interstate System.

The law addressed the barrier States by requiring all States to allow trucks meeting STAA requirements to operate on what became known as the "National Network for Trucks." The National Network, which FHWA selected in cooperation with the States and designated by regulation in June 1984, included the Interstate System and other designated highways (a total of about 200,000 miles today). In addition, the law required the States to allow "STAA vehicles" to have reasonable access between the National Network and terminals and facilities for food, fuel, repairs, and rest. Terminals are defined as any location where freight originates, terminates, or is handled in the transportation process. (See 23 CFR 658, and Federal Size Regulations for Commercial Motor Vehicles, FHWA, 2004.)

On January 8, 1983, an article in The Washington Post discussed the ATA's efforts to block the 1982 STAA. Staff Writer Douglas B. Feaver called the ATA "one of the best-financed and strongest interest groups on Capitol Hill." The group's political action committee had contributed $285,565 to 398 congressional candidates during the 1982 campaign, with more than one-fifth going to members of the tax-writing House Ways and Means Committee and Senate Finance Committee. "I'm not so naïve," the ATA's Whitlock told Feaver, as "to believe that political contributions do any more than give you an opportunity to sit down with the congressman or his staff members and explain your position." In fact, according to Feaver, most recipients of the ATA contributions had voted for the bill.

What had surprised the ATA was that the bill had been approved during the lame-duck session when, as Feaver put it, the "long-dormant highway legislation took on the aura of a jobs program." Chairman Howard of the House Committee on Public Works told Feaver:

I just think this [loss by the ATA] is an aberration due to [the] fact there was a tremendous push for a jobs bill and a huge highway and transit bill. It all got wound up in its own momentum.

Nevertheless, Whitlock was pleased with what the ATA had accomplished. Although the ATA had not been able to sidetrack the tax increases on trucks, the organization had negotiated with Secretary Lewis to secure expanded measures to compensate trucking companies and truckers for the increases. [Feaver, Douglas B., "Revved-Up Truckers Riding Hill to Ease Increase in User Fees," The Washington Post, January 8, 1983]

A companion article by Feaver the same day indicated that the Independent Truckers Association (ITA) had called for a nationwide truck strike beginning January 31. Although the fuel and heavy vehicle taxes were the primary target, ITA president Mike Parkhurst also wanted the 55 mph speed limit repealed and a ban on State trucking taxes. Parkhurst claimed that his organization represented 30,000 of the estimated 100,000 independent truckers, in contrast with the ATA, which represented 10,000 to 15,000 truck firms. The ATA opposed the call for a strike. [Feaver, Douglas B., "Independent Association Urges Nationwide Strike," The Washington Post, January 8, 1983].

Parkhurst told The New York Times that the 1982 STAA should be called "the trucking industry bankruptcy law." It "contains more taxes than the entire trucking industry has been able to make in profits in the last four years." He had led independent trucker strikes in 1974 and 1979 to protest the high cost of fuel, although the strikes had mixed results because many truckers could not afford to stop driving.

The truckers saw the 1982 STAA as the immediate symbol of their difficulties. However, their real problem was that the economics of the trucking industry had been affected profoundly by deregulation. The Motor Carrier Act of 1980 had increased opportunity for independent owner-operators by reducing barriers to their entry in the market and allowing truckers to set their own shipping rates, but the environment for all truckers was now more hostile. As transportation historians Mark Rose, Bruce Seely, and Paul Barrett stated in their study of transportation deregulation:

In the trucking industry, falling rates and rising levels of unemployment comprised the two most visible consequences of deregulation (and a depressed economy). Between 1980 and 1983, reported two academic economists, "competitive pressures and cost-cutting efforts . . . lead to rates . . . nearly 22% lower" . . . . In mid-1983, truck operators in the Pennsylvania area reported that deregulation had brought dramatic declines in rates and increased layoffs . . . .

Nor did a restoration of economic growth in 1983 foster profitability and the end of price-cutting tactics among trucking executives. The basic factor limiting profitability was the presence of additional competitors. After 1980, commissioners of the [Interstate Commerce Commission] no longer controlled entry into the trucking business. [Rose, Mark, Seely, Bruce E., and Barrett, Paul, The Best Transportation System in the World, Ohio State University Press, 2006, p. 214]

On January 24, 1983, 42 truckers affiliated with the Owner-Operators Independent Drivers Association of America parked at Robert F. Kennedy Stadium in Washington and headed to Capitol Hill by taxi to protest the higher tax on heavy vehicles. The president of the association, Jim Johnston, said, "We're here to get the message across that if something isn't done about the high road taxes, a lot of us independent truckers are going to be out of business." A Pennsylvania trucker, Chauncey Boyd, said, "This is the greatest tax increase that's ever been put on any individual, any group, any industry in this country's history."

The independent truckers were suspicious that large firms affiliated with ATA had allowed the increase in hopes of squeezing independent truckers off the road. One trucker said, "The big companies sold us little guys down the road."

In addition to meeting with Members of Congress, Johnston had met with DOT officials earlier in the week. He said of the DOT officials, "They were unwilling to reconsider their position on these huge truck taxes." He predicted a walk out within a week. [Whitaker, Joseph D., "Truckers Arrive on Capitol Hill to Protest Tax Rise," The Washington Post, and Voss, Stephanie, "Truckers Roll Here in Protest on Taxes," The Washington Times, both January 25, 1983]

The strike by independent truckers began on January 31. Scattered violence aimed at trucks still operating was reported in seven States. Secretary Lewis estimated that 20 percent of independent owner-operators had heeded ITA's strike call, but Parkhurst estimated 50 to 70 percent. Noting that the ATA and the Teamsters Union were not backing the strike, Parkhurst said, "There are always draft-dodgers and 4-F's who stay clear of the war, while a relatively small number does the actual fighting." [Holsendolph, Ernest, "Scattered Violence Reported in Independent Truck Strike," The New York Times, February 1, 1983]

By February 3, violence was increasing and the impact on markets was being felt, according to news accounts. The Associated Press reported:

Bushwhackers who have attacked more than 500 trucks during a violent truckers strike renewed their assaults yesterday, and food brokers from St. Louis to Boston began feeling the pinch of shortages.

Shipments of fresh fruit and vegetables dwindled, shipping costs went up and officials warned consumers to be prepared to pay more at the checkout counter . . . .

A Teamsters Union driver had been killed in North Carolina, 30 had been injured, and at least 13 people had been arrested in violence in over 30 States. An explosion at the Interstate Motor Freight Systems terminal near Youngstown, Ohio, started a fire that damaged the roof and blew doors off the loading dock. Truckers were protecting themselves by traveling only by day and forming convoys. [Associated Press, "Assaults on Truckers Continue," The Baltimore Sun, February 4]

On February 4, President Reagan denounced the violence. Caving in to those "committing murder" would be the "worst thing in the world." He considered the taxes "proportionately fair" and that the truckers could pass the increased taxes on to buyers, just like any other business.

By then, the strike was beginning to diminish, along with reports of violence. On February 8, The Washington Post reported that the Departments of Transportation and Agriculture "could find no evidence of major problems for shippers or buyers" in the second week of the strike. Far fewer truckers than claimed by Parkhurst had taken part in the strike, they said, but precise numbers were impossible to gather. More than 578 shootings and 1,715 other violent incidents had occurred, resulting in 89 injuries, 123 arrests, and the one death.

Secretary Dole, shortly after her swearing in ceremony, said "there has been no widespread disruption of commerce nationally," but the Department "will continue to be available to work with responsible representatives of the trucking industry" to resolve issues. She did not, a spokesman added, plan to meet with Parkhurst. [Feaver, Douglas B., "Truckers' Strike Causing No Big Problems, Two U.S. Agencies Say," The Washington Post, February 8, 1983]

By February 10th, the strike was coming to an end. The ITA was planning a strategy meeting in Washington while some Members of Congress, including some who had not been in office in December 1982, indicated they might be willing to reconsider the tax on heavy vehicles. However, Senator Dole, as Chairman of the Senate Finance Committee that would have to consider any change, said that he considered the strike over and declined to hold hearings on the truckers' problems. [Belden, Tom, "Kostmayer Leads Way Toward Meeting to End National Truck Strike," The Philadelphia Inquirer, February 10, 1983]

Parkhurst soon announced that the strike was officially over. According to an editorial in The Journal of Commerce, Parkhurst considered the strike a success, claiming it accomplished more than the earlier stoppages he had engineered:

Mr. Parkhurst claims responsibility for the introduction of seven bills in Congress to roll back the new increases in fuel and highway-user taxes that were legislated to fund the rehabilitation of the country's dilapidated highways.

A major coup also was scored, he added, when 35 congressmen signed a statement that expressed concern at the independents' plight and promised to look into the possibility of reducing those new taxes.

But if that's a victory, then the moon really is made of green cheese. As the American Trucking Associations Inc., the lobby for regulated carriers, points out, several of those tax roll-back bills were introduced before the strike even began. And there are a total of 535 U.S. senators and representatives in congress – any 35 of whom would probably sign anything at any given moment. ["No Victory for Truckers," The Journal of Commerce, February 14, 1983]

Facing the Guillotine

Although the strike did not force a change in the Heavy Vehicle Use Tax, trucking interests were optimistic in early 1984, the year the increased taxes on heavy vehicles were to go into effect on July 1. An article in The Charlotte Observer on January 8, 1984, reported "guarded optimism" among truckers:

After another year of battling increased competition and lingering recessionary effects, the trucking industry is hurtling toward another major challenge in 1984—an 82% increase in federal highway-use taxes for the typical rig. "We're like the man facing the guillotine," says Ernie Cox of Charlotte, chairman of the American Trucking Associations. [Ellis, Marion A., "‘Guarded Optimism' Among Truckers Facing New Taxes," The Charlotte Observer, January 8, 1984]

On January 26, DOT acknowledged the possibility of relief by sending a report to Congress listing seven alternatives to substantial increases in heavy-duty truck taxes. The alternatives involved reducing or eliminating the tax while increasing the diesel fuel tax to capture the lost revenue. DOT did not endorse the alternatives, but the industry was encouraged that officials were at least considering changes. As The Journal of Commerce put it, DOT had "opened the bidding" in the debate. [Cawthorne, David M., "DOT Opens Bidding in Truck Use Tax Fight," The Journal of Commerce, January 27, 1984]

Several congressional committees considered the issue, including the House Ways and Means Committee and the Senate Finance Committee. On February 9, Secretary Dole testified before the Senate Finance Committee, headed by her husband, Senator Dole. (This was believed to be the first time a Cabinet member testified before a committee headed by a spouse.) The Secretary opposed industry proposals to reduce taxes on heavy trucks and increase the diesel tax by 5 cents a gallon. In the Secretary's view, the industry proposal would result in heavy trucks still being subsidized by other classes of vehicles, while the revenue raised would not be sufficient to offset pavement and bridge damage by the heavy trucks.

Secretary Dole favored what was dubbed D.O.T. Option No. 4, which would cut the use tax for the heaviest trucks (55,000 to 80,000 pounds) to a maximum of $650, exempt all other trucks from the tax, and increase the diesel tax by 6 cents a gallon for all vehicles. "What sets it apart from the others," Secretary Dole told the committee, "is that it transfers the maximum tax burden to a pay-as-you-go tax instrument without compromising our equity objective." She added, "While I believe that D.O.T. 4 is a workable and desirable option, it also represents the limit on the reduction in the heavy-vehicle use tax that we could accept."

While considering the truck issue, Congress was developing legislation in an election year attempt to reduce the deficit. According to a report in The New York Times, Chairman Dole indicated that he "hoped to attach a truck-tax proposal to whatever package might emerge from negotiations to make a ‘down payment' this year to reduce the Federal deficit." [Hershey, Robert D., Jr., "Mrs. Dole Proposes Cutback in Truck Tax," The New York Times, February 10, 1984]

Although the newspaper reported "broad Senate support" for the Administration's D.O.T. Option No. 4, the change could "meet resistance in the House, aides said." Chairman Rostenkowski of the House Ways and Means Committee working out a different approach with House leadership. On March 2, the committee approved an increase of 5½ cents a gallon in the diesel fuel tax and a tax ranging up to $500 on vehicles heavier than 55,000 pounds. The tax was structured so that all trucks weighing 72,000 pounds or more would pay the full $500 fee. Although committee members claimed the plan was "revenue neutral," as required by DOT (i.e., would raise the same amount as the taxes in the 1982 STAA), the committee and DOT did not agree on how to calculate neutrality. Nevertheless, the House approved the bill.

Chairman Dole attached his committee's truck tax bill to the Senate's version of the Deficit Reduction Act. On May 21, Transport Topics reported that "the Senate is still slogging through the budget deficit reduction bill." It added:

Several weeks ago, Senators failed to agree on a time limit for discussing and amending the budget deficit bill, a failure which has left the legislation open to an onslaught of changes and additions. Senators are having "a field day," according to one observer from the trucking industry.

Moreover, a main source of delay in moving the legislation ahead has been controversy over administration-sponsored defense spending versus spending for domestic programs favored on Capitol Hill.

The delay in the Senate was holding up a conference with the House to resolve differences in the truck tax legislation, including the truck taxes. Senator Dole considered moving a separate truck tax bill or a bill delaying the start of the new taxes 120 days beyond July 1, 1984, to allow time to resolve issues with the deficit bill:

However, [a spokesman] pointed out that the budget measure "is the driving force" on truck tax legislation, and is one way to get administration support for the industry-supported diesel differential concept. ["Truck Tax Issue May Be Delayed Until Month's End," Transport Topics, May 21, 1984]

After the Senate approved the Deficit Reduction Act, conferees reconciled the House and Senate bills and Congress completed work on the measure on June 27. The Deficit Reduction Act of 1984, according to contemporary accounts, was expected to raise taxes by about $50 billion while reducing $13 billion in spending through 1987. The tax increases spanned a wide spectrum, including an extra 42 cents a gallon on 100-proof liquor, extension of the 3-percent telephone excise tax through 1987 (originally enacted to fund the Spanish-American War in 1898), and a reduction in the advantage of income averaging. The New York Times stated, "The new law also changes many corporate, accounting and tax shelter practices to stop abuses, and it delays several scheduled tax cuts, including the decline in the top estate tax rate." The article added:

Most of the spending cuts will mean savings in Medicare, the health care program for the elderly, including an increase in premiums and a 150-month freeze on physicians' fees.

Depending on congressional decisions on slowing the growth of the Defense budget, "deficit reduction through 1987 is expected to total between $140 billion and $180 billion." [Fuerbringer, Jonathan, "Reagan Signs Bill to Cut Spending, Raise Taxes," The New York Times, July 19, 1984]

Shortly after the bill passed Congress, Paul W. McCracken, Professor of Business Administration at the University of Michigan and chairman of the Council of Economic Advisors during President Nixon's first term, wrote that it deserved to be approved, although it lacked "some great, sharply focused theme, which might set some sort of new philosophy of taxation for years ahead." He added, "For one thing, the bill seems to hold to a minimum the usual collection of special provisions – of interest to committee members' constituencies – that so often creep into tax legislation. These are not, of course, absent." [McCracken, Paul W., "Business Forum; It's a Marvel the Congress Did Anything," The New York Times, July 1, 1984]

One of those special provisions concerned the Heavy Vehicle Use Tax approved in the 1982 STAA. Title IX of the Deficit Reduction Act of 1984 eliminated the tax on vehicles under 55,000 pounds and provided a maximum tax rate of $550, effective July 1, 1984. It increased the diesel fuel from 9 cents to 15 cents per gallon. Because the rates established by the 1982 STAA for the Heavy Vehicle Use Tax had been deferred until July 1, 1984, they never went into effect.

Although the deficit bill included most of the tax increases the Reagan Administration had proposed, the President signed the bill at 10 a.m. on July 18, 1984, in the Oval Office without ceremony and with only staff present. The White House did not explain why the President had chosen not to have a signing ceremony for Public Law 98-369, but The New York Times speculated:

Although President Reagan is philosophically opposed to raising taxes, he supported this deficit reduction package, which includes most of the particular tax increases his Administration proposed this year.

But apparently Mr. Reagan chose not to highlight the signing of the bill in this election year. In 1982 he was criticized by many people in his own party for signing a tax increase. [Fuerbringer, Jonathan, "Reagan Signs Bill to Cut Spending, Raise Taxes," The New York Times, July 19, 1984]

(This was a reference to TEFRA.)

In a brief statement on July 14, 1984, the President indicated he was signing "this important legislation," but "vigorously" objected to provisions that "would unconstitutionally attempt to delegate to the Comptroller General of the United States, an officer of Congress, the power to perform duties and responsibilities that in our constitutional system may be performed only by officials of the executive branch." He also may have wanted to play down the tax increases, and the Medicare cut, in a year when he was seeking a second term as President.

Beyond the Gas Tax Increase

The 1982 STAA was, in many respects, a typical surface transportation bill. In addition to the usual reauthorizations for core programs and the increased funding from the tax increase, it contained a mix of special provisions.

Demonstration Projects

The 1982 STAA continued a trend of earmarking funds for specific projects, with four pages of "Demonstration Projects" in Section 131. Congress had begun calling earmarks "Demonstration Projects" to suggest that home district projects were justified because they would demonstrate important transportation ideas.

The STAA included other generic and specified earmarks under a variety of names and guises. Section 139 ("Change in Location of Interstate Segments") was an example of an earmark written in generic terms that applied only to a specific project. It allowed the Secretary to approve a change in location of "any Interstate route or segment" if construction on the new location met certain requirements, including that the cost would not exceed the cost of eligible improvements on the original location. This provision was in the bill approved by the House on December 7. As usual when bills are sent to the opposite chamber, the Senate substituted its own version of the bill when debate began. On December 15, Senator Helms, with Senator East as cosponsor, introduced an amendment during floor debate to incorporate a slightly different version of the provision into the Senate bill. Senator Helms explained that although the amendment was "written in general terms," it affected only I-40 in Winston-Salem. [Congressional Record, December 15, 1982, p. S14855]

The roadway designated as I-40 did not meet Interstate standards, but upgrading it would have caused social, environmental, and financial problems that made the transformation impractical. The amendment allowed FHWA to help pay for a southern bypass of Winston-Salem to carry I-40 through the area. Senator Robert T. Stafford (R-Vt.), Chairman of the Committee on Environment and Public Works, said he had discussed the amendment with the Senator and that "I am prepared, for the majority, to accept it." Senator Randolph, now the Ranking Member on the committee, said that the Democratic minority did not object. Despite the animosity directed at the filibusterers, the Senate agreed to the provision. The Conference Committee included the House language; unlike the Helms/East amendment, it allowed for an increase or decrease in the cost of construction on the new location based on changes in construction costs. (The I-40 bypass opened in 1993. The former I-40 through Winston-Salem is signed with off-Interstate "Business Route 40" markers.)

Other generic and specific earmarks, totaling at least 20, applied to special purposes such as:

  • Energy impacted roads (Sections 109 and 120)—Allowed an increased Federal share of 85 percent to encourage States to give priority to improving roads incurring heavy use to meet national energy needs. Senator Jennings Randolph (D-WV) and Representative Nick J. Rahall II (D-WV) introduced the measure in generic form, but they were concerned about the condition of coal haul roads in their State;
  • Vending machines (Section 111)—Reversed a long-standing Federal law prohibiting commercial activities on the Interstate right-of-way by allowing installation of vending machines in safety rest areas;
  • Parking ramps and frontage roads (Section 127)—Introduced by Senator David Durenberger (R-Mn.) in generic form but intended to include construction of fringe parking facilities in the 1981 ICE for projects in Minnesota (I-394), Florida (I-95 in Dade County), the District of Columbia (I-295 in Southeast), and Maryland (I-795 in Baltimore), all of which FHWA had excluded under the eligibility restrictions of the 1981 Act.
  • Project eligibility (Section 128)—Allowed the use of Interstate funds for safety improvements on a primary highway in the vicinity of an interchange—a generic earmark with qualifiers intended to apply only to depressing a road in Charlestown, Massachusetts;
  • Martin Luther King Bridge between St. Louis Missouri, and East St. Louis, Illinois (Section 134)—Established criteria that would allow this private toll bridge to be eligible for HBRRP funds;
  • Ferryboat study (Section 136)—Authorized funds to study the feasibility of high-speed ferryboat operation between St. Croix and St. Thomas in the U.S. Virgin Islands.
  • Revision of project agreement (Section 141)—Introduced by Representative Robert A. Roe (D-NJ), the measure authorized up to $1 million to compensate businesses that he indicated had been harmed by a temporary bypass for a New Jersey project. Compensation for lost business during construction is normally not eligible for Federal-aid funds;
  • Innovative technologies (Section 142)—Senator Ron Wyden (D-Or.) introduced an amendment to encourage States to use rubber recycled from discarded tires as an additive in asphalt mixes for pavement rehabilitation projects. The final provision was generic in providing an additional 5 percent Federal share when the States used "materials which are produced from recycled materials or which contain asphalt additives to strengthen the materials";
  • Study of methane conversion for highway fuel use (Section 152)—The study, requested by Representative Judd Gregg (R-NH), would determine the potential for recovering methane released during offshore oil drilling and converting it into methanol on floating conversion plants for use as fuel in highway vehicles;
  • Withdrawal and designation of certain Interstate routes (Section 162)—Required the Secretary to approve withdrawal of a portion of I-95 and I-695 that New Jersey had decided not to build and substitute a portion of the New Jersey and Pennsylvania Turnpikes (Section 162).

The point is not that these provisions and other generic and specific earmarks included in the 1982 STAA were "bad." Rather, these examples illustrate how Members of Congress directed funds to benefit favored constituencies instead of allowing State and local officials to determine how the funds could best be used to meet surface transportation needs. The trend would accelerate with each multi-year authorization bill.

Disadvantaged Business Enterprises

Another important provision of the 1982 STAA established a goal for participation by disadvantaged business enterprises (DBE). Representative Parren J. Mitchell (D-Md.), the first African-American to represent Maryland in the U.S. House of Representatives (January 3, 1971, to January 3, 1987), introduced the amendment on the House floor during debate on the STAA on December 6, 1982:

Notwithstanding any other provision of the law not less than 10 percent of the amounts authorized to be appropriated under this Act shall be expended directly with small business concerns owned and controlled by socially and economically disadvantaged individuals as defined by section 8(d)(3) of the Small Business Act (15 U.S.C. Section 637(d)(3)) and relevant regulations promulgated pursuant thereto.

Mitchell explained that a similar measure had been added to the Public Works Act of 1977. The Supreme Court had found the measure constitutional in a 1980 case and "the amendment met with enormous success." He said that "the November unemployment figures [show] 10.8 percent of Americans are out of work," but for black Americans unemployment was "an atrocious level of 20 percent." That figure did not include the "millions of individuals who have given up total hope and thus are no longer seeking employment."

While the 1982 STAA was estimated to create nearly 300,000 jobs, Representative Mitchell was concerned that "the twin forces of racism and economic discrimination will once again raise their ugly heads." He told his colleagues, "Yes we have the power within our grasp today to provide blacks and other minorities with a hope for the future." He continued:

In light of the disproportionate unemployment enjoyed by minorities as of this time, and in light of the success of the public works amendment in mixing together county, State, and local governments with minority business provisions [sic], I would urge the passage of my amendment.

Small businesses owned and controlled by socially and economically disadvantaged individuals, he said, had made major contributions in the past. "The small minority business community can play a major role in assisting this Nation to reduce the 20-percent black unemployment figure."

Representative Mitchell spoke within an allotted 5 minutes. According to the Congressional Record for December 6, 1982 [p. H8954], the House agreed to the Mitchell amendment without discussion or debate.

The Senate did not include a comparable provision in its version of the bill. Mitchell's language was modified in conference with the Senate and incorporated into Section 105 ("Authorizations") as subsection (f):

Except to the extent that the Secretary determines otherwise, not less than 10 per centum of the amounts authorized to be appropriated under this Act shall be expended with small business concerns owned and controlled by socially and economically disadvantaged individuals as defined by section 8(d) of the Small Business Act (15 U.S.C. section 637(d)) and relevant subcontracting regulations promulgated pursuant thereto.

While the House provision specified that not less than 10 percent shall be expended with disadvantaged business enterprises, the final version gave the Secretary statutory authority to alter the percent or eliminate it.

Implementing this provision was a challenge for the Reagan Administration, which opposed affirmative action quotas. Given the introductory clause, "Except to the extent that the Secretary determines otherwise," the Department treated the provision as requiring each State transportation department to establish a goal that it would try to attain – as long as accumulated national contracting equaled 10 percent. States with small numbers of minorities set low DBE goals, while others set goals far exceeding 10 percent, allowing FHWA to comply with the statutory requirement. Because the firms involved were small and often inexperienced, they would be used mostly as subcontractors to nonminority, nondisadvantaged prime contractors.

Although opponents of affirmative action would attempt to end the DBE program in later legislation, the four subsequent reauthorizations since then retained it, with some modifications. Section 106 of the Surface Transportation and Uniform Relocation Assistance Act of 1987 (Public Law 100-17, approved April 2, 1987) modified the definition of the term "socially and economically disadvantaged individuals" by stating that "women shall be presumed to be socially and economically disadvantaged individuals for purposes of this subsection." (Because women constitute over 50 percent of the population, they are not a "minority.") The Act also required the Secretary to establish minimum uniform criteria for the States to use in certifying companies to participate in the program while requiring each State to publish an annual list of certified DBE's. The most recent reauthorization as of this writing, the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, approved August 10, 2005, continued the requirements. The general rule, originally drafted by Congressman Mitchell, now reads:

Except to the extent that the Secretary determines otherwise, not less than 10 percent of the amounts made available for any program under titles I, III, and V of this Act and section 403 of title 23, United States Code, shall be expended through small business concerns owned and controlled by socially and economically disadvantaged individuals.

(Title I was the Federal-aid highway program while Title III was the Federal-aid transit program. Title V authorized research funding; Section 403 covers highway safety research and development.)

Buy America

The 1982 STAA also strengthened the "Buy America" requirements of the Federal-aid highway program. By the 1970's, the steel industry's struggles prompted Members of Congress representing steel districts to form a Steel Caucus to seek legislative measures to increase the market for American steel. Imported steel from companies subsidized by their national government was a primary target. For the Federal-aid highway program, the first measure was Section 401 of the Surface Transportation Assistance Act of 1978. It prohibited the Secretary from obligating funds for any project exceeding $500,000 in total cost unless "such unmanufactured articles, materials, and supplies as have been mined or produced in the United States" will be used. Exceptions were allowed in the public interest, if supplies in the United States were insufficient or unsatisfactory, or inclusion of domestic material would increase overall project contract cost by more than 10 percent.

In 1982, the Steel Caucus wanted a stronger, more explicit protective measure. Representative Douglas Applegate (D-OH), who represented his Steubenville district from 1974 to 1994, had introduced the provision. Steubenville's economy was slumping as steel corporations such as Weirton Steel struggled in the marketplace. With unemployment in his district at 10.8 percent partly, he believed, as a result of steel imports, he said that "it is imperative that strong action be taken to correct what has been a blatant inequity of trade laws." He said that over 160,000 steelworkers were on layoff status while another 50,000 were working short weeks. In addition to subsidizing steel exports to the United States, many countries, he said, had erected trade barriers to import of American steel.

Representative Barbara K. Mikulski (D-Md., now Senator Mikulski), whose home town of Baltimore included the Bethlehem Steel plant at Sparrows Point, agreed:

As the secretary of the Steel Caucus, I know the terrible problem being faced by our steelworkers. Forty-eight percent of the unemployed steelworkers in my district will have their benefits run out in the next 2 weeks. I feel that instead of the Christmas present of a pink slip to the American steel industry and to the suppliers of our transportation network, we ought to give them a Buy American amendment and make a real Christmas present.

Section 165 ("Buy America") of the 1982 STAA prohibited FHWA from obligating funds for any Federal-aid project "unless steel, cement, and manufactured products used in such project are produced in the United States." (Restrictions also applied to transit projects.) The only exceptions were that a State could apply for a waiver if application of the Buy America requirement "would be inconsistent with the public interest" or if the foreign products to be incorporated are not "produced in the United States in sufficient or reasonably available quantities and of a satisfactory quality." Further, a minimal use of foreign material was permitted if the cost of the material was less than one-tenth of 1 percent of the total contract cost or $2,500, whichever is greater.

(The complexities of such legislation became clear once FHWA implemented the requirement. For example, some States complained that the Buy America requirement increased project costs, while others claimed that some materials were in short supply in certain regions. American companies representing foreign suppliers pointed out the advantages of their products. Congress reacted by amending Section 165 to apply only to permanently incorporated steel and iron. Section 165 of the 1982 STAA, as amended, remains the Buy America provision for the Federal-aid highway program. The Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users, approved August 10, 2005, codified the Buy America provision as Section 313 of Title 23, United States Code.)

Federal Lands Highway Program

For decades, FHWA and its predecessor agencies provided engineering and contracting assistance to other Federal landowning agencies, such as the National Park Service and U.S. Forest Service, in their roadbuilding endeavors. Because these agencies did not have a roadbuilding unit, FHWA administered design and construction contracts for the Going-to-the-Sun Road in Glacier National Park in Montana, the Blue Ridge Parkway, the Natchez Trace Parkway, and countless other projects around the country. FHWA also administered funds for work on Indian Reservations and projects to improve access to public lands. These activities developed independently in the context of the landowning agency, with construction dependent on general funds authorized by congressional acts from year to year.

Just days before leaving office, the Carter Administration submitted a proposal on January 16, 1981, to consolidate two categories of assistance into a Federal Lands Highway Program (FLHP). The draft language began:

It is the sense of Congress that Federal roads which are public roads receive the same uniform policies as roads on the Federal-aid systems or part of the Federal-aid programs. The Congress therefore finds that in order to accomplish this objective there shall be a coordinated Federal Lands Highway Program which shall consist of the forest highways and public lands highways. Appropriations for the construction and improvement of such Federal roads shall be administered by the Secretary in conformity with regulations jointly approved by him and the Secretary of the appropriate Federal land managing agency.

The Reagan Administration did not include this concept in its initial consolidation proposal for reauthorization on March 17, 1981. However, the concept was revived in the proposal President Reagan submitted to Congress on November 30, 1982. The proposed legislation would eliminate the separate provisions for forest highways, park roads, parkways, Indian reservation roads, and public lands highways and establish a coordinated FLHP that would continue funding for each on a multi-year basis, while allowing for long-range planning and coordination of resources. In placing oversight in DOT, the goal was to apply uniform standards to all projects.

Because projects had previously been administered under the rules applicable to the landowning agency, they were not subject to Section 4(f) of the DOT Act, which applies only to projects funded under DOT programs. The proposed bill exempted FLHP projects from Section 4(f).

The House and Senate included versions of the Administration proposal. Section 126 of the 1982 STAA authorized the FLHP, with funds from the Highway Trust Fund, rather than the general treasury. (The Federal-Aid Highway Act of 1970 had changed the funding source for public lands highways from the general treasury to the Highway Trust Fund.) Congress did not exempt FLHP projects, now funded from the Highway Trust Fund under a DOT program, from Section 4(f).

Through the FLHP, FHWA works with Federal land owning agencies to manage transportation needs. Funds are used for such activities as planning, design, construction, and rehabilitation of the highways and bridges that provide access to and within federally owned lands. The core programs consolidated under the FLHP by the 1982 STAA were forest highways, park roads, parkways, Indian Reservation roads, and public lands highways. The current FLHP program categories are:

  • Indian Reservation Roads Program provides funding for public roads that grant access to or within Indian or Native Alaskan reservations, lands, or communities.
  • Park Roads and Parkways Program provides funding for public roads that make access available to or within national parks, recreational areas, historic areas, or other units of the National Park System.
  • Refuge Roads Program maintains and improves public roads that provide access to or within units of the National Wildlife Refuge System.
  • Public Lands Highway Program has two components — the Public Lands Highway Discretionary Program and the Forest Highway Program — both of which provide funding for public roads serving Federal and Indian lands.

In addition, FHWA administers the Emergency Relief for Federally Owned Roads Program, which repairs and restores roads damaged by natural disasters or catastrophic failures.

To celebrate the 25th anniversary of the FLHP, Public Roads magazine published Marili Green Reilly's "Accessing America's Treasures" in the July/August 2008. The article is available online.

Transit Authorizations

Professor of Transportation George M. Smerk discussed the impact of the 1982 STAA on transit in The Federal Role in Urban Mass Transportation. Noting that the 1970's had been "heady days for the federal transit programs," he said that the 2 years leading to the 1982 STAA "were really a down-to-the-wire effort to preserve at least some of the gains of the past, including the retention of operating-aid provisions in the face of an administration hostile to the program." While funding would be "essentially flat" for the 4-year span of the Act, "the amount of federal transit funds was at least $1 billion higher each year of the four-year authorization . . . than under the administration's original proposals."

He acknowledged the dramatic change in setting aside 1 cent of the gas tax for transit:

The Mass Transit Account of the Highway Trust Fund finally established the long-coveted guaranteed source of money for transit, going all the way back to efforts of Secretary of Transportation John Volpe in the late 1960s and early 1970s. The guaranteed source of funding was a major victory for the transit industry.

At the same time, the funding for capital purposes was "woefully small when recollecting the transit industry's estimate of capital needs of about $5 billion per year."

Smerk summarized the results:

The federal mass transit program was actually no closer to attaining solid, workable, long-term goals and objectives with the passage of the 1982 Act than it had been before. As with all past legislation, the new Act was nothing more than a compromise—only this time the compromise was more complex than usual. Because the federal transit programs lacked discernible purpose, a real measure of success remained elusive.

The 1982 transit legislation was far better than any observer of transit or anyone in the transit industry had a right to expect, given the opposition of the president and of the Office of Management and Budget to providing aid to transit. Transit may not have reached the heavenly gates, but it did not fall from grace, a fall that had seemed in the cards at the start of 1982.

Given the Administration's opinion of transit, Smerk attributed this success, however limited, to "the lobbying effort for the transit bill and the breadth of that lobbying effort." He also credited Secretary Lewis for "awakening the public interest to the issue of America's decaying infrastructure, of which highways and transit played a large part." [Smerk, George M., The Federal Role in Urban Mass Transportation, Indiana University Press, 1991, p. 213-217. See Smerk's chapter 11, "Federal Mass Transit Policy in the Age of Reagan, 1981-1982," p. 189, for a detailed discussion of the fight to preserve transit funding.]

Summary

In looking back at the 1982 STAA, Stockman recalled Secretary Lewis' reaction in March 1981 to the proposed spending cuts:

Lewis's initial reaction to my attack on the transportation pork barrel accurately reflected the consensus of the politicians. The Republicans on Capitol Hill, led by conservatives like Senator Alfonse D'Amato [of New York] and liberals like Senator Arlen Specter [of Pennsylvania], fought and prevailed on every effort to cut mass transit. And all of the congressional politicians wanted to keep fixing local potholes, roads, and bridges. We finished up saving hardly a dime of the $20 billion.

In the end, the transportation sector of the pork barrel never even knew the Reagan Revolution had tilted at it. It was a dramatic case of everything staying the same . . . . [Triumph, p. 150]

Our Economic Arteries

As requested by the President, Congress significantly increased funding in the 1982 STAA for the programs to repair aging Interstates and deficient bridges. Compared with $275 million for Interstate 3R in FY 1982, the 1982 STAA authorized $1.95 billion in FY 1983 for Interstate 4R, with the amount increasing to $3.15 billion in FY 1986, the final year of authorization. Funding for the HBRRP went from $900 million in FY 1982 to $1.6 billion in FY 1983, gradually increasing to $2.05 billion in FY 1986.

As President Reagan, Secretary Lewis, and Administrator Barnhart had predicted, the increased revenue for Interstate 4R and bridges had the desired effect. By the mid-1980's, Interstate pavement conditions had begun to show overall improvement (i.e., the pavements that were improved exceeded the aging pavements that deteriorated to poor condition). The improvement was documented in The Status of the Nation's Highways: Conditions and Performance," released on May 29, 1985, the eighth in a series of biennial DOT reports to Congress. The report covered conditions as of FY 1983. In an accompanying news release, Barnhart said:

One of the major findings of this report is that the steady decline in pavement quality which had characterized previous status reports has been halted. While it is still too early to see significant changes in highway conditions on a broad national scale, data received from state highway agencies indicate that during 1983 pavement improvements on major highways—including the Interstate system—were sufficient to bring us into at least a neutral position with regard to pavement deterioration.

According to the DOT's Sixth Annual Report to Congress on the Nation's 574,045 bridges on public roads, released May 22, 1985, at least 10,605 structurally deficient bridges (defined as no longer able to accommodate the vehicle weights for which they were originally designed) had been improved and were no longer structurally deficient. In a news release issued May 22, Secretary Dole said, "These bridges, which heretofore had been either closed or restricted to handling only light-weight traffic, can now accommodate the heavier vehicle loads commonly in use on the nation's highways today."

The news release summarized the result:

Because the condition of other bridges deteriorated during the year, the report noted that the total number of deficient bridges on public roads (structurally deficient and "functionally obsolete") declined by only 131, from 260,306 deficient structures reported in 1983 to 260,175 at the end of the 1984. Even so, this is the first decline in the number of deficient bridges since records have been kept. Functionally obsolete bridges are bridges which were not designed to handle current vehicle sizes and weights and often hinder the efficient flow of crossing traffic.

As reflected in the reports on pavement and bridge conditions, the increased funding under the 1982 STAA translated into projects, as noted in The New York Times:

Nevertheless, the 60 percent increase in Federal highway dollars last year, to $12.8 billion from $8 billion, was turned into building contracts with surprising speed. In the first 11 months of 1983, the states awarded about $7.6 million in highway construction contracts, a third more than in the comparable period in 1982.

The Federal Highway Administration approved $8.9 billion worth of projects for contract bidding, 60 percent higher than a year earlier . . . .

Some of the work made possible so far by the gasoline tax boost involves tens of millions of dollars in projects that won't be completed until the end of the decade. Others, like repairs to a two-lane bridge on a rural Illinois highway, are more modest.

"In most cases they emptied the shelves of projects that had been backlogged and had been ready to go," said Francis Francois, executive director of the Association [sic] of State Highway and Transportation Officials. [Associated Press, "Nickel Rise in Gas Tax Swells Road Projects," The New York Times, January 16, 1984]

In agreeing to the gas tax increase sought by Secretary Lewis, President Reagan had insisted that the additional revenue was needed to improve roads and bridges. Members of Congress had referred to the 1982 STAA as a jobs bill. However, the issue of jobs would prove to be secondary to the road and bridge improvements.

The economic statistics continued to decline through December 1982 and January 1983, as Cannon explained:

By November 1982 more than 9 million Americans were officially unemployed, a statistic that would rise to 11,534,000 by January. Grim as they were, these statistics understated actual unemployment. Between 2 and 3 million Americans had been out of work so long they were not actively seeking jobs and therefore were not officially counted in the army of the unemployed. Many other Americans, perhaps as many as 10 million, had been forced by factory shutdowns or relocations to take service or pickup jobs at lower pay. With the job losses came business failures—17,000 of them in 1981 alone, the second-highest figure since the Depression year of 1933. [The total in 1982 was even higher, over 25,000.] By the end of 1982, the nation's steelmakers were operating at only 35 percent capacity. In January 1983, 20,000 people lined up in 20-degree weather to apply for 200 jobs at an auto-frame factory in Milwaukee. [Cannon, p. 196]

The data took a toll on Reagan's popularity:

Reagan's own popularity would reach its first-term low point of 35 percent in January 1983, a time when confidence in the administration's (and Volcker's) policies was even lower. Less than 20 percent of Americans thought the economy was improving. [Cannon, p.234]

As Cannon and many others observed, Reagan was an optimist by nature. On February 9, 1983, during a question-and-answer session with editorial-page writers, he assured them that "all the signs we're now seeing point toward an economic recovery." He had been making optimistic statements throughout the recessions, so the editorial-page writers were skeptical. One asked about the prospects for the type of jobs program the President had long opposed:

Q. Mr. President, there have been some reports in the news recently that you may be leaning toward recommending or endorsing some kind of jobs program. Could you tell us exactly how you feel about this?
The President. The thing that we have talked about and that is, again, provided for already in the budget, is that where there are legitimate—and we got this idea from the gas tax program. And incidentally, for all this talk that I had once said that it would take a palace coup to make me accept the 5-cent gas tax, that was when they were talking about it as just general revenue, a tax increase.
But Drew Lewis, Secretary of Transportation, had come to us over a year ago with a complete report on the state of our highways and bridges in the country and the desperate need and the almost emergency situation then. At that time, I asked him if he could hang on for a year and come back a year later, which he did. So, that really was a users fee. The gas tax was passed to get this necessary work that needs to be done, get it in work.
Now, what we have said to all of our agencies and departments is that—in the budgets for all of them there are maintenance work, construction, things of that kind that are called for—and what we've said, "Expedite it. Accelerate it. Don't wait if you've got it on schedule some place down the line. It's already in the budget. It won't add anything to the deficit to do it. Go to work on it and start doing it to help in the recovery.

Within days, the Administration advised congressional leaders that a jobs and recession relief bill in the $4.3 billion range would be acceptable to the President. The Emergency Jobs Appropriations Act (Public Law 98-8), approved March 24, 1983, authorized over $9 billion for 77 Federal programs and activities, including public works such as highways and transit. Although President Reagan signed the bill without ceremony, he discussed it during a press conference the following day. After summarizing the bill, he said:

Let there be no confusion on one essential point. Even as this bill becomes law, the signs are clear that economic recovery is already underway, a recovery that'll bring far more jobs to unemployed Americans than could ever be created by new Federal jobs programs. Make-work jobs are just temporary at best. And we know that from past experience. More government spending for such jobs will only crowd out private borrowing for private jobs, raise the deficit and reverse our dramatic progress in bringing down inflation and interest rates.

What President Reagan, the editorial-page writers, and those involved in shaping the 1982 STAA and the 1983 Employment Act who spoke of their job-creation potential did not know was that the recession had ended before enactment.

The beginning and end of a recession are never seen when they occur, so they always pass without notice, other than speculation after the fact. The National Bureau of Economic Research (NBER), the private, nonprofit, nonpartisan research organization that determines the start and end points of recessions, announced on July 8, 1983, that its Business Cycle Dating Committee had "identified November 1982 as the trough of the recession that had begun in the United States in July 1981." The announcement explained that, "The trough signifies both the end of a recession and the beginning of a recovery or business expansion."

Unemployment peaked at 10.8 percent in December 1982, but gradually began falling. Inflation also declined from over 10 percent in 1981 to 3.2 percent in 1983 as the stringent measures Volcker had imposed finally ended the cycle of stagflation that had gripped the economy for so many years. Corporate earnings rose, including in industries such as auto manufacturing, that had been hard hit during the recession. The NBER announcement explained:

Real retail sales, which declined by 4.9 percent during the recession, have already well exceeded their pre-recession peak . . . . Total employment began to recover sharply this spring and is now almost back to its pre-recession peak.

The committee also strongly emphasized that the expansion has been extending throughout the economy in recent months and is now widespread. For example, approximately five-sixths of all manufacturing, mining and utility industries now report higher production levels than they were experiencing six months ago, and three-fourths of all nonfarm industries report higher employment levels than six months ago.

Although the recovery was good for the country, it also proved timely for President Reagan, as James MacGregor Burns explained:

[One] grand asset Reagan retained—political luck. The recession came early enough for some Reaganites to blame it on the lingering effects of Carter policies, early enough too for the White House to wait it out and hope for recovery by election time. The very spending that Reagan condemned in principle while authorizing in practice, combined with such anti-inflationary developments as an oil price decline over which the White House had little control, brought a strong recovery. Although large pockets of poverty and unemployment persisted, the recovery remained vigorous enough to project Reagan toward his massive reelection triumph of 1984. It was hard enough for Walter Mondale, leading a divided, irresolute party, to take on an incumbent whose personal popularity remained high, who had managed to maintain his electoral coalition despite sporadic complaints from both movement conservatives . . . and liberal and moderate Republicans in the Senate. But former Vice President Mondale, forced to share some of the blame for failed Carter economic policies, also faced a Republican Santa Claus who continued to disperse federal money to thousands of vested interests and welfare projects even while preaching economy and thrift and budget balancing. He faced a chameleon who alternated between attacking government and exploiting his government. It was no contest from the start. [Crosswinds, p. 641, President Reagan won 525 electoral votes compared with 13 for former Vice President Mondale.]

On December 23, 1983, President Reagan wrote to Tom Riedlinger, managing editor of Better Roads magazine, to send greetings "to all governmental road and street officials, engineers and contractors." The President said the 1982 STAA had "initiated one of the largest rehabilitative public works programs in the history of the United States." Funding in FY 1983 was a 45-percent increase over the previous year "to begin rebuilding America's decaying roads and highways." He anticipated that in 1984, "this accelerated level of federally aided highway construction activity will continue at the rate of about $1 billion a month."

The increased levels of construction meant that "hundreds of thousands of new jobs are created as projects get underway." The President cited the FHWA statistics that in FY 1983, "more than 300,000 additional jobs were generated . . . in a wide range of industries." He said:

The rehabilitation of America's highways is essential if we are to maintain the economic recovery that is already under way. Without our highways, industry would be unable to bring products to markets throughout the country, and consumers would be unable to continue enjoying the highest living standard in the world. The vast majority of all we eat, wear, and use in our daily lives travels by the highways. We must and will maintain these vital economic arteries. ["A Personal Message from the President of the United States," Better Roads, February 1984, p.6]

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Updated: 10/21/2013
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