PALACE COUP: 

President Ronald Reagan and the 

Surface Transportation Assistance Act of 1982 

by 

Richard F. Weingroff 

Federal Highway Administration 

Introduction

Joe Rhodes had a problem. As assistant to Executive Director Hank Stafseth of the American 

Association of State Highway Officials (AASHO), Rhodes had helped organize AASHO’s annual 

meeting in Los Angeles, California. On the Opening General Session, Monday, November 12, 

1973, the planned speakers were Mayor Tom Bradley and Secretary of Transportation Claude S. 

Brinegar, but Mayor Bradley had just canceled. Rhodes had an hour to fill. 

Someone pointed out that Governor Ronald Reagan lived in Los Angeles and might be available to 

give a brief speech greeting the 1,000 AASHO participants to the city. That would fill at least part 

of the gap in the program. Rhodes called the Governor, who agreed to stop by. Instead of a quick 

greeting that would have left a large block of empty time to fill, the Governor filled the hour with a 

speech on highways and the environment. 

Governor Reagan began: 

In recent years, most of us have become a great deal more concerned about the necessity of 

protecting the environment, and we have been doing something about it . . . . Literally 

millions of dollars have been and are being spent to fight smog, eliminate water pollution, 

and to otherwise preserve and protect the environment against unnecessary intrusion by the 

activities of man. 

Although any “reasonable person would say that we have been moving vigorously” on the 

environmental front, Governor Reagan said that “no matter how much we do, there is still a very 

active fringe element in the environmental movement that never seems to be satisfied.” The 

“voices of reason are being drowned out by the prophets of calamity” who wanted to take the old 

expression “stop the world, I want to get off,” and change it to “stop the world and put us off.” He 

continued: 

A strange sort of no-growth, no-development syndrome is proposed without regard for the 

consequences this might have on the lives of our people or the vitality of our economy. 

Most daily traffic “is for a very necessary and practical purpose,” such as commuting to jobs. “We 

must have the fuel and electric power to drive those vehicles, along with the rapid transit systems 

we are trying to develop to ease the burden on the private automobile and the roads.” He 

suggested: 
It is high time we strike a more realistic and reasonable balance between the need to protect 

the environment and the equally urgent need to have an efficient, functioning transportation 

system, including highways, with sufficient fuel to meet the needs of a modern industrial 

economy . . . . 

A month earlier, 11 Middle East nations, all members of the Organization of Arab Petroleum 

Exporting Countries, proclaimed a progressively increasing monthly cut in oil exports to the United 

States and other nations perceived as unfriendly to Arab goals, particularly regarding the existence 

of Israel. Their action set off the first energy shortage the United States had faced: 

Right now, America is caught between two whirlwinds forcing potentially massive 

disruptions in our society, the effort to protect the environment and the world wide energy 

shortage. 

He discussed the need for nuclear power plants that were opposed by “the self-appointed guardians 

of the environment.” Other alternatives, such as tapping oil resources in Alaska and offshore, were 

being fought by “the philosophy of no-growth” that was imposing “an environmental straightjacket on our economy.” He was concerned about proposals to drastically curtail automobile 

traffic: 

There have been suggestions that a surcharge be imposed for downtown parking, for higher 

taxes on automobiles, for steps that would mean higher gasoline prices to limit driving, 

even for gasoline rationing itself. 

These might be temporary solutions, but they “hit the average citizen where it hurts most, in the 

pocket book.” The solution would not be found by forcing people out of their cars “because 

government makes it too expensive for the average citizen to operate his own car.” The solution 

was more likely to come “from the engineers in the factories, not from the economists in 

Washington.” 

Governor Reagan considered highways “an essential element” in the Nation’s transportation 

system: 

Perhaps it is time that those of you in this particular area of transportation become less 

defensive and more aggressive in pointing out the beneficial impact of America’s network 

of highways and roads. 

There has been far too much mythology about the so-called adverse impact of highways and 

not enough of the facts about how vital our highways are to the prosperity, convenience and 

well-being of our people. 

We have the best transportation system in the world. And the main reason for that is 

because we have the best highways and roads. 

He pointed out that the population had doubled since 1916 and the number of vehicles had 

increased 30 times, “yet highway mileage has increased less than one third. “In some areas, 
highways require less land area than we used for horses and wagons before the automobile was 

invented.” The Interstate System carries 19 percent of all traffic “and yet uses up only one percent 

of the land area devoted to highways and roads.” Although freeways were “cast as the butt of so 

many jokes” and portrayed as the “archvillain,” they had “made a massive contribution to traffic 

safety,” saving thousands of lives. Further, most of the funding, 93 percent, spent on roads was to 

improve existing facilities, not build new ones. 

Governor Reagan concluded: 

We need a modern system of roads and highways to carry our people to and from work, to 

haul the products of our industries and farms to market, to help maintain a dynamic and 

prosperous economy and to make travel safer for our people. 

That is a legitimate and valid goal. It is something that government must recognize, just as 

we recognize the need for legitimate and realistic steps to protect and preserve the 

environment. [Reagan, Governor Ronald, “The Voices of Reason,” American Highway and 

Transportation Monthly, March 1974, p. 5]

Secretary Brinegar, by contrast, urged the road builders to recognize that four big problems—urban 

congestion, pollution, safety, and the weeks-old energy crisis—had created a turning point for 

America’s dependence on cars and highways. These problems demanded a “rethinking of direction 

and a shift of emphasis.” Abandoning highways was not practical, but the country must shift focus 

to the broader goal of “transportation.” Reflecting the new emphasis, AASHO’s executive 

committee voted to rename the organization the American Association of State Highway and 

Transportation Officials (AASHTO). [Hebert, Ray, “U.S. Dependence on Autos Must Change, 

Highway Officials Warned,” The Los Angeles Times, November 13, 1973] 

Nevertheless, Governor Reagan’s speech, coming at a time when AASHO was in the forefront of 

the “two whirlwinds,” got the annual meeting off to an excellent start. And solved Joe Rhodes’ 

problem. 

A New Team 

Governor Reagan served two terms from January 3, 1967, to January 7, 1975. Because of 

California’s constitutional term limit, he could not seek reelection. In 1968, he had sought the 

Republican nomination for President as the favorite of his party’s conservatives, who were still 

smarting from President Lyndon B. Johnson’s landslide defeat of Senator Barry M. Goldwater of 

Arizona in 1964. Although Governor Reagan won slightly more votes in the primaries than the 

frontrunner, former Vice President Richard M. Nixon, Nixon went into the convention with more 

delegates. He secured the nomination and won the election, defeating Vice President Hubert H. 

Humphrey and third party candidate Governor George C. Wallace, Jr., of Alabama. 

President Nixon resigned on August 9, 1974, in the wake of charges referred to collectively as 

Watergate. His Vice President, Gerald R. Ford, became President for the remainder of Nixon’s 

second term. In 1976, President Ford ran for a full term in the White House. To win, he would 

have to overcome several obstacles, not the least of which was his pardon of President Nixon on 
September 8, 1974. Many people remained angry that a trial of the former President had been 

averted. 

Other problems included lukewarm support within the Republican Party, especially among the 

more conservative elements. Ford had been Minority Leader in the U.S. House of Representatives 

(1965-1973) when he was tapped for the Vice Presidency after the resignation of Vice President 

Spiro Agnew on October 10, 1973. Because Ford had never run for national office, he had not built 

support within the party around the country. Conservative leaders saw the likeable Ford as too 

moderate, and they despised his Vice President, former New York Governor Nelson A. 

Rockefeller, who was considered a liberal. Conservatives also criticized the President’s foreign 

policy, including his work on an agreement that would turn the Panama Canal over to Panama. 

In addition, his image had suffered because of a late night comedy show that went on the air in 

October 1975, “NBC’s Saturday Night” (soon renamed “Saturday Night Live”). The popular and 

influential comedy show featured comedian Chevy Chase’s recurring, devastating portrayal of a 

bumbling, stumbling President Ford—a portrayal that became for many a true portrait of the 

President. The image was reinforced during the second presidential debate, on October 6, when 

President Ford stated that “there is no Soviet domination of Eastern Europe and there never will be 

under a Ford administration” and asserted that he did not believe the Polish, Romanians, or 

Yugoslavians considered themselves “dominated by the Soviet Union.” By sticking to these 

inaccurate statements before retracting them a week later, the President compounded the blunder. 

Frustrated by the moderate leadership of Presidents Eisenhower and Ford, as well Nixon’s approval 

of liberal legislation, conservatives urged former Governor Reagan to take on President Ford in the 

Republican primaries. His decision to do so led to a bitter primary fight that was too close to call 

when the Republican Party held its nominating convention. Trying to demonstrate his appeal to 

northern moderates, Reagan chose as his running mate the liberal Senator Richard Schweiker of 

Pennsylvania. The choice outraged conservatives while not gaining support from moderates. Ford 

won the nomination with Senator Bob Dole of Kansas as the Vice Presidential nominee. 

Governor Jimmy Carter of Georgia would win the election in November with over 50 percent of 

the popular vote. Historian James MacGregor Burns discussed Carter’s appeal: 

By inauguration day Carter had acquired a lustrous media image. After years of drift and 

deadlock in government, a leader of proved competence—competence at running a business 

and a state, a submarine and a tractor, and those tough primary campaigns, a demand, 

clearheaded man—seemed to have stepped forward. Even his appearance—his bluff, open 

face creased by a wide smile, his hair style that looked both stylish and rustic, his quick, 

buoyant ways—set him off from the gray, sedate men in high office. [Burns, James 

MacGregor, The Crosswinds of Freedom: From Roosevelt to Reagan – America in the Last 

Half Century, Vintage Books, 1990, p. 521] 

Four years later, going into the 1980 presidential election, President Carter’s image was almost 

reversed. He faced crises on multiple fronts. In early 1979 a revolution in Iran replaced the U.S.-

backed Shah of Iran with Ayatollah Ruhollah Khomeini, who transformed the country into an 

Islamic Republic. With the Iranian oil industry in transition, other countries increased production, 
but panic in the United States drove up the price of gasoline dramatically and brought on a second 

energy crisis. 

As confidence in the President sank, he went to Camp David, the presidential retreat in Maryland, 

for 10 days to consider his presidency. After receiving advice from over 130 people invited to 

Camp David, he emerged on July 15, 1979, to address the Nation. “It is a crisis of confidence,” he 

explained: 

It is a crisis that strikes at the very heart and soul and spirit of our national will. We can see 

this crisis in the growing doubt about the meaning of our own lives and in the loss of a unity 

of purpose for our nation . . . . 

Regarding America’s energy problem, he proposed to commit $10 billion to mass transportation 

over the next 10 years and asked people “to take no unnecessary trips, to use carpools or public 

transportation whenever you can, to park your car one extra day per week, to obey the speed limit, 

and to set your thermostats to save fuel.” (On January 2, 1974, President Nixon had signed the 

Emergency Highway Energy Conservation Act, prohibiting approval of Federal-aid highway 

projects in any State having a maximum speed limit over 55 mph on any highway.) He also 

directed Secretary of Transportation Brock Adams to develop proposals for reducing oil 

consumption through conservation measures as well as increased transit use. Further, he embraced 

a synthetic fuels plan. 

Although initial reaction to the speech was favorable, it soon became known as the “malaise” 

speech, a word he had not used but that reflected a widespread view of his downbeat message and 

presidency. A few days later, in a move intended to show decisive action to revitalize his 

presidency, Carter fired five Cabinet Secretaries, including Adams. Instead of restoring confidence 

in the Carter Administration, the move reinforced the public perception of disarray and uncertainty. 

Whatever confidence the American people still had in Carter would be further undermined on 

November 4, 1979, when Iranian students took over the American embassy in Tehran and held 52 

U.S. diplomats hostage. The crisis would last 444 days, with President Carter’s efforts to secure 

release of the hostages failing until long after the election. (The hostages were released on 

Inauguration Day, January 20, 1981.) In addition, Carter was undermined by steep inflation, high 

interest rates, and his ineffective response to the Soviet Union’s 1978 intervention in Afghanistan. 

His Republican opponent, former Governor Reagan, exuded confidence and offered an optimistic 

view of what would happen to the Nation if he became President. Governor Reagan, with primary 

campaign rival George H. W. Bush as the Vice Presidential candidate, defeated President Carter by 

a landslide. Reagan won the popular vote by almost 10 percentage points (43.9 million to 35.4 

million) and received 489 electoral college votes (representing 44 States) to 49 for Carter. In 

addition, the Republicans took control of the Senate. 

Carter’s unpopularity was a significant factor in his defeat, but credit also must be given to the new 

President, as Burns pointed out: 

In fact, Reagan won the election by persuasive appeals to the right-wing vote and to 
disaffected independents, full exploitation of the remarkable direct-mail and fund-raising 

apparatus of the Republican national party, and his skillful coalition building between GOP 

regulars and movement conservatives, as reflected in the choice of George Bush for running 

mate. [Crosswinds, p. 638] 

The incoming President established transition task forces to evaluate government agencies. Former 

Secretary Brinegar, an oil company executive who had been Secretary of Transportation under 

Presidents Nixon and Ford (1973-1975), headed the 16-member transportation task force. It 

included Andrew L. Lewis, Jr., who would serve as Secretary of Transportation under President 

Reagan; former Nebraska Governor and Federal Highway Administrator Norbert T. Tiemann 

(1973-1977); Frank C. Herringer, a former Urban Mass Transportation Administrator (1973-1975); 

and John W. Snow, who had served in several capacities in the Office of the Secretary of 

Transportation (1972-1975) and would go on to head the railroad giant CSX before serving as 

Secretary of the Treasury under President George W. Bush (2003-2006). 

The task force, which released its report on December 27, 1980, recognized the importance of the 

Interstate System, but recommended that construction be brought to an end. Less than 4 percent of 

the mileage remained to be built (1,547 miles of 42,500 miles), with much of it facing substantial 

environmental and cost obstacles. One unidentified committee member told reporters, “There 

needs to be a process to bring all this to a close, and that would probably cause a lot of these things 

not to be built.” The Federal Government should ensure the System is maintained. 

The report spelled out principles to guide the incoming Secretary of Transportation. Transportation 

should be provided by the private sector as much as possible, with the Federal Government 

involved only when a clear need is evident that cannot be provided otherwise. Federal 

transportation programs should be based on user fees so outlays can be recovered from the 

beneficiaries of the expenditures. The task force endorsed the Highway Trust Fund, initiated in 

1956, to support the highway system and recommended increasing the gas tax by 4 cents a gallon 

to ensure its solvency. Each class of beneficiaries should pay into the fund based on their use of 

the network. The Federal-aid highway program should be simplified by consolidating more than 

20 funding categories. 

The task force also concluded that the Federal Government had exhausted its ability to increase 

automobile safety at reasonable social cost. The report expressed reservations about airbags and 

other “passive” restraints as well as automobile recalls. The task force also was skeptical of the 

nationally mandated 55 mph speed limit enacted in January 1974 amidst the initial energy crisis, 

but did not call for eliminating the restriction. 

Major revisions in Federal mass transit programs were needed according to the task force. New 

rail starts should be discouraged while Federal operating subsidies should be eliminated. Modest 

support for upgrading established rail systems should continue, but the bus purchase program 

should be continued. Formula Federal-aid transit funds should be distributed based on transit 

ridership. 

Better Roads magazine described the task force’s report as “containing recommendations generally 

considered ‘reassuring’ to the money-plagued highway industry.” If the recommendations were 
followed, “the highway departments, at all levels, should find the allocation reductions and budget 

balancing threats of the Carter program no longer a continuing worry.” [“Reagan Task Force 

Report Called Reassuring to Hiway Departments,” Better Roads, February 1981, p. 8; “Reagan 

Team Urges New Highway Policy,” The New York Times, December 28, 1980] 

The Burden of Stagflation 

When former Governor Reagan took office as President of the United States on January 20, 1981, 

the Nation faced one of the worst recessions since the 1930’s. It was the inevitable result of a 

change in direction by the Federal Reserve Board under Chairman Paul Volcker. He was trying to 

get the country out of the grip of "stagflation," a term coined in the 1960’s to describe a period of 

stagnation and inflation characterized by slow growth and high unemployment. After being 

appointed by President Carter in 1979, Volcker began reining in the money supply that had been 

growing too quickly and was fueling inflation. 

The immediate impact included high unemployment and declines in stock prices, but as financial 

historian John Steele Gordon states, “Benefits were not long in coming.” He said: 

Inflation began to break. Inflation had raged at 13.5 percent in 1980. The next year it was 

at 10 percent. In 1982 it was 6.2 percent, the lowest since the early 1970s. In 1983 it was 

4.1 percent. It averaged less than that for the rest of the decade. [Gordon, John Steele, An 

Empire of Wealth: The Epic History of American Economic Power, Harper Collins 

Publishers, 2004, p. 396] 

As a result, the stagflation that had been undermining the Nation’s economy since the 1960’s 

would finally be out of the way by 1983. However, the first 2 years of the Reagan Administration 

were clouded by the economic downturn that was the consequence of Volcker’s bitter cure. 

To address these problems, the President embraced “supply-side economics,” as described to him 

in a January 1980 meeting, early in his presidential campaign. Several younger conservatives–

Representative Jack Kemp (R-NY), economist Arthur Laffer, and journalist and commentator Jude 

Wanniski—explained that putting money in taxpayers’ pockets by tax cuts would jumpstart the 

economy and lift it to new heights while increasing Federal revenues, as demonstrated via a graph 

known as the “Laffer Curve.” 

According to David Stockman, the President’s first Director of the Office of Management and 

Budget, when Kemp, Laffer, and Wanniski explained their theories to Reagan, they “set off a 

symphony in his ears. He knew instantly that it was true and would never doubt it a moment 

thereafter.” [Stockman, David A., The Triumph of Politics: The Inside Story of the Reagan 

Revolution, Avon, January 1987, p. 10] 

Supply-side economics fit perfectly with the President’s agenda, which embodied conservative 

movement ideas that had taken shape in the 1950’s and been filtered through the polarizing era of 

President Nixon’s years in office (1969-1974). The new President said he would cut taxes and 

regulations, balance the budget, dismantle the New Deal/Great Society bureaucracy and shift power 

to the States, reduce expenditures for domestic programs while increasing defense spending, 
empower the private sector, and save billions by cutting waste, fraud, and mismanagement. 

One of Reagan’s Republican rivals for the nomination, George H. W. Bush, had referred to the 

supply-side theory as “voodoo economics.” He was now the Vice President. Stockman’s former 

mentor, Representative John B. Anderson (R-Il.), running as a moderate independent candidate for 

President, claimed that the only way to cut taxes, raise defense, and balance the budget was with 

“smoke and mirrors.” Anderson ran third in the general election with 6.6 percent of the popular 

vote and zero electoral votes. [Triumph, p. 55] 

After the election, the President-elect’s team combed through the budget for Fiscal Year (FY) 1982 

to identify savings. The President-elect wanted to propose $40 billion in cuts shortly after taking 

office, but he limited the percentage of the budget that Stockman could review. Stockman met with 

the President-elect the first of January 1981 to discuss budget cuts beyond the President-elect’s 

mantra of “waste, fraud, and mismanagement.” In an interview with Washington Post reporter 

William Greider, Stockman said he described the “dire shape” of the Federal budget. Greider 

reported: 

“Do you have any idea what $40 billion means?” he asked. “It means I’ve got to cut the 

highway program. It means I’ve got to cut milk-price supports. And Social Security 

student benefits. And education and student loans. And manpower training and housing. It 

means I’ve got to shut down the synfuels program and a lot of other programs. The idea is 

to show the magnitude of the budget deficit and some suggestion of the political problems. 

Forty-eight percent of the budget was for Social Security, pension checks, welfare checks for the 

dependent, and others–the President put the “social safety net” off limits. Another 25 percent was 

for the Pentagon; the President had pledged to increase the defense budget. Ten percent went to 

interest payments on the national debt—payments that had to be made. Stockman would have to 

find $40 billion in cuts from the remaining 17 percent. During the campaign, the President had 

assured the public that eliminating “waste, fraud, and mismanagement” would be sufficient to 

balance the budget, but Stockman knew that would not be the case. [Greider, William, “The 

Education of David Stockman,” The Atlantic, December 1981] 

Stockman, the Cabinet Secretaries, and their staffs had worked to find the desired cuts until 

February 18, 1981, when the President addressed a joint session of Congress to discuss his 

economic recovery plan. Speaking at about 9 p.m. in the House Chamber, the President laid out the 

problem facing the country: 

All of us are aware of the punishing inflation which has for the first time in 60 years held to 

double-digit figures for 2 years in a row. Interest rates have reached absurd levels of more 

than 20 percent and over 15 percent for those who would borrow to buy a home. All across 

this land one can see newly built homes standing vacant, unsold because of mortgage 

interest rates. 

Almost 8 million Americans are out of work. These are people who want to be productive. 

 But as the months go by, despair dominates their lives. The threats of layoff and 

unemployment hang over other millions, and all who work are frustrated by their inability 
to keep up with inflation . . . . 

Can we, who man the ship of state, deny it is somewhat out of control? Our [total] national 

debt is approaching $1 trillion . . . . The interest on the public debt this year we know will 

be over $90 billion, and unless we change the proposed spending for the fiscal year 

beginning October 1st, we'll add another almost $80 billion to the debt. 

Adding to our troubles is a mass of regulations imposed on the shopkeeper, the farmer, the 

craftsman, professionals, and major industry that is estimated to add $100 billion to the 

price of the things we buy, and it reduces our ability to produce. The rate of increase in 

American productivity, once one of the highest in the world, is among the lowest of all 

major industrial nations. Indeed, it has actually declined in the last 3 years. 

To counter this economic situation, the President proposed a comprehensive four-point program 

“aimed at reducing the growth in government spending and taxing, reforming and eliminating 

regulations which are unnecessary and unproductive or counterproductive, and encouraging a 

consistent monetary policy aimed at maintaining the value of the currency.” Lou Cannon, who 

covered Governor and President Reagan as a reporter and biographer, summarized the four-point 

proposal: 

 A budget reform plan to cut the rate of growth in federal spending. 

 A series of proposals to reduce personal income tax rates by 10 percent over three years and 

to create jobs by accelerating depreciation for business investment in plant and equipment. 

 A far-reaching program of regulatory relief. 

 And, in cooperation with the Federal Reserve Board, a new commitment to a monetary 

policy that will restore a stable currency and healthy financial markets. [Cannon, Lou, 

President Reagan: The Role of a Lifetime, PublicAffairs, 2000, p. 199] 

President Reagan told Congress that the full plan, if enacted, would create 13 million jobs, “nearly 

3 million more than we would have without these measures,” and help the country gain control of 

inflation. 

Based on the urgent review directed by Stockman, the President proposed to reduce Federal 

spending by $41.4 billion in FY 1982. For example, he would terminate the Economic 

Development Administration, convert some programs to block grants to reduce wasteful 

administrative overhead and give State and local officials greater flexibility, and refocus, reduce, or 

reorganize such programs as Food Stamps, school breakfasts and lunches, Trade Adjustment 

Assistance, Medicaid, the space program, the Postal Service, and others. He also planned to target 

waste and fraud. He said: 

Politically, the plan is not that radical. We’re just repealing about 10 or 12 years of 

accretion in terms of government’s share of national income, marginal tax rates and loosely 

conceived programs that have cropped up all over. 

The President submitted his plan to Congress the same day in a 281-page message titled America’s 

New Beginning: A Program for Economic Recovery. Although economists, editorialists, 
columnists, and others debated the plan in the press polls, indicated the public generally liked what

they heard. 

While the White House worked with the House and Senate to craft legislation implementing tax 

cuts and budget reductions, Stockman launched a second more detailed round of budget discussions 

in March. The goal this time was $13 billion in FY 1984 cuts and $62 billion over 5 years. He 

quickly “discovered the glory days of the Cutting Room were over.” He found that, “Resistance 

began to crop up everywhere, both within the Cabinet and on the Hill.” In his memoir of the 

Reagan Revolution, Stockman said: 

In its totality, it amounted to a counter-revolution—a broad range of political signals that 

the free market and anti-welfare state premises of the Reagan Revolution were not going to 

take root . . . . But almost before we had gotten started on these new cuts, political reality 

blew a large hole in the side of the cuts we’d already sent to Capitol Hill—and I barely 

knew it happened. 

His struggles over the Federal-aid highway and transit programs were illustrative: 

One of my basic fiscal principles was that the federal government had no business repairing 

or building local city streets, country roads, bridges, or mass transit systems. They served 

the local populace and benefited only local economies; the local taxpayers should therefore 

pay for them. Money that came from Washington on a skyhook had an invitation to indulge 

in waste and excess written all over it. It was the pork barrel at its grandest and most 

wasteful. 

He considered transit operating subsidies “a special abomination” that had the effect of raising “the 

already monopoly level wages of local transit workers—or to reduce arbitrarily the transit fares 

paid by rich and poor alike.” Transit capital grants, he said, encouraged “the construction of new 

subway systems all over the country, when there was no hope that these economic white elephants 

could ever pay for even their operating costs, let alone the billions it cost to build them.” City 

officials and chambers of commerce “were tripping over each other to get in line at Uncle Sam’s 

money kitchen.” 

When Stockman laid out his plans to scrap local highway and transit subsidies, Secretary Lewis 

“turned completely white.” Stockman summarized the Secretary’s view: 

I was proposing to touch off a political firestorm by disrupting the flow of $14 billion per 

year of federal gravy to governors, mayors, contractors, and unions . . . . 

Lewis finally said, Okay, why not raise the federal gasoline tax modestly and let the states 

preempt a share of it? He felt this compromise would make it politically feasible to 

eliminate $20 billion—nearly 30 percent of the built-in spending on these programs—over 

the next five years. 

The idea of preemption had been suggested many times before—the Federal Government would 

yield gas tax revenue to States that increased their gas tax by an equivalent amount to gain full 
control of the money, without the strings that came with Federal dollars. The problem with 

preemption was that many Governors and State legislatures were opposed to raising taxes, 

whatever the reason. 

When the gas tax idea was leaked to the press, the White House made clear that, “No one was 

authorized to talk about tax increases on Ronald Reagan’s watch, no matter what kind of tax, no 

matter how justified it was.” 

The dispute with Lewis was a harbinger of things to come for Stockman. “It was a dramatic case 

of everything staying the same, but it would be one of many.” [Triumph, p. 148-150, emphasis in 

original] 

On March 17, 1981, Secretary Lewis submitted a proposal to Congress for extending the Federalaid highway program, then authorized only through FY 1982, through FY 1986. The proposal 

reflected the conservative goals Stockman had expressed and that Reagan espoused about restoring 

the proper balance between the Federal and State governments. It placed a high priority on 

activities of national interest, such as completing and preserving the Interstate System, while 

eliminating programs of primarily State or local interest. 

To accelerate Interstate completion, construction funds would be limited to building highways to a 

minimum level of acceptable service (20-year pavement design, full control of access, not less than 

four lanes in rural areas and urban areas under 400,000 population, and up to six in larger urban 

areas). The 3R program (“resurfacing, restoring, and rehabilitating”), initiated by the Federal-Aid 

Highway Act of 1976, would be expanded to 4R, with the fourth R being “reconstruction.” States 

could use I-4R funds for the excluded items or continue to use the funds only for projects covered 

by the 3R program. 

The proposal also recommended retaining the Federal-aid primary system and the Highway Bridge 

Replacement and Rehabilitation Program, both deemed high national priorities. However, funds 

were eliminated for the Federal-aid secondary and urban systems as well as other categorical or 

special interest programs, including economic growth center development highways, the Great 

River Road, bicycle transportation and pedestrian walkways, and several safety programs. 

Secretary Lewis, in transmitting the proposal to Congress, explained the philosophy behind it: 

Completion of the Interstate System and the preservation of this system is the highest 

Federal priority. The Primary system is also of national significance and will continue to 

receive high levels of Federal funding. State and local governments should have the 

principal responsibility for highways systems which are not of national significance. 

He added that the proposal would produce budget savings of approximately $11.2 billion through 

1986, compared with the Carter Administration’s proposal. (The Reagan proposal did not include a 

transit element.) 

The new Federal Highway Administrator, Ray A. Barnhart, emphasized these points in a 

communication to employees. Barnhart, a former Texas Highway Commissioner (1979 until taking 
his Federal position) who had been Co-chairman of Texas for Reagan in the 1976 president 

primary, said that the election had created “a new sense of purpose and hope in Washington and 

throughout the nation.” It gave President Reagan a mandate that “caring citizens will no longer 

tolerate the expansion of powers of the Federal government and the accompanying diminishment of 

personal freedoms.” To restore the economy, the President had sent Congress a “comprehensive 

legislative program” that included an across-the-board series of budget and tax cuts, plus regulatory 

reform. Special interests would “put up a staunch fight to resist this departure from business-asusual government and thereby cripple our last best change to get out of the mess we’re in.” 

The proposal for reauthorizing the Federal-aid highway program was based on an analysis of “the 

extent and necessity of Federal involvement in all of the highway programs.” After summarizing 

the details of the proposal, he concluded: 

The budget we have recommended to Congress is one I’m proud to advocate. It is one 

which, in the total picture, will well serve our country and our highway constituency. It is 

consistent with the November mandate to reorder our priorities and restore the balance of 

power between the various levels of government. [Barnhart, Ray A., “Where We Are 

Going: How We Will Get There,” FHWA News, May 1981, p. 1, 3] 

As with similar proposals from Presidents Nixon, Ford, and Carter, President Reagan’s proposal 

was contrary to the interests affected by any highway bill. The highway interests could find little to 

support after working for decades to build a Federal funding role. A constituency for less or no 

funding did not materialize. 

Although the proposal would not receive serious consideration, Congress was developing new 

multi-year surface transportation legislation. With the House in Democratic hands and the Senate 

controlled by pro-Administration Republicans, the measure faced challenges that did not usually 

affect Federal-aid legislation. Moreover, the newly Republican Senate was moving slowly on 

many issues, making the fate of the proposal harder to predict. 

The rumor about the gas tax increase floated by Secretary Lewis, though not part of the 

Administration’s proposal, resonated within the highway community. 

Leading the Nation Out of the Economic Swamp 

The economy entered a severe recession in July 1981, largely as a result of the Federal Reserve 

Board’s attempt to wring inflation out of the system. Unemployment rose, banks and savings and 

loan institutions experienced hardships and failures, and questions were raised about the direction 

the country was headed. 

Through the summer, the White House and Congress had conducted tedious negotiations on the 

shape of the legislation implementing the President’s February proposals on tax and budget cuts. 

The work had been completed in June when a Conference Committee of the House and Senate put 

the finishing touches on the companion bills. The legislation cleared Congress in June, and was 

ready for the President’s signature on August 13. With the downturn fresh in everyone’s mind, the 

President would sign the Economic Recovery Tax Act of 1981 and the Omnibus Budget 
Reconciliation Act of 1981 at his ranch in the Santa Ynez Mountains of California. 

Rancho del Cielo (“Sky” or “Heaven’s Ranch) would have been a scenic spot for a signing 

ceremony if fog had not rolled in on the morning of August 13. After joking that the weather had 

been perfect until the reporters showed up, the President made brief comments about the bills he 

was about to approve: 

These bills that I'm about to sign—not every page—this is the budget bill, and this is the tax 

program—but I think they represent a turnaround of almost a half a century of a course this 

country's been on and mark an end to the excessive growth in government bureaucracy, 

government spending, government taxing. 

And we're indebted for all of this—I can't speak too highly of the leadership, Republican 

leadership in the Congress and of those Democrats who so courageously joined in and made 

both of these truly bipartisan programs. But I think in reality, the real credit goes to the 

people of the United States who finally made it plain that they wanted a change and made it 

clear in Congress and spoke with a more authoritative voice than some of the special 

interest groups that they wanted these changes in government. 

This represents $130 billion in savings over the next 3 years. This represents $750 billion 

in tax cuts over the next 5 years. And this is only the beginning, because from here on now 

we are going to have to implement all of these, and it's going to be a job to make this whole 

turnaround work. It's going to be the number one priority—or continue to be the number 

one priority of our administration. 

After signing the bills into law, the President then asked if the reporters had any questions about 

the legislation: 

Q. Mr. President, the Wall Street Journal carried a story yesterday that the revenue 

projections which you will be getting are going to be lower than your administration 

previously thought, and that means we're headed for a more severe economic downturn with 

higher interest rates. Are you ready to revise your own projections about the economy 

downward? Are we headed for a recession? 

The President. I don't know whether you'd call it a recession or not, but they're not saying 

anything that we haven't said over and over again. Our own projections have been that for 

the next several months this soft and soggy economy is going to continue and that we 

shouldn't be fooled by these last couple of months of seeming upturn, that this means a 

continued climb . . . . This is the budget that begins for the year in October. The tax 

programs, of course, won't be into effect until then either. And what we're counting on is 

when these . . . begin to take effect, that we will see the results when people begin to have 

the more money in their pockets from their earnings and when the lowered expenditures of 

government begin taking effect. 

Most of the remaining questions were on other topics, but one reporter observed that the Governors 

were concerned that without Federal help on the “safety net” programs, the States would not be 

able to take up the slack on other programs being cut. The President was disappointed that he had 
not been able “to get all that we wanted in the line of real block grants and autonomy for local and 

State governments.” The proposed block grants were intended to give the States the flexibility to 

use the funds as they saw fit, especially with the Federal red tape eliminated. He would continue to 

work with Congress and the States “to give them the autonomy they can have to make these 

programs work.” 

In response to a question about projected deficits being larger than expected, the President said he 

expected additional budget cuts in coming years, plus the stimulus of the tax cuts, “to balance the 

budget in ’84.” 

By this time, Stockman had become disillusioned by the Reagan Revolution. He had seen the 

supply-side theory and Laffer Curve and the President’s confidence in them, but also how Cabinet 

officials and Members of Congress, as well as their staff, acted to protect their turf. He saw the two 

bills as a reflection of the dominance of practical politics over theory: 

The conference produced valid budget savings lower than both the Senate and the House 

bills. The resulting 1,000 page document was replete with every loophole, every cut corner, 

every perversion of fine print in the considerable repertoire of the professional staff that 

dominated the conference . . . . 

The Reagan coalition had come eyeball to eyeball with the Reagan Revolution. In the 

political white heat of the hour it had wavered, complained, rebelled, then broken into a 

chaotic and disorderly retreat . . . . So June 26, 1981 [when Congress completed work on 

the bills], marked a historical moment, but not the one which has been ascribed to it. It was 

the day on which the United States Congress reached the limits of its ability—and 

willingness—to reduce spending. 

As he pointed out, the bills had been put together so hastily in the end that the new omnibus law 

included a provision that was simply the telephone number of a House staff aide who helped put 

that page together. [Triumph, p. 246-247] 

With the economy continuing to deteriorate and pressure mounting for additional presidential 

action, Stockman emphasized in budget meetings that the deficit projections were worsening. He 

became frustrated that he could not shake the President’s faith in the Laffer Curve, with its 

prediction of increased revenue thanks to the stimulus of tax cuts. The President also put his faith 

in additional cuts, such as reducing the bureaucracy. “The federal government’s lathered in fat 

when it comes to employment. We should tell all the agencies to the rear march.” [Triumph, p. 

298] 

On September 24, 1981, the President addressed the Nation on his plan to respond to the downturn 

that had begun in July. He began: 

Shortly after taking office, I came before you to map out a four-part plan for national 

economy recovery: tax cuts to stimulate more growth and more jobs, spending cuts to put 

an end to continuing deficits and high inflation, regulatory relief to lift the heavy burden of 

government rules and paperwork, and, finally, a steady, consistent, monetary policy. 
Considerable progress had been made, but the Nation was “just starting down a road that I believe 

will lead us out of the economic swamp we’ve been in for so long.” What was important was “to 

hold a firm, steady course.” Noting that in August he had signed a budget bill that cut $35 billion 

from the 1982 budget and slowed the growth of spending by $130 billion over the next 3 years, he 

said, “we must move on to a second round of budget savings to keep us on the road to a balanced 

budget.” He proposed that Congress reduce the 1982 appropriation for most government agencies 

by 12 percent. No one, he said, would be “exempt from belt-tightening.” 

He proposed to shrink the size of the non-defense payroll by 75,000 employees, dismantle the 

Departments of Energy and Education, reduce Federal loan guarantees, move forward with a new 

package of entitlement and welfare reform measures, and urge Congress to eliminate abuses and 

obsolete incentives in the tax code. (Regarding the Department of Energy, he said, “we don’t need 

an Energy Department to solve our basic energy problem. As long as we let the forces of the 

marketplace work without undue interference, the ingenuity of consumers, business, producers, and 

inventors will do that for us.”) 

He also discussed the value of user fees: 

I'm renewing my plea to Congress to approve my proposals for user fees—proposals first 

suggested last spring but which have been neglected since. 

 

When the Federal Government provides a service directly to a particular industry or to a 

group of citizens, I believe that those who receive benefits should bear the cost. For 

example, this next year the Federal Government will spend $525 million to maintain river 

harbors, channels, locks and dams for the barge and maritime industries. Yacht owners, 

commercial vessels, and the airlines will receive services worth $2.8 billion from Uncle 

Sam. My spring budget proposals included legislation that would authorize the Federal 

Government to recover a total of $980 million from the users of these services through fees. 

Now, that's only a third of the $3.3 billion it'll cost the government to provide those same 

services. 

He asked the public to join “in this crusade to save our economy” by letting Congress know that 

“you will support them in making the hard decisions to further reduce the cost and size of 

government.” He concluded: 

We’re launching a nationwide effort to encourage our citizens to join with us in finding 

where need exists, and then to organize volunteer programs to meet that need. We’ve 

already set the wheels of such volunteer effort in motion. As Tom Paine said 200 years ago, 

“We have it within our power to begin the world over again.” What are we waiting for? 

Biographer Richard Reeves said of the President who was known as the Great Communicator: 

“Words did fail Reagan this time.” It was, Reeves said, a “speech of small things” and “wrong or 

misleading or missing statistics.” He quoted editorials in The New York Times (“Tinkering”) and 

The Baltimore Sun (“Reagan in Retreat”). Wall Street “wanted actions not words on reducing the 

deficit”; the Dow Jones Industrial Avenue dropped 11 points the next day to 824, “just about 200 
points below where it was shortly after Reagan took office.” [Reeves, Richard, President Reagan: 

The Triumph of Imagination, Simon and Schuster Paperbacks, 2006, p. 92-93] 

Stockman characterized the reaction in similar tones: 

In the days after the President’s September Offensive speech, the political and economic 

facts of life pounded away at what remained of the Reagan Revolution. Congress and the 

White House became stalemated. “With his speech last night,” wrote David Broder [of The 

Washington Post], “President Reagan came down from the stratosphere of last spring’s 

euphoric first round of budget cutting and into the trench warfare most of his predecessors 

have faced when they challenged deeply embedded Congressional attitudes and interestgroup pressures.” 

Stockman quoted Senator Mark O. Hatfield (R-Or.), Chairman of the Committee on 

Appropriations, as saying, “Compared to last summer, there are no rubber stamps in this 

Congress.” The goal had been to reduce the 1984 deficit by $75 billion, but now “the deficit 

estimate had increased by an order of magnitude—to $150 billion.” 

Stockman briefed the President and senior staff “on this radical transformation,” projecting “nearly 

$400 billion in red ink for 1982 to 1984.” Officials from the Administration and Congress met 

with the President to express their views on the budget, but with out changing his mind. [Triumph, 

p. 360-361, 369] Historian James MacGregor Burns summarized the President’s reaction to the 

attempts by Stockman and his staff to explain the need to increase revenue: 

Time and again emergency budget meetings in the Oval Office were trivialized as the 

President retreated into anecdotage about timeserving bureaucrats or wasteful projects. 

Stockman noted that when Pete Domenici, a Republican Senator [from New Mexico] 

friendly to the White House, confronted Reagan with the need to raise taxes [on November 

6, 1981], the President jotted down notes during the presentation but only in order to rebut 

it. . . . . “I’m just not going to accept this. This is just more of the same talk we’ve heard 

for forty years.” [Crosswinds, p. 640, Triumph, p. 380-381] 

A Chance to Rethink Priorities 

The proposed 12-percent budget cut, coming as Congress was trying to complete action on the 

multi-year Federal-aid highway reauthorization package, created uncertainty about the size of the 

highway and transit programs. Moreover, the House and Senate were moving in different 

directions. 

On September 24, before the President’s address, the House had approved a 1-year reauthorization 

intended to give Congress time to decide in 1982 on a multi-year bill. The House adopted the 

Administration’s proposals regarding the Interstate System, including I-4R funding. Chairman 

Glenn Anderson (D-Ca.) of the House Transportation Subcommittee said the committee would 

undertake a thorough study of transportation needs prior to developing multi-year legislation in 

1982. 
The Senate, however, was developing a multi-year bill to fund the program through FY 1990, 

largely along standard lines, but including the Interstate completion changes and expanded 

Interstate 4R program. [“Budget Cuts Slow Highway Legislation; More State Initiative in New 3R 

Rules,” Better Roads, November 1981, p. 6] The Senate passed its bill in November. 

With little time left to resolve differences between the two bills before adjournment on December 

16, 1981, Congress decided to postpone consideration of a multi-year reauthorization. Another 

reason for the decision was that FHWA had been able to apportion 1982 non-Interstate funds at the 

start of the fiscal year (October 1, 1981), but not Interstate construction funds in the absence of 

legislation adopting the 1981 Interstate Cost Estimate (or ICE—compiled from State data, the ICE 

was used to establish apportionment factors based on Interstate completion needs per State 

compared with overall needs). 

With nearly 20 States running out of Interstate construction funds, Congress passed the Federal-Aid 

Highway Act of 1981. President Reagan approved it on December 29, 1981, without ceremony or 

statement. It approved the 1981 ICE and authorized apportionment of FY 1983 Interstate 

construction funds. (Interstate construction funds were apportioned one year in advance of the 

fiscal year for which they were authorized.) 

In addition, the 5-page law adopted the Administration’s proposals for Interstate System. It 

redefined "completion" to focus Interstate construction funds on getting the remaining mileage 

open. The legislation added the fourth R to Interstate 3R and made Interstate 4R funds available by 

formula, with each State transportation department deciding which projects to develop within 

Interstate 4R funding limits. The 1981 Act also increased the Federal share of Interstate 4R 

projects from 75 percent to 90 percent, the same percentage applied to Interstate construction 

projects. 

By adopting the Administration proposal, Congress took the potentially controversial Interstate 4R 

concept off the table in 1982, eliminating an issue that could have delayed action on the multi-year 

bill. T. Randolph Russell, Public Affairs Director for the American Road and Transportation 

Builders Association, pointed out: 

The Interstate 4R program has great appeal and almost universal support . . . . Although the 

concept has had general support for several years, strong differences of opinion have 

emerged as the precise statutory provisions were developed. 

One area of dispute, he said, had been over which categories of work would be shifted to Interstate 

4R. Another involved the matching ratio. “The House bill provided 90-10 matching, while the 

Senate, firmly committed to the principle that the states have a responsibility to maintain their 

Federal-aid roads, felt that 70-30 matching was generous enough.” Disagreements also arose over 

the apportionment formula for Interstate 4R funds. The formula in the 1981 Act (apportionment 

based 55 percent on Interstate lane miles and 45 percent on vehicles miles of traffic) was for 1 year 

only, with debate likely to continue as each member of the House and Senate calculated how 

changes in the formula would benefit or harm his or her State. [Russell, T. Randolph, 

“Congressional Bipartisan Cooperation Feature of Federal-Aid Highway Act,” Better Roads, 

February 1982, p. 37] 
Summarizing the bill, FHWA News said in the February 1982 issue, “The combined features of the 

Interstate 4R Program will provide for an effective transition into the post-Interstate construction 

era.” The bill was a compromise that gave all parties a chance to rethink their positions. President 

Reagan would take advantage of the opportunity. 

Untangling the Jungle of Grants-in-Aid

In his first State of the Union Address (delivered early in his second year in office, January 26, 

1982), the President promised: 

I will seek no tax increases this year, and I have no intention of retreating from our basic 

program of tax relief. I promise to bring the American people—to bring their tax rates 

down and to keep them down, to provide them incentives to rebuild our economy, to save, 

to invest in America’s future. I will stand by my word. 

For the highway community, this statement seemed to end the possibility, however slim, of an 

increase in the gas tax. 

President Reagan also discussed “the jungle of grants-in-aid” and favorably quoted an unnamed 

Democratic Governor who “put it recently: The National Government should be worrying about 

‘arms control, not potholes.’” He said: 

Our citizens feel they've lost control of even the most basic decisions made about the 

essential services of government, such as schools, welfare, roads, and even garbage 

collection. And they're right. A maze of interlocking jurisdictions and levels of 

government confronts average citizens in trying to solve even the simplest of problems. 

They don't know where to turn for answers, who to hold accountable, who to praise, who to 

blame, who to vote for or against. The main reason for this is the overpowering growth of 

Federal grants-in-aid programs during the past few decades. 

He proposed to solve the problem in “a single, bold stroke” by returning “some $47 billion in 

Federal programs to State and local government, together with the means to finance them” over a 

10-year period. Excise taxes would go into a grass roots trust fund “that will belong in fair shares 

to the 50 States.” He described how the States would use the fund: 

If they want to continue receiving Federal grants in such areas as transportation, education, 

and social services, they can use their trust fund money to pay for the grants. Or to the 

extent they choose to forgo the Federal grant programs, they can use their trust fund money 

on their own for those or other purposes. 

The States would be in complete control of over 40 grant programs by 1988. 

William Nickel, eastern editor of Better Roads magazine, described how the New Federalism 

proposal would affect the highway program: 
As defined, the administration’s federalism program is essentially a revised federal/state 

partnership under which the states acquire more initiative and authority, and a 

corresponding increase in responsibility including the financial burden of the programs 

turned back. 

More than 40 categorical and block grant programs would be turned back, including non-Interstate 

highways, airports, and local mass transit: 

To soften the financial impact on the states, a $28 billion annual federalism trust fund will 

provide nearly dollar-for-dollar financing through FY 1987. In FY 1988, federal grant 

programs will begin to terminate, and trust fund payments and excise taxes will decline by 

25% each year. 

The fund would be financed “from existing federal alcohol, tobacco, telephone, motor fuel (2 cents 

only), and part of the oil windfall taxes.” The transportation portion of the $28-billion fund was 

$6.4 billion earmarked for local transportation. [Nickel, William, “Prospects for Increased Road 

Revenues Dimmed by Reagan Program, No Tax Increase,” Better Roads, March 1982, p. 9] 

In a 1990 article about presidential proposals to restructure the Federal-aid highway program in the 

era of Nixon, Ford, Carter, and Reagan, Elizabeth Parker, a Senior Policy Analyst in the U.S. 

Department of Transportation (DOT), wrote about the reaction to the highway portion of the 

proposal: 

In his 1982 State of the Union address, President Reagan proposed that highway and transit 

programs, except the Interstate, be "turned back" to the states. Half of the federal gas tax 

receipts would be made available to the states "to pick up." Generally, there was little 

support on Capitol Hill or among interest groups. The Governors' Association calculated 

that the proposal would turn over highway programs costing about $5.2 billion in FY 1982 

and transit programs amounting to $3.1 billion, while providing only $2.2 billion in 

revenues. Thus . . . the administration proposed a package that allowed flexibility, but in 

exchange, required states to enact taxes and take on more programs than the turned back 

taxes would pay for. It received no serious attention. 

Richard Williamson, assistant to the President for Intergovernmental Affairs, later said "I 

think now it was a strategic error to put the federalism initiative on the table at the same 

time we were trying to get cuts out of a budget that had already suffered. . . . It poisoned 

the well for the federalism discussion because the mayors and governors were so concerned 

they were going to be left holding the bag with a recession coming on." William Hudnut, 

the Republican mayor of Indianapolis, and head of the National League of Cities during 

some of the bargaining with the White House, said the federalism initiative was not going 

anywhere and was tantamount to saying "Here, the ship is sinking, you take over." [Parker, 

Elizabeth, “Major Proposals to Restructure the Highway Program,” Transportation 

Quarterly, January 1991] 

While the Administration was promoting New Federalism, the “crumbling infrastructure” crisis 

that had begun in the wake of the 1970’s oil shocks continued to receive media attention. With gas 
tax revenue and high inflation in the construction industry, many States has been unable to keep up 

with maintenance needs on aging highways and bridges. Some headlines illustrate how the media 

was covering the growing concern: 

 "As the Interstates Near Completion, U.S. Faces Huge Road-Repair Bill," The Wall Street 

Journal, January 31, 1978. 

 "America's Highways: Going to Pot," U.S. News and World Report, July 24, 1978. 

 "Cures for America's Dying Highways," Reader's Digest, April 1982. 

 "The Decaying of America," Newsweek, August 2, 1982. 

The Newsweek cover story included a sampling of the nation’s worst infrastructure problems, 

spanning highways, city streets, bridges, transit, railroads, water and sewage systems, dams, and 

public buildings. For highways, the article stated that the Interstate System would need $33 billion 

worth of repairs in the next decade, but the Highway Trust Fund “has been sorely depleted with the 

advent of smaller, more fuel efficient cars” that reduced the amount of gas consumed and gas tax 

paid. Conditions were even worse, the article added, “on the larger network of primary and 

secondary roads.” As for city streets, “the record-cold winter of 1982 left a plague of [potholes]—

1 million, by some counts, in Chicago alone.” Deficient bridges totaled 45 percent of the total, 

with needed repairs estimated to cost $47.6 billion. The article quoted Secretary Lewis as saying, 

“We’re living on our laurels of the 1950s and 1960s,” and concluded: 

In past decades public works made America a nation of highways, of automobiles, of vital 

cities and water systems that are the envy of the world. Today’s hard choices will 

determine the shape of America in the decades to come. [“The Decaying of America,” 

Newsweek, August 2, 1982, p. 12] 

Inflation was part of the problem, as transportation historian Mark H. Rose pointed out: 

During the period 1973-1981, the costs of highway construction and maintenance had more 

than doubled, consuming part of the nation’s highway budget; and the additional expenses 

made necessary by environmental requirements such as noise walls further reduced the 

ability of engineers to construct new roads. But in the face of rapid price increases through 

1980 for such basic items as housing and gasoline, political leaders in many states refused 

to increase gasoline and other highway-related taxes . . . . [Rose, Mark H., Interstate 

Express Highway Politics: 1939-1989 (Revised edition), The University of Tennessee 

Press, 1979, p. 113] 

As reflected in Stockman’s account of early budget fights, Secretary Lewis had concluded early on 

that an increase in the 4-cents a gallon gas tax, which had not been increased since 1961, was 

needed to restore highways and bridges. President Reagan, who was promoting tax and budget 

cuts, rejected the pleas by Secretary Lewis in fall 1981 and early 1982, but did authorize Lewis to 

reach out to transportation interests and Congress to explore support for an increase. Lewis and 

Barnhart took advantage of this clearance to do just that. 

One opportunity to make the case for the increase came on January 12, 1982, when President 

Reagan visited the DOT headquarters at 400 Seventh Street, SW., to meet with members of the 
Department’s Senior Executive Service. He told them, “The theme of our administration is a new 

beginning, a national renewal that will make America great again; and for that, we need a spirit of 

renewal and excellence in all of government.” In just his first year in office, he said, “We’ve cut 

waste, eliminated redtape, and provided better services to the American taxpayers.” 

He also told the executives that, “good tax policy is one in which, as much as possible, the tax that 

funds a service is levied on those who benefit from the service.” He thanked the executives for 

their “leadership in developing the transportation user-fee concept [which] will more equitably 

distribute the cost of transportation among those who actually benefit.” 

While in the building, the President met with Secretary Lewis, his top assistants, and the heads of 

the agencies within DOT, including Administrator Barnhart. During the meeting, Barnhart made 

the case for a user tax increase to address the deteriorating condition of the Nation’s highways and 

bridges. 

As permitted by the President and Secretary, Barnhart had been making a similar case before 

groups involved in highway development, always emphasizing that thus far, the gas tax increase 

was a DOT proposal not cleared by the White House. He summarized the argument in his 

“Comments” column in the May 1982 issue of FHWA News. Although a formal proposal for “a 

possible 4-cents increase” in the gas tax had not gone forward, “serious discussion along these lines 

has been taking place at various levels behind the scenes” within the Administration and members 

of Congress. The Nation, he said, was at a critical stage “where increased expenditures are going 

to be necessary to prevent further deterioration of one of our Nation’s most vital economic and 

structural assets.” The cost of postponement will cause the cost of later repairs to escalate. 

Moreover, inflation had quadrupled since the last increase in the gas tax, approved on a temporary 

basis in 1959 and made permanent in 1961: 

Since 1959, the price of a postage stamp has risen from 4 cents to 20 cents; the average 

daily newspaper from 5 cents to 25 cents; and the purchasing power of the 4-cents Federal 

gasoline tax has dropped to the equivalent value of 1 cent. 

He explained that the current proposal was a $5-billion a year increase in revenues, “with $1 billion 

being earmarked for mass transit.” (The 4-cent increase he referred to would be the highway 

portion.) He knew that some people might think the diversion to transit inappropriate, but said, “I 

believe the time has come for us to recognize that highways and transit are inseparable—the two 

modes are interdependent and complementary.” 

Further, Barnhart said, the proposal was consistent, “philosophically and practically,” with 

President Reagan’s economic recovery program. He said, “the Reagan economic program has 

attempted to reduce demands on the general fund, insisting that wherever possible, users should 

pay for the support and services they receive from the Federal Government.” The Highway Trust 

Fund met the test—“we are being consistent with the overall goal of revitalizing the private sector 

of our economy and not adding one penny to the Federal deficit.” [Barnhart, Ray A., “Comments 

from the Administrator,” FHWA News, May 1982, p. 2] 

The argument for the tax increase would be based in part on a report that Secretary Lewis 
submitted to Congress on May 13, 1982. This was the latest in a series of Highway Cost 

Allocation Studies the FHWA had conducted since the first one had been requested by Section 210 

of the Federal-Aid Highway Act of 1956. The report included “an allocation of costs among the 

various highway vehicle classes and an assessment of the current Federal user charges along with 

recommendations on how to make them more equitable.” Based on the current system of user fees 

(which would generate about $7.2 billion in 1985) heavy combination trucks would pay 

substantially less than their share of the cost of rehabilitation and reconstruction, while automobiles 

would pay their fair share. 

As a result, the report recommended that user charges should be graduated more according to truck 

weight. This recommendation would become a controversial part of the Administration’s proposal. 

 [“Cost Allocation Report Goes to the Congress,” FHWA News, July 1982, p. 3] 

The report kept alive hopes for the nickel-a-gallon tax increase, but Congress was awaiting a signal 

from the White House. The Journal of Commerce reported on May 14 that Republicans on the 

House Ways and Means Committee, which must initiate tax changes, “are expected to determine 

the fate of Secretary of Transportation Drew Lewis’ proposal for an increase in gasoline and diesel 

fuel taxes.” The issue was complicated because the proposal included an increase in taxes on 

truckers and diversion of a penny to mass transit: 

It is understood that a majority of Ways and Means Republicans must support or show 

interest in the plan if there is any hope for it to be proposed by the White House. 

The article was written before release of the Highway Cost Allocation Study, but indicated that 

DOT officials confirmed that the Secretary had been holding the report “because it could create 

problems for the tax hike.” Truckers had mixed feelings, according to the article, since the current 

bill would have given them some relief from State weight restrictions they had sought for years. At 

the same time, they had traditionally opposed diversion of highway user tax revenue to transit but 

would reserve judgment until further details came out. 

Chairman James J. Howard (D-NJ.) of the House Committee on Public Works and Transportation, 

“made it perfectly clear to reporters that it is time for a decision to be made and that the White 

House should support the plan.” The article continued: 

In any event, Rep. Howard made no bones about the fact that legislation increasing truck 

size and weight limits that cleared his committee Wednesday [May 12, based on the 

proposed tax increase] must be accompanied by an increase for highway projects. 

Sometimes administrations must take unpopular stands to be sure things are done, he told 

reporters after the highway funding bill cleared the committee Wednesday evening. 

Expectations were that President Reagan would make a decision soon. The article concluded: 

In any event Secretary Lewis is spending today with President Reagan campaigning for 

Republican candidates in Pennsylvania. 
It would be logical to assume, observers commented, that the future of the highway 

proposal might be discussed at some point. [Cawthorne, David M., “Highway Tax Fate in 

Hands of Republicans,” The Journal of Commerce, May 14, 1982] 

President Reagan made his decision on May 18. Secretary Lewis presented the proposal to the 

Cabinet Council on Economic Affairs. According to news reports, he received support from most 

Cabinet members, but not the President’s economic team: Treasury Secretary Donald T. Regan, 

Economic Advisor Murray Weidenbaum, and Budget Director Stockman. They were concerned 

that introducing the proposal would confuse negotiations with Congress over the pending FY 1983 

budget. 

Fred Barnes of The Baltimore Sun reported some of the discussion: 

The president was said to have acknowledged “the need” for the tax during a meeting of the 

cabinet council on economic affairs. But Mr. Reagan expressed the view that the new gas 

tax would “fuzz” the budget issue. 

“Why put in mass transit?” the president asked at one point in the meeting. Mr. Lewis was 

said to have told Mr. Reagan that earmarking one cent of the tax for this would make the 

proposal more politically appealing and might obviate the need for new highways in urban 

areas. 

Secretary of the Interior James G. Watt suggested postponing the issue under after the November 

congressional election “if only to keep it from being overly politicized,” according to Barnes. 

The President rejected the tax increase for now, but left open the possibility he might support it at 

some later date. Secretary Lewis was confident: 

Mr. Lewis was undeterred by the Reagan rejection, insisting that the president will approve 

the proposal later. “This ultimately has to happen,” he said. “It’s a question of when, not 

whether . . . . The bottom line is we just don’t have enough revenues now to maintain a 

good highway system,” the transportation secretary said in an interview [with Barnes]. 

Mr. Lewis said the gas tax increase is salable to the public because it is linked to highway 

repairs. “If we can relate it that way, it’s a salable package,” he said. “This is a program

the public should buy because it’s something we have to do.” 

Despite the Secretary’s optimism, interest groups were disappointed. Edward V. Kiley of the 

American Trucking Associations (ATA) said, “It looks like Drew Lewis had the rug pulled from 

under him for the third time,” while Jack R. Gilstrap of the American Public Transit Association 

said, “It’s a dark day for the users of mass transit.” [Barnes, Fred, “Reagan Lays Aside 5 Cent 

Gasoline Tax Boost for Consideration as Part of 1984 Budget,” The Baltimore Sun, May 19, 1982; 

Cawthorne, David M. “White House Delays Hike in Truck Tax,” The Journal of Commerce, May 

19, 1982; Holsendolph, Ernest, “Tax on Transport Killed in Cabinet,” The New York Times, May 

19, 1982] 
The Palace Coup 

Despite this setback, Lewis would convince the President in late 1982. A key factor was that the 

Nation still was in the severe recession. Through the year leading up to off-year congressional 

elections in November, the economy deteriorated, as did Reagan’s popularity. Reagan’s approval 

ratings dropped as deficits increased, interest rates rose as high as 20 percent, unemployment 

reached 10 percent, even higher for minorities, and the Rust Belt of declining industrial States 

suffered near-Depression conditions. 

Critics compared him to his Republican predecessor, Herbert Hoover (1929-1933), whose actions 

in the early years of the Depression only worsened conditions. Cannon summarized the situation as 

it deteriorated in 1982: 

Reagan, whose jaunty optimism rekindled memories of Franklin Roosevelt, was compared 

in these hard times to Herbert Hoover instead. Arriving at a Minneapolis political fundraiser in February 1982, Reagan was greeted by a banner proclaiming “Welcome President 

Hoover.” In June, organizers for the homeless pitched a ramshackle “tent city” in the 

shadow of the White House and conducted similar encampments in fourteen other cities. 

The tent cities were called “Reagan ranches” and were intended to evoke memories of the 

Depression shantytowns known as “Hoovervilles.” The White House dismissed the protest 

as a publicity stunt, but disillusionment with Reagan’s leadership was evident in the public 

opinion polls. Reagan’s approval ratings, stratospheric after the assassination attempt [on 

March 30, 1981, as the President emerged from a luncheon address to the AFL-CIO at the 

Washington Hilton Hotel] and high throughout the spring and early summer of 1981, 

tumbled with the economy. When the nation edged into recession in midsummer, Reagan’s 

approval rating stood at 60 percent. It fell to 49 percent by year’s end and continued 

dropping. By the end of 1982, only 41 percent of Americans said they approved of 

Reagan’s governance, a substantially lower rating than his four elected predecessors had 

received after two years in the White House. [Cannon, p. 196-197] 

By fall 1982, the off-year election season was underway, with the entire House and one-third of the 

Senate up for reelection. On September 25, 1982, President Reagan had discussed the election in 

his weekly radio address. He described the dire situation he inherited when he took office in 

January 1981, proclaiming that his Administration was “winning the war the experts said was 

hopeless.” Inflation had been cut in half, down to 5.1 percent. As for jobs, unemployment had 

been “averaging 7 percent since 1976.” He explained: 

Rising inflation pushed up interest rates in the late 1970’s, and together they hit us like a 

one-two punch, sending shock waves through the economy . . . . To make matters worse, as 

high inflation and interest rates were crippling the economy’s ability to provide jobs, they 

were forcing more families to seek a second income. Well, this all came home to roost in 

1980, when inflation reached double digits for the second straight year and interest rates 

soared to 211⁄2 percent—their highest peak in more than a century. 

Pointing out that he inherited the economic situation he had just described, he continued: 
I don’t believe that it follows that those who took us to the edge of economic Armageddon 

are automatically best qualified to lecture us now on the most fair, effective way to end the 

crisis. And when those same individuals charge our administration fights inflation by 

putting people out of work, I say they’re exploiting helpless people for their own political 

gain. It’s the most cynical form of demagoguery. 

Creating jobs, he said, “can only come from continued progress against inflation.” Interest rates 

were down to 131⁄2 percent, but he would continue to fight to lower them because “if the public 

senses we’re giving up the fight against inflation, those who lend money will demand higher 

interest rates, and we’ll be right back in the soup with even higher unemployment.” One point he 

wanted to make clear: 

There’s only one major cause of our economic problems: government spending more than 

it takes in and sending you the bill. There’s only one permanent cure: bringing government 

spending in line with government revenues. 

He opposed efforts by liberals who wanted to eliminate the third year of the tax cuts he had 

approved the previous year: 

This will only give government more money to spend, weaken savings, and hurt those who 

need help most—lower- and middle-income taxpayers, the backbone of this country. We’re 

not going to let them do it. We need less spending. 

He endorsed “an historic measure” that had been approved by the Senate and “supported by 80 

percent of the public,” namely a constitutional amendment requiring a balanced budget. The 

measure was stalled in the House. “It’s tragic at this late date that those who controlled the 

Congress for so long and spent us to the brink of bankruptcy are still playing politics with these 

problems and the suffering they caused.” He hoped they would realize that “much more than an 

off-year election is at stake.” 

President Reagan took a strong position on taxes during a press conference on September 28, 1982, 

in response to a question from Helen Thomas, White House Correspondent for United Press 

International: 

Q. Mr. President, your aides are currently at work on a new budget that you'll present to 

Congress next year. Knowing of your great distaste for taxes and tax increases, can you 

assure the American people now that you'll flatly rule out any tax increases, revenue 

enhancers, or specifically an increase in the gasoline tax? 

The President. Unless there's a palace coup and I'm overtaken— [laughter] —or 

overthrown, no, I don't see the necessity for that. I see the necessity for more economies, 

more reductions in government spending. And I can't say anything about the 1984 budget, 

because in 3 days we come to the beginning of the fiscal 1983 year, and we still don't have a 

budget. I haven't had a single appropriation bill to sign as yet, and they're all going to go 

home in a few days. 

On November 2, 1982, voters left the Senate in Republican hands, with no change in the balance 
between Republicans (54) and Democrats (46). However, the Democrats retained control of the 

House of Representatives, gaining 26 seats to increase their numbers to 267 members compared 

with 168 Republicans. 

The following day, the President held a news conference in the Rose Garden to express his 

satisfaction that Republicans had retained control of the Senate, while the losses in the House were 

less than the average for the first off-year election following a change in President. When a 

reporter asked if the President was “going to stay the course with high deficits,” the President 

replied: 

Are we going to stay the course with high deficits? We're going to stay the course, because 

the best way to reduce the high deficits is to continue the reduction of unnecessary Federal 

spending and the necessity of restoring the economic base, because the high deficits have 

come about through several factors. But one of the most important is the high 

unemployment, which has taken people off the tax rolls and at the same time has increased 

the output for subsistence for those people who are penalized by unemployment. So, when 

we can get the economy back working again, that will take care of the revenues that are 

necessary to help us reduce those deficits. 

That month, the Administration was finalizing details of its budget proposal for FY 1984. 

Stockman was trying to convince the President that under the proposal as drafted, “the already 

frightening deficit would soar to $2777 billion by 1986.” The President resisted tax increases to 

reduce the deficit because he was convinced budget cuts would suffice. Stockman had an idea to 

break through the President’s optimism about budget cuts: 

By the end of 1982, the fiscal situation was an utter, mind-numbing catastrophe. 

To convince the President it really was as bad as I was saying, I invented a multiple-choice 

budget quiz . . . . The quiz divided the entire budget up into about fifty spending 

components and gave him three spending-cut choices on each, ranging from a nick to a 

heavy whack . . . . 

The President enjoyed the quiz immensely. He sat there day after day with his pencil. He 

listened to his senior staff and the economic team discuss the relevant policy and political 

ramifications, then announced his choice and marked the appropriate box. 

And rarely chose to make a whack. They were mostly nicks. “Yes,” he would say, “we 

can’t go that far.” Or, “No, we better go for the moderate option or there will be a drumbeat 

from the opposition.” 

When the exercise ended, President Reagan was surprised by the grade Stockman gave him. “After 

making all his cuts, the five-year deficit remained at a staggering $800 billion.” Moreover, “the 

total national debt would reach two trillion dollars by 1988.” When discussion turned to taxes, 

Stockman recounted, the President banged his fist on the table. He said, “I don’t want to hear any 

more talk about taxes. The problem is deficit spending!” 
They continued developing the budget in December, finally convincing the President in early 

January to include a “trigger” tax increase of $50 billion in the FY 1984 budget. The increase 

would go into effect in 3 years if Congress made all the spending cuts he wanted, the economy was 

not still in recession, and recovery had not lowered the deficit to 2.5 percent of gross national 

product or less. Stockman described the scene when the budget was placed before the President for 

approval with the trigger tax in January 1983, 

“You’re telling me this trigger tax is actually going to happen, aren’t you?” The President 

sounded crushed. 

“Yes,” I answered, “I don’t see how it can be avoided.” 

“Oh darn, oh darn. It just can’t be. I never thought it would come to this.” Slowly he took 

out his pen and scratched “RR” on the paper. [Triumph, p. 385-395, italics in the original] 

While the President was enjoying his budget quiz, Secretary Lewis briefed the President and the 

Cabinet Council on Economic Affairs on November 10, 1982, regarding the proposal to increase 

the gas tax by a nickel to raise $5.5 billion a year for highways, bridges, and mass transportation. 

Senator Dole, the former Vice Presidential candidate who was Chairman of the Senate Finance 

Committee, favored such a plan, while Representative Dan Rostenkowski (D-Il.), Chairman of the 

House Ways and Means Committee, considered the increase a near certainty. In addition, 

Democrats were developing a public works jobs bill involving roads, bridges, mass transit, and 

public buildings that they hoped to enact during the lame-duck special session of Congress that 

would convene on November 29. 

Following the Cabinet session, White House Deputy Press Secretary Larry Speakes told reporters 

that the President had not decided whether to support the gas tax proposal. He wanted to make 

clear, though, that the President was not reversing his opposition to a tax increase for a public 

works program. Speakes explained that the gasoline tax was not a tax but a “user fee.” Moreover, 

the program was needed to improve roads, bridges, and mass transit, and was not the 1930’s style 

“make-work” public works program that the President opposed. 

Secretary Lewis confirmed this explanation when he told reporters, “We have highways and 

bridges that are falling down around our ears—that’s really the thrust of the program.” News 

reports indicated that Budget Director Stockman, who “has previously argued that the 

administration should get out of the road-building business entirely,” still opposed the proposal. 

[Hoffman, David, “President Hints Gas Tax Rise,” The Washington Post, November 11, 1982] 

With the meeting in the news, Helen Thomas again raised the topic during a November 11 press 

conference: 

Q. Mr. President, at your last news conference you said it would take a palace coup for you 

to approve a five-cent-a-gallon increase in gasoline—build highways and create jobs. Have 

you changed your mind? And I'd like to follow up, if I may. 

The President. Well, Helen, I don't think that I said it with reference to that. I said that on a 

general subject of tax increases, as such, it would take a palace coup. 
Q. It was specifically—[ inaudible]. 

The President. But on the thing that we're talking about, this particular subject is under 

discussion. But it was under discussion a year ago, and at that time I asked the Department 

of Transportation, Drew Lewis, the Secretary, to hold off certainly for another year because 

of the economic problems that we face. 

I don't view this proposal as, let's say, a job-creating program, although, obviously, there 

would be jobs created by going forward with that effort. But what we're talking about here 

is, also—and we have used the term to try and make people understand what it would be—

that if we do it, it would be a user fee. It would be dedicated to the rebuilding of our 

highways and bridges. This is a problem that must be met sooner or later. I wish the 

economy were such that we didn't have to worry about it at all. 

But it is still under discussion. No decision has been made. And if it is put into effect, it 

isn't anything that would in any way reduce the incentive features of our tax cuts, because 

the average individual's tax would only—for that purpose—would only go up about $30 a 

year. 

Q. It sounds like you're leaning toward it . . . . 

The President. Well, Helen, we're doing a number of things to help the people that are out 

of work . . . . 

Later in the news conference, Kathy Lewis of The Houston Post tried to pin the President down: 

Q. Mr. President, back on the gasoline tax. Secretary Lewis briefed you yesterday. Can 

you at least tell us what you see as some of the pros and cons of that proposal-particularly 

the mass transit aspect? And can you make it equitable for all States, or will some States 

bear an unfair burden of that tax? 

The President. Well, again, as I indicated earlier, you'll have to wait on that one, because 

that one was just presented yesterday. 

No decision has been made. It is under consultation and deep thought by all of us, and we 

are faced with the need, both at the local and State level and for our own interstate—the 

Federal highway system. And the program that has been proposed deals with both those 

problems. But you'll just have to wait and see if we make a—what decision we make. 

On November 22, House Speaker Thomas P. (Tip) O’Neill, Jr. (D-Ma.) and Senate Majority 

Leader Howard H. Baker, Jr. (R-Tn.) announced that they would seek approval of a 5-cent a gallon 

gas tax increase during the lame-duck session of Congress. Their proposal was similar to Secretary 

Lewis’ plan to use the revenue for highway and mass transportation projects. Although some 

pressure was being placed on them to hold the proposal until 1983, many Members of Congress felt 

pressure to enact a bill that would generate jobs in a tough economic period. 

The Administration and Congress were still debating the concept, as well as how to describe it. In 

an article bylined November 22, The New York Times explained: 

While the President has described the proposal as a highway repair program, the majority 

leader, Howard H. Baker Jr., Republican of Tennessee, called it a “highway jobs” program, 

and the Speaker, Thomas P. O’Neill Jr., said, “Our first priority must be to put the millions 

of unemployed back to work.” 
. . . Similarly, Mr. Reagan has termed the proposed method of financing a “user fee,” while 

both Congressional leaders flatly called it a “gasoline tax.” 

Both Congressional leaders have said that they viewed the elections earlier this month as a 

mandate for Government action to reduce unemployment, now at 10.4 percent. White 

House aides have contended that such an interpretation implied the failure of the President’s 

economic program, and they disputed that implication. [Tolchin, Martin, “O’Neill and 

Baker to Seek Tax to Aid Road Repair Plan,” The New York Times, November 23, 1982] 

The trucking industry was the main opponent of the proposal, which included higher taxes on 

heavy trucks. Lewis tried to secure support from trucking interests by supporting higher, uniform 

weight limits. The Times explained Lewis’ message to the industry: 

Get behind the program or he will not support Federal uniform size and weight limits, long 

a goal of the industry. Currently, states have varying weight limits, so interstate truckers 

must generally conform to the restrictions requiring the lowest weight. The industry favors 

raising the limits in states where they are now low. 

The industry did not accept the tradeoff. In the view of the ATA’s Kiley, the “relief” would be 

more than offset by the higher taxes on truck use. He said, “We will not accept the taxes he is 

proposing. They are confiscatory, and we will fight them in Congress.” Kiley recognized that 

highway officials, the construction industry, and AAA supported the tax increase, “but we’re the 

ones paying it.” [Holsendolph, Ernest, “U.S. and Trucking Industry Fight on Tax Plan,” The New 

York Times, November 23, 1982] 

In Orlando, Florida, Lewis responded to the industry’s views during a Keynote Address to the 

annual meeting of AASHTO on November 22. He outlined the basis for the proposed tax increase, 

noting that the increase was timely for three reasons. First, “There is a large and ever-growing 

need for the rehabilitation of our highways, bridges and transit systems.” The second reason was 

that under current law, the Highway Trust Fund would expire at the end of FY 1983. “Third, the 

five cent increase we are proposing would generate 170,000 direct and indirect jobs in the 

construction industries, which currently have a 23 percent unemployment rate, and stimulate an 

estimated 150,000 jobs in other sectors of the economy.” 

Based on the cost allocation study, he said that proposals to increase taxes on the heaviest 

combination trucks addressed cost equity. Trucks as a whole would pay their fair share in 1985 

under the current tax structure, but the heaviest combination trucks would pay only about 60 

percent of their fair share. “The heaviest trucks, in other words, would be subsidized by the light 

and medium weight trucks,” which is “contrary to the basic user fee principle.” 

In return for the increase, trucker efficiency would grow with elimination of “a patchwork system 

of differing size and weight standards” among the States. If the trucking industry was not willing 

to pay its fair share, the Administration would not support the shifts in size and weight standards. 

“We see no reason to allow trucks to rip up our highways and not pay their fair share,” he told the 

transportation officials, a sentiment they applauded, according to news accounts. [Lewis, Drew, 
“Keynote Address,” AASHTO Quarterly, January 1983, p. 5] 

Protecting and Preserving the System

After the presentation, Secretary Lewis returned to Washington for a Cabinet meeting on 

November 23. Following the meeting, the President addressed reporters in the Briefing Room at 

the White House, at about 12:20 p.m. He announced that “we should move forward now with a 

program to repair the nation’s major highways and bridges.” He would support, he said, “the 

proposal that Secretary Drew Lewis has spent so many months developing,” namely a nickel a 

gallon increase in the tax on gasoline, with one cent for transit. Secretary Lewis estimated that the 

proposal would create 170,000 direct jobs and 150,000 jobs in related industries—at an average 

cost of some $30 a year for the average motorist. 

The President explained the need for the tax increase: 

An estimated 10 percent of our Interstate Highway System—portions of which are more 

than 20 years old—need immediate resurfacing. We have 23,000 bridges in need of 

replacement or rehabilitation; 40 percent of our bridges are over 40 years old. Moreover, 

our cities face capital transit costs of some $50 billion as many buses and urban railcars 

need to be replaced or upgraded. 

He concluded his prepared remarks by saying: 

Our country's outstanding highway system was built on the user fee principle—that those 

who benefit from a use should share in its cost. It is appropriate that we rely on this same 

concept now. America has been blessed over the years with excellent transportation, and 

this program would provide us with a means of protecting and preserving this system. 

Reporters (not identified in the transcript) had several questions for the President: 

Q. Sir, is this a jobs bill, a highway bill, or a tax? Which do you prefer to call it? 

The President. No. When this was first presented by Secretary Lewis over a year ago, he 

presented it with the idea and the real need of the highway system. But at that time, 

because of the economic situation we were faced with, I asked him to hold off for a while. 

In fact, I think I even mentioned, hold off a year. And he did and came back this year with 

it. In the meantime, we have gathered much more information about the real need for this, 

and this, if— 

Q. You don't mind if it creates jobs. 

The President. What? 

Q. You don't mind if it creates jobs. 

The President. No, there's no question but obviously there will be some employment with it, 

but it is not a jobs bill as such. It is a necessity. It's a problem that we have to meet, and 

we'd be doing this if there were no recession at all. 

When a reporter mentioned the comment about a palace coup, the President again put his earlier 

comment in a broader context: 
 

Q. Has there been a palace coup? You said something about not raising taxes. 

The President. That was in the context, that whole discussion, of our tax bill. And it's true 

that a tax on gas was one of those that had been proposed as an excise tax to help with that 

tax package that we presented in the midcourse correction of our program. And that's what 

I meant that, I'd-no—would not use that as a source, as there were several other excise taxes 

that we wouldn't use as a source just for general revenue. And that's what I meant at that 

time . . . . 

Q. But isn't concrete breaking around your feet? 

The President. What? 

Q. But isn't concrete breaking around your feet? 

The President. No, not at all. I knew the need a year ago and asked him to wait for a year. 

As a matter of fact, I specified '84, and that's what we're talking about. 

Consistent with the theme of the earlier proposal, the Administration proposed to focus the added 

revenue on the programs of highest national interest, especially Interstate completion and 4R as 

well as the bridge program, while still funding other programs with revenue from the existing 

highway user taxes. 

The President used his weekly radio address on November 27, during the Thanksgiving holiday 

weekend, to discuss the proposal. He began: 

One of our great material blessings is the outstanding network of roads and highways that 

spreads across this vast continent. Freedom of travel and the romance of the road are vital 

parts of our heritage, and they helped to make America great . . . . But let's face it: Lately, 

driving isn't as much fun as it used to be. Time and wear have taken their toll on America's 

roads and highways. In some places the bad condition of the pavement does more to 

control speed than the speed limits. 

He explained the need for his proposal: 

We simply cannot allow this magnificent system to deteriorate beyond repair . . . . America 

can't afford throwaway roads or disposable transit systems. The bridges and highways we 

fail to repair today will have to be rebuilt tomorrow at many times the cost. 

He would ask Congress to approve the new program to complete construction of the Interstate 

System and “get on with the job of renovating existing highways.” He assured listeners the plan 

would not increase the Federal deficit or the income taxes they paid on April 15: 

It'll be paid for by those of us who use the system, and it will cost the average car owner 

only about $30 a year. That's less than the cost of a couple of shock absorbers. Most 

important of all, it'll cost far less to act now than it would to delay until further damage is 

done. 

After describing examples of bad roads justifying the program (“There's already a section of 

interstate highway in Illinois that's so far gone the truckers call it the only all-gravel interstate in 
the country”), he said: 

Good tax policy decrees that wherever possible a fee for a service should be assessed 

against those who directly benefit from that service. Our highways were built largely with 

such a user fee—the gasoline tax. I think it makes sense to follow that principle in restoring 

them to the condition we all want them to be in. 

Although the tax increase was needed to improve the Nation’s roads and transit, it would have 

another benefit: 

The program will also stimulate 170,000 jobs, not in make-work projects but in real, 

worthwhile work in the hard-hit construction industries, and an additional 150,000 jobs in 

related industries. It will improve safety on our highways and will make truck 

transportation more efficient and productive for years to come. 

He concluded: 

Perhaps most important, we will be preserving for future generations of Americans a 

highway system that has long been the envy of the world and that has truly made the 

average American driver king of the road. 

On to Congress 

In transmitting the proposal to Congress on November 30, 1982, President Reagan pointed out that 

it did not contain a Federalism turnback as in his earlier recommendation. He added: 

However, the Administration remains committed to Federalism and will strive to return to 

State and local governments programs that are primarily of local interest and responsibility. 

 The Administration is consulting with the Governors, affected State and local officials, and 

the Congress on a bill which will implement the appropriate turnback of highway programs 

and accompanying revenues. 

He explained: 

The primary objective of this legislation is to provide renewed investment to help rebuild 

our nation’s deteriorating infrastructure. In addition to supporting the economic recovery 

by providing an effective transportation network that is crucial to commerce, this bill sets 

the framework for several other beneficial effects on the economy. For example, this 

legislation would create an estimated 320,000 jobs, 170,000 direct and indirect in 

construction industries and 150,000 more jobs “induced” by the construction. 

The proposal, he said, called for “a reallocation of existing user charges to make the current user 

fee structure more equitable,” in part by eliminating “the existing cross-subsidy from lighter to 

heavier trucks.” It also included “changes to truck size and weight laws to help bring about 

uniformity and provide significant productivity benefits for the trucking industry.” In addition to 

allowing heavier and longer trucks, the measure would end varying State weight limits. The 
trucking productivity measures were a payback for the tax increase. 

(Barnhart had been adamant on this point, having seen trucks reach a State border only to unload 

enough cargo to meet weight restrictions in that State. The excess cargo had to be carried on a 

second truck. The cost to efficiency imposed by the barrier States was borne by shippers and, 

ultimately, consumers.)

Much of the new revenue, including 4 cents of the 5-cent increase in the gasoline “user fee” would 

go to roads, particularly rehabilitation of Interstate highways that would be subjected to new 

poundings from the heavier trucks. One penny of the increase would go to a new transit 

infrastructure program, while the bill proposed to phase out transit operating assistance by the end 

of FY 1984, consistent with the view of Stockman and other conservatives that such assistance was 

inconsistent with Federal responsibilities. The bill would also create a transit capital formula 

program of $8.914 billion for urbanized areas over 50,000 population. It would fund planning, 

acquisition, construction, deployment of innovative demonstration results, and improvement of 

facilities and equipment. 

Although the Administration deferred some of its controversial proposals, including the Federalism 

turnback, the bill included several ideological measures. For example, the bill proposed to amend 

Section 4(f), a provision of the Department of Transportation Act of 1966 (codified as 23 U.S.C. 

138) that required all projects funded by the Department to avoid “publicly owned land from a 

public park, recreation area, or wildlife and waterfowl refuge of national, State, or local 

significance . . . or any land from an historic site of national, State or local significance . . .” unless 

“no feasible and prudent alternative” was available and the program included all possible planning 

to minimize harm to the resource. The Administration proposed to restrict Section 4(f) protection 

for “historic sites” to “National Historic Landmarks.” The section-by-section analysis transmitted 

with the bill explained the rationale for this change: 

This minor change has been made to reduce paperwork burdens on State and local 

governments, and reduce a portion of the “redtape” [sic] involved in the current process. 

Historic sites other than National Historic Landmarks have been eliminated from this 

section in order to simplify requirements and eliminate unnecessary duplication of effort 

which presently occurs when the official in charge of preparing the environmental impact 

statement prepares separate documents to meet the requirements of this section and section 

106 of the National Historic Preservation Act. 

The change would not “reduce the protection afforded historic sites,” which would still be covered 

by the Preservation Act. 

Another provision required the Secretary to consolidate environmental compliance procedures 

under NEPA and related policies and regulations into a single project development process to be 

coordinated by the Department. The section-by-section analysis explained: 

The Secretary would establish procedures to ensure that adequate information is developed 

from a public hearing, if one is held, so that the record available to Federal decisionmaking 
agencies provides an adequate basis for them to make the necessary determination. As an 

example, if a public hearing is held, information on the needs of navigation interest would 

be developed so the Coast Guard could issue a bridge permit. 

The goal of this change was “to minimize, to the maximum extent possible, duplication, needless 

paperwork, and delays in action” on highway projects. 

Although the proposed gas tax increase had broad support, truckers opposed the President’s bill, as 

expected. They continued to object to the tax increases, particularly the increase in the Heavy 

Vehicle Use Tax. The ATA argued that truckers would pay an additional $1.3 billion under the 

bill, with taxes increasing 200 percent on a typical truck. A spokesman said: 

It will do no good to create jobs in the construction industry with one hand while 

eliminating jobs in trucking and related industries with the other. 

Similarly, tire retreaders feared the cost of their product would increase by $2.50 a tire, costing 

them sales. 

Environmentalists were upset by the change in Section 4(f). Alan Boyd, Chairman of the National 

Trust for Historic Preservation (not the first Secretary of Transportation, also named Alan Boyd), 

said, “It is disturbing that the administration has chosen this bill as the vehicle to accomplish their 

goal of gutting environmental protections.” He called it a “blatant attempt . . . to weaken laws and 

regulations protecting historic properties.” The Environmental Policy Center accused the 

Administration of having “hidden agendas” because the increased funding for roads would be used 

to finance some of the most expensive and controversial Interstate highway projects in the country. 

 

While AAA objected to diversion of the highway tax revenue to transit, others objected to the 

proposal to phase out subsidies for transit. The Administration argued that transit-system wages 

and other day-to-day expenses should be paid by local governments. Because transit systems 

typically take in less via fares than the cost of operation, additional revenue is needed to keep the 

buses and trains moving. 

Another problem for the bill was that Martin S. Feldstein, Chairman of the President’s Council of 

Economic Advisors, claimed that the proposal could raise inflation and cost more jobs than it 

would create, or at best would generate only a minor net increase in employment. Alice Rivlin, 

Director of the Congressional Budget Office, also challenged the jobs claims. [Brandt, Thomas D., 

“Gas Tax Bandwagon Hits Potholes,” The Washington Times, December 2, 1982, and Edsall, 

Thomas B., and Feaver, Douglas B., “Highway Proposal Runs Into Opposition,” The Washington 

Post, December 2, 1982] 

Despite these objections, the House Ways and Means Committee approved the tax increase, with 

some modifications, on December 2. Representative Bud Shuster (R-Pa.) created controversy by 

proposing a “domestic content” amendment that would require half of all foreign buses bought with 

Federal funds to be made with U.S. parts, and would require 40 percent of all foreign-bought buses 

to come from countries without a U.S. trade deficit. Secretary Lewis objected to the proposal, 
which failed because of a jurisdictional dispute with the House Committee on Public Works. 

On December 7, the House passed the bill by a vote of 262 to 143, but only after tense debates that 

threatened to derail the proposal. Opposition rose from those who questioned the projected jobs 

benefits, backed the trucking industry, feared the tax increase would impact the poor, and were 

unhappy with the amount of funds their State would receive. Some House liberals favored deleting 

the tax measures, while substituting revenue from the tax cuts approved in 1981 to pay for the bill. 

During the difficult debate, Secretary Lewis made two concessions to secure support for the bill. 

One would allow States to defer their matching share for a year if they could not provide the funds. 

 In addition, the Secretary worked out a deal during negotiations with Governors from States that 

contributed more to the Highway Trust Fund than they received under the Federal-aid highway 

program. Those States (California, Indiana, Michigan, New Jersey, North Carolina, Oklahoma, 

Texas, and Wisconsin) would be guaranteed a minimum return of 85 percent (85 cents for each 

dollar). [Barnes, Fred, “It’s No Smooth Ride for Gas-Tax Boost,” The Baltimore Sun, December 7, 

1982, and “Concessions Offered to Enhance Gas-Tax Bill,” The Philadelphia Inquirer, December 

7, 1982] 

Roadblock 

As the bill moved to the Senate, new problems arose. Aside from the issues that had threatened the 

bill in the House, some Senators wanted to add a public works jobs bill to the measure, despite 

presidential opposition, while others wanted to replace the gas tax hike with increased income taxes 

on the well-to-do. The Senate also faced the threat of a filibuster from conservatives led by Senator 

Gordon J. Humphrey (R-NH) with support from Senators Don Nickles (R-Ok.), Jesse Helms (RNC), and John East (R-NC). Humphrey, a first term Senator who would vote against every budget 

during his two terms (1979-1990) because they included deficits, said of the House action, “Last 

night the lame-duck Congress laid its first rotten egg.” He called the bill “New Deal nonsense” and 

“Keynesian claptrap.” He also accused Congress of panicking and succumbing to the temptation to 

“do something even if it’s the wrong thing.” 

After the Senate Finance Committee and the Committee on Environment and Public Works 

approved their portions of the bill, debate began on the Senate floor on December 10. Senator 

Humphrey launched his filibuster. His proposal to defer consideration of the measure until the new 

Congress convened in 1983 was defeated (79 to 10), but the filibuster continued while Senator 

Baker warned that he would keep the Congress in session through Christmas week if necessary. 

Humphrey acknowledged that some Senators thought that he and his colleagues were being 

unreasonable: 

But I would suggest that those who are trying to ramrod through this legislation are being 

unreasonable. If raising gasoline taxes by a nickel is a way to produce jobs and prosperity, 

why limit it to a nickel? True, the measure will create jobs in the construction industry, but 

it also will destroy jobs in other industries. [Tolchin, Martin, “Conservative Senators Begin 

Filibuster on Rise in Gas Tax,” The New York Times, December 11, 1982] 

Under Senate rules, a filibuster can be ended by a “cloture” vote of 60 Senators. Cloture was 
achieved on December 13 by a vote of 75 to 13. Technically, the vote limited debate on a 

parliamentary motion relating to the bill. A filibuster on the bill itself, according to opponents, was 

likely. 

On December 14, the Senate resumed debate on the bill on a round-the-clock basis, in hope of 

adjourning on Friday, December 17. However, the four conservatives opened a new filibuster. 

They had added leverage because their actions were delaying approval of a must-pass omnibus 

stopgap bill containing 6 of the 13 regular appropriations bills funding eight Cabinet Departments, 

the others having been approved earlier. Unless the omnibus bill was approved, the President had 

threatened to shut down a large part of the government and furlough about 350,000 employees 

when spending authority expired after midnight on Friday. 

In contacts with Senate leaders, President Reagan had insisted they keep the surface transportation 

bill on the floor. Some critical progress was made when the Senate approved an amendment setting 

a $1,200 ceiling on taxes for heavy trucks, compared with a ceiling of $2,000 in the House bill. 

However, a cloture vote to end the filibuster had failed by a vote of 50 to 48. Democrats who 

opposed the filibuster voted to continue it after Republicans tried to block a vote on amending the 

surface transportation bill to include 55 weeks of benefits for States with the highest jobless rates. 

After the benefits were approved by voice vote as an amendment to the surface transportation bill, 

Senator Carl Levin (D-Mi.) explained that, “Many of us had to vote against cloture in order to be 

heard; it’s the only reason we got the extra benefits passed.” 

Late in the evening of December 16, the President agreed to pull the bill in the face of the stubborn 

resistance. Baked pulled the surface transportation bill at 10 p.m. to allow consideration of the 

spending bill. The Baltimore Sun’s Nancy J. Schwerzler described efforts to convince the four 

conservatives to end their filibuster: 

“We are not able this evening to work out further agreement,” Mr. Baker said in taking the 

bill off the floor. Only moments earlier, he had met with leaders of the conservative 

filibuster revolt . . . in an unsuccessful effort to persuade them to give up their effort. 

During that session, at least one of the conservatives indicated a willingness to stay in the 

Senate on Christmas Day and, even if it meant shutting down the government, to continue 

the fight against the tax increase, according to a Republican source. 

Earlier, the conservatives resisted more than an hour of intense pressure by Republican 

colleagues in a closed-door meeting. They also refused to yield to a gambit by Mr. Baker to 

make them appear personally responsible for a government shutdown along with a possible 

delay in paying federal employees, Social Security recipients and members of the military. 

But Mr. Humphrey, a freshman Republican who assumed the leadership of the conservative 

fight on the Senate floor, refused to budge, saying he would not shoulder the blame. “I’m 

not holding up consideration of that important piece of business [the stopgap spending bill] 

or any other,” he said, suggesting that the Senate abandon the gas tax bill and move on to 

the spending measure. 
Mr. Baker, at the president’s request, refused to put the gas tax measure aside for several 

hours last night. But he finally yielded to the wishes of a majority of Senate Republicans, 

who voted in a closed-door caucus to move on to the spending bill if no gas tax agreement 

had been reached by last night. 

With the surface transportation bill pulled from consideration, observers feared that Baker’s action 

was a death blow for the measure. He insisted, however, that he was pulling the bill from the 

Senate floor only temporarily. News accounts reporting the action generally put the word in quotes 

(“temporarily”) to emphasize the prospect that the move was likely permanent. The cloture vote 

having failed, Senate rules allowed leaders of the filibuster 3 more days to stall a final vote on the 

bill if they wished. They did intend to do so, because as Senator Nickles put it: 

[It’s] a bad bill for my state and a bad bill for the country. Lots of roads and highways need 

work in my state and throughout the country, but the problem is the states do not do enough 

under this program. It flies in the face of New Federalism. 

[Schwerzler, Nancy J., “Senate Shelves Gas Tax, Turns to Spending,” The Baltimore Sun, 

December 17, 1982; Cawthorne, David M., “Senate Accepts Truck Gasoline Tax Ceiling,” The 

Journal of Commerce, December 17, 1982; and Hunt, Albert R., and Apcar, Leonard, “Senate 

Suddenly Drops Gasoline-Tax Bill as Snags Develop in Rush to Adjourn Soon,” The Wall Street 

Journal, December 17, 1982] 

According to The New York Times, Republican leaders in the Senate were enraged and frustrated 

by the success of the four conservatives in blocking a bill that the President, the House, and the 

overwhelming number of Senators supported. When the 54 Republicans met to “discuss strategy 

and berate the filibusterers in voices loud enough to be heard in an adjacent corridor,” one 

lawmaker could be heard asking, “Are the egos in this place bigger than the institution of the U.S. 

Senate?” The article quoted Senator William S. Cohen (R-Me.) as saying: 

I have never seen the kind of anger that is being expressed behind closed doors. People are 

perceived as having abused the procedures and failing to support the leadership. Normally, 

there is great deference around here toward people who seek to use the rules, but today 

tempers are very short. [Tolchin, Martin, “How to Stall Gas Tax Rise,” The New York 

Times, December 18, 1982] 

In pulling the bill, Republican leaders had said unanimous consent would be required to bring the 

measure back to the floor—an unlikely occurrence given the continued opposition of the four 

conservatives. On December 18, reported The New York Times, the leaders indicated they “had 

discovered the bill would return automatically for floor consideration.” In addition, “there were 

parliamentary devices that could expedite the matter.” Nevertheless, “the fate of the bill was in the 

hands of those conducting the filibuster because members of Congress are eager to adjourn for a 

Christmas vacation and a new Congress will convene in two weeks.” [Tolchin, Martin, “Gasoline 

Tax Measure May Die, Leaders Concede,” The New York Times, December 19, 1982] 

For government agencies covered by the omnibus appropriations act, spending authority would 

expire at 12:01 a.m. on December 18, a Saturday. Because the expiration would occur during a 
weekend, it would not cause major disruptions initially. If the stopgap bill could be approved over 

the weekend or be reasonably assured of approval early in the week, disruptions could be kept to a 

minimum. 

Helen Dewar of The Washington Post described the efforts to pass the two bills despite the 

continuing filibuster on the surface transportation bill. After speaking with President Reagan and 

the Republican caucus, Senator Baker launched “extraordinarily tough tactics” in a “last-ditch 

effort” to pass the surface transportation bill. The tactics included “brushing aside some of the 

niceties of normal Senate procedure to avoid time-consuming roll calls on as many as 400 

amendments proposed by the filibusterers.” 

In a radio interview around noon the same day, President Reagan said that it was “ridiculous for a 

minority to stand in the way of this bill,” while Senator Paul E. Tsongas (D-Ma.) reported that the 

wife of a colleague had said “this is not a lame-duck session but a lame-brain session.” [Dewar, 

Helen, “Senate Republicans Renew Fight for Gas Tax Increase,” The Washington Post. December 

19, 1982] 

Just when the spending bill appeared on the verge of passage, Senator East “started what appeared 

to be a lengthy discourse touching on both the spending bill and the gas tax, prompting Senator 

Baker and other leaders to leave the floor for consultations.” It was the start of a filibuster of the 

stopgap spending bill as a tactic to prevent further consideration of the surface transportation bill. 

For 4 hours, Senator Baker periodically asked Senator East if he would yield the floor. Senator 

East repeatedly responded, “Is the Senator willing to guarantee me that the gas tax will not be 

resurrected?” When Senator Baker replied “No,” Senator East held the floor. While the filibuster 

continued, Senator Baker let most Senators go home after midnight. 

Around 1 a.m., Senator East made a tactical error after looking around the nearly empty chamber 

by saying, “Mr. President, I would like to raise a point of order that a quorum is not present, and 

ask for a ruling of the Chair.” (In a parliamentary system, a point of order challenges rulings by the 

presiding officer, with the Senate voting on each point.) Senator Frank H. Murkowski (R-Ak.), the 

presiding officer, ruled that the Senator had requested a quorum call, meaning he had to relinquish 

the floor. Senator East’s protests that he had not asked for a quorum call were denied on grounds 

that debate was not in order while a quorum call was underway. [Tolchin, Martin, “Senate Ends 

Filibuster; Gas Tax Bill Alive Again,” The New York Times December 20, 1982] 

On December 19, the Senate voted to end the filibuster of the surface transportation bill, 89 to 5, 

with the lopsided margin reflecting widespread frustration over the delay. Secretary Lewis, 

watching from the VIP gallery, gave a double thumbs-up signal when the vote reached 60. (The 

fifth vote against cloture was cast by Senator William Proxmire (D-Wi.), who opposed the surface 

transportation bill.) Dewar explained the end of the filibuster: 

Finally, by inadvertence or necessity, East appeared to utter the magic words that, under 

Senate rules, trigger a quorum call, after which the leadership could reclaim the floor . . . . 

When East slipped, the leadership, now fully awake, pounced, took back the floor, and 

mapped strategy for last night’s vote to stop the filibuster. [Dewar, Helen, “Senate Ends 
‘Trial by Ordeal’ on Gas Tax,” The Washington Post, December 20, 1982; Timberg, 

Robert, “Senate Vote Breathes New Life into Gas Tax-Road Repair Bill,” The Baltimore 

Sun, December 20, 1982]] 

Columnists Rowland Evans and Robert Novak illustrated the ill feelings by reporting on an 

incident that occurred in the Senate Republican cloakroom during East’s filibuster: 

While freshman Sen. John East of North Carolina was droning on through a filibuster 

blocking Reagan’s nickel-a-gallon gasoline tax, one of East’s aides seated in the cloakroom

was subjected to a tongue-lashing from two esteemed senators—Utah’s Jake Garn and 

Missouri’s John Danforth. The shouting and (on Garn’s part) profanity produced a scene 

seldom matched in that venerable political cockpit. 

Bystanders heard Garn, chairman of the Senate Banking Committee, tell the aide that East 

had broken his pick opposing Reagan’s policy and that there was no way he could be 

reelected in 1986. The absence of fraternity among Republican senators was reflected when 

an overwrought Garn directed particularly harsh words at East. 

The columnists added that the filibustering Senators “were subject to browbeating from the 

leadership in an extraordinarily plain-spoken Senate Republican caucus.” They said: 

The highly esteemed Sen. Paul Laxalt, the president’s friend and the new general chairman 

of the Republican Party, joined Baker in reading the riot act. The recalcitrants were painted 

as betrayers of the party for obstructing higher gasoline taxes. If any doubt were left, 35-

year-old Don Nickles was summoned to the White House, where counselor Edwin Meese 

instructed him to support his leader. 

Helms, for one, was not intimidated: 

Sen. Jesse Helms took the floor in a caucus, asking Baker how it was that he used such 

pressure to shut down conservative filibusters against higher taxes but not liberal filibusters 

against Helms’s school prayer and anti-abortion measures. [Evans, Rowland, and Novak, 

Robert, “Season of Ill Will for Senate Republicans,” The Washington Post, December 22, 

1982] 

(Cannon discussed the first months of the Reagan Administration, during which he and 

Administration officials focused on approval of his tax and budget cuts: 

Social conservatives who had backed Reagan soon became restless. On March 26, [1981] 

the Senate Majority leader, Howard Baker, said that he had agreed to keep social issues like 

abortion off the floor for a year so that senators could concentrate on Reagan’s economic 

program. Baker was promptly assailed by the favorite son of the right, Senator Jesse 

Helms. Asked about this deal in an interview with The Washington Post, Reagan sided with 

Baker. It was the last interview that Reagan would give for months, for he was shot by a 

would-be assassin on March 30, the bullet narrowly missing his heart. [Cannon, Lou, 

“Obama’s Reagan Transformation,” The New York Times online “100 Days” blog, January 
28, 2009] 

(With the economy in recession since July 1981, Baker continued to keep divisive social issues out 

of the way, including during the lame-duck session when the Senate had a limited time to achieve 

important goals before the new Congress began in January.) 

Before turning to the surface transportation bill, the Senate approved the stopgap spending bill on 

December 20. With the bill on its way to the President, the four conservatives believed they had 

the advantage in blocking the surface transportation bill because many Senators wanted to go home 

now that the lame-duck session had completed work on the most important bill. Senator Robert C. 

Byrd (D-WV) acknowledged as much, saying, “I’d like to see us get out of here. We shouldn’t 

have even had this lame-duck session.” 

With the surface transportation bill once again on the floor on December 20, the opponents began a 

new filibuster. Late that evening, the Senate approved cloture by an 87-to 8 vote, but the 

conservatives continued to use every other parliamentary maneuver they could devise to delay 

action, including points of order as each amendment came up for consideration. In the end, the 

Senate approved the bill, 71 to 24, and sent it to a Conference Committee to resolve differences 

between the House and Senate versions, with the four conservatives vowing to block final passage. 

 [Maraniss, David, “Highway Repair Bill Raising Gasoline Tax Endorsed by Senate,” The 

Washington Post, December 21, 1982] 

On December 21, President Reagan approved the Continuing Appropriations for Fiscal Year 1983 

(Public Law 97-377), which kept all remaining government agencies in operation. To avoid a 

veto, Congress had backed down on its proposal to include a jobs program in the bill. He said, 

“While I continue to be deeply troubled by the budget-making processes in our government, I am 

pleased that the appropriations for the current fiscal year have finally been passed.” He thanked the 

congressional leadership “for completing a challenging task under difficult circumstances.” 

Conferees completed their work quickly; they had begun reconciling the two bills before the Senate 

approved its version of the bill. An article in The Philadelphia Inquirer described the negotiations: 

Negotiators began talks on the gas-tax measure . . . only hours before the House planned to 

adjourn . . . . [The] gas tax was the major business of the day that House Speaker Thomas 

P. O’Neill Jr. (D., Mass.) and Senate GOP leader Howard H. Baker Jr. said they hoped 

would end the two-year Congress. And there was no objection when Rep. Charles B. 

Rangel (D., N.Y.) pushed for a fast compromise so “somehow we can get back to our 

families.” 

The negotiations had dragged into yesterday evening, with Transportation Secretary Dew 

Lewis shuttling between groups of House and Senate members. At one point, Rangel had 

declared: “I think this bill is dead” 

Sources who asked not to be identified said that one sticking point was over the amount that 

excise taxes should be increased for large trucks. Whether to exempt gasohol [a blend of 
gasoline and ethanol made from grain] was another. Those were finally resolved by a 

decision to allow the use tax to rise gradually on heavy trucks to $1,900 a year in July 1988 

for rigs weighing more than 80,000 pounds. Gasohol would receive a one-penny increase 

in its current 4-cent tax exemption. The gas tax itself would go from 4 cents to 9 cents. 

“If we are fortunate, the lame-duck session will end today [December 21],” said O’Neill. 

[“Spending Bill Signed; Gas-Tax Debate Goes On,” The Philadelphia Inquirer, December 

22, 1982] 

The House approved the revised bill on December 21 by a vote of 180 to 87, with many 

Representatives having departed for the holiday. Following the vote, the House adjourned for the 

year. 

When the bill reached the Senate, Senators Helms and East began another filibuster. The 

increasingly bitter session reached a turning point shortly before midnight on December 21 when 

Helms vowed to keep the Senate in session over Christmas if necessary. In response, the 

Democrats, all angry, some opposed to the bill, held a caucus in which they agreed to stay for one 

final vote to end the filibuster. Senator Byrd said, “We ought to have a showdown or we ought to 

go home.” 

Seeing that the Democrats would stay for one last try, Senator Baker said, “That allowed us to 

show Sen. Helms we would take him to the nth degree, just as he had done to us.” Baker filed a 

cloture petition. Senator Baker gave President Reagan a list of Senators to call, not including 

Helms, to lobby for the bill. The President had called Senator Helms the previous week without 

success, as Helms recalled: 

I reminded the president that he once said it would take a palace coup for him to support a 

tax bill like this. “Mr. President,” I said, “when did the palace coup occur?” Then I went 

down the provisions in the bill with him. “Do you like this?” I asked. And he said, “No.” 

Do you like that?” I asked. And he said, “No.” 

He was not apologetic about delaying the Senators’ Christmas holiday: 

I really should not be the one making the apologies. The president should apologize, the 

people who pushed this measure on us during a lame-duck session should make the 

apologies . . . . This is a bad bill coming at a bad time.” [Maraniss, David, “Sen. Helms: 

An Outcast in Senate,” The Washington Post, December 23, 1982] 

The Washington Post explained the extraordinary steps taken by Republican leaders to secure a 

vote: 

President Reagan telephoned senators yesterday [December 22], offering Air Force 

transportation to some in an effort to keep them here long enough to win approval of his 

nickel-a-gallon gasoline tax increase, while the heavy-truck lobby fought to kill the package 

because of the high fees it would impose on 18-wheelers . . . . [Senator] Baker’s office, the 

White House and the Department of Transportation were checking yesterday to see which 
senators have not left Washington and to make sure they will get votes considered “soft.” 

. . . The question facing the Senate “has become much larger than the gasoline tax,” an 

administration official said in referring to Helms’ filibuster. “It goes to the ability of the 

leadership to control the Senate and of the administration to pass legislation.” 

That realization, the source said, led to a substantially increased White House effort on 

behalf of the bill after Transportation Secretary Drew Lewis had carried much of the load in 

the early days of the lame-duck session before the measure passed the House. 

Baker went to the White House yesterday with other congressional leaders and staff 

members to give Reagan a list of senators to be called by Reagan. “We’re not going 

through a charade,” a Baker aide said. “It will be a close vote, and there are enough 

uncertainties floating around out there to compel us to take it seriously.” 

The article also described efforts by the trucking interests to block the bill: 

Bennett C. Whitlock, Jr., president of the American Trucking Associations, spent the day in 

meetings on strategy, counting votes and making phone calls. “We’ve talked to quite a few 

senators,” he said. “We’re asking them to vote against the conference report and to start 

over again in the next session of Congress in establishing new truck-use fees. 

In a news release, Whitlock said the trucking industry “is appalled” at the increases in fees 

under the bill. The ATA figures that a typical 18-wheeler will pay an increase in total 

highway taxes on fuel, use and tires of $2,203 in the second year. [Feaver, Douglas B., and 

Maraniss, David, “Reagan Lobbies for Senate Votes on Gasoline Tax, The Washington 

Post, December 23, 1982] 

The following day, December 23, the vote on cloture was overwhelming, 81 to 5. Senators Helms, 

East, and Nickles were joined by Senators Proxmire and James Exon (D-Ne.) in voting to continue 

the filibuster. Senator Humphrey, a member of the Armed Services Committee, was on a troopinspection tour of South Korea and could not return for the vote. 

Five Senators had been flown back to Washington on government planes for the vote. One of 

them, Senator Goldwater, had been recovering at home during the lame-duck session from triplebypass surgery. Voting to end the filibuster, he said, “When you know you’re whipped, you should 

quit.” The airlift prompted Senator Helms to say, “The sky was dark with Air Force planes. 

Nobody knows what that will cost. It’s another case where the poor taxpayer is required to finance 

his own misery.” 

In the final moments, many Senators had unkind words for Senator Helms. Senator Wendell H. 

Ford (D-Ky.) said that the tactics employed by the two Senators from North Carolina had placed all 

future bills involving tobacco in “the greatest jeopardy.” Senator Dennis DeConcini (D-Az.) said 

the Senate had been “tyrannized and immobilized by a handful of men.” Senator Edward M. 

Kennedy (D-Ma.) said: 
We are not debating war and peace, or a new world order, or whether all people are created 

equal. We are talking about the width and weight of trucks, the potholes in our country 

roads, and the failing subways in our ailing cities. That is the poor stuff of which this 

ridiculous debate is made, and we deserve all the ridicule we are receiving, because all our 

wounds are self-inflicted . . . . We have too easily permitted this historic chamber to 

become the laughing stock of the nation. 

Senator Helms replied to the liberal Senator, long a target of conservatives, saying he appreciated 

Kennedy’s words. “His statement may have increased my popularity in North Carolina by 10 to 12 

points.” 

Senator George J. Mitchell (D-Me.) delivered the final speech before the cloture vote, quoting 

Oliver Cromwell’s words to the British Parliament in 1653: 

You have sat too long for any good you have done. Depart, I say, and let us be done with 

you. In the name of God—go!” [Maraniss, David, “Senate Stops Debate, Votes Gas-Tax 

Bill,” The Washington Post, December 24, 1982] 

President Reagan met briefly with reporters after the Senate approved the bill, 54 to 33. United 

Press International reported: 

Smiling and at ease, Reagan, who suffered some major setbacks during the post-election 

season, said Congress “dealt with some very difficult issues and put in some very long 

hours.” 

He declined to criticize the Senators who had delayed action on the bill. “They have their own 

rules, they abide by them and I respect the separation of powers,” he said. Passage of the bill was 

“a credit to leaders of both parties and congressmen and senators on both sides of the aisle.” 

The President also indicated he was not frustrated by the lack of change in the unemployment rate, 

voicing confidence that his policies would lead to a broad recovery. “I am convinced that this 

coming year, 1983, is going to see a definite upturn.” [“Reagan, Happy With Gas-Tax Bill, 

Predicts Upturn,” The Philadelphia Inquirer, December 24, 1982] 

Writing in The Washington Times, Thomas D. Brandt described the arc of the 1982 STAA. 

Although congressional committees had been considering the legislation for nearly 2 years, it 

“came to life” in the aftermath of the November 2 election “when the nation’s 10.4 percent 

unemployment rate (now 10.8) was a major issue and most candidates had pledged to go back to 

Washington to do something about it.” The bill, with its promise of 320,000 jobs and vitally 

needed road improvements, “was never more popular than the day it was introduced.” Then reality 

set in: 

Born in haste, the bill quickly began losing support as its complexities were examined, and 

the winners and losers that inevitably are created by bills of such magnitude were identified. 

He pointed out, for example, that Oklahoma’s Senator Nickles “has fought the funding formula 
under which his state’s motorists would pay tens of millions of dollars more than they would get 

back in road repair and transit money over a several-year period.” (This was the issue addressed 

when Secretary Lewis agreed to equity adjustments.) 

The House held only a day of hearings on the bill after the election, with objections to the gas tax 

bill “drowned out by the sound of the legislative steamroller.” However, the number of “no” votes 

in the House on December 7 (a 262-143 vote) “revealed a sizable pool of opposition that grew as 

the gas tax measure moved to the Senate”: 

The measure was beginning to teeter, showing clear signs that it lacked the foundation of 

support that is built through the congressional review process. The committee hearing 

process and the time it takes allow for questions to be raised, problems corrected and 

compromises struck. Fast tracking a $5.5 billion bill through a three-week session of 

Congress allowed little time for conflict resolution in the committees and cloakrooms, 

which left objectors with no choice but to take their problems to the floor of the Senate. 

Objectors always had an advantage in a post-election lame-duck session because of time 

constraints. “Without building a majority to defeat a bill, they can in effect kill it or put it off until 

next year by the use of such delaying tactics as filibusters.” [Brandt, Thomas D., “Senate 

Conservatives Press Filibuster on Gas Tax Rise,” The Washington Times, December 21, 1982] 

Schism in the Republican Party 

At the same time, the efforts to block the surface transportation bill demonstrated a schism in the 

Republican Party that went beyond disagreement over the gas tax. Like any national movement, 

the modern conservative movement, emerging from the 1950’s, that brought Reagan to the 

presidency was not a monolith, but a collection of philosophies pulling together. Although the 

failures of Democratic Administrations contributed to the rise of Reagan and the conservative 

movement, the movement deserved much of the credit, as John MacGregor Burns observed: 

The conservative triumph stemmed to a marked degree from a considered and collective 

effort of rightists of various schools to build their intellectual case and to use invigorated 

and broadened conservative ideas as vehicles to political power. 

He added, “The more conservatism prospered as a creed and cause, the more the various right-wing 

factions advanced their competing doctrines.” He catalogued the main factions: 

 Traditionalist conservatives who “preached the virtues of order, reverence, stability, 

moderation, gradual change . . .” 

 Libertarian conservatives who “demanded optimal individual freedom of choice in cultural, 

sexual, and social matters, protected especially against governmental intrusion.” 

 Free-market conservatives “called for an open, competitive economy, which to them meant 

reductions in government, in regulation, in union power, and a drastic cutback on the 

environmental, affirmative-action, and other controls loaded on private enterprise from the 

FDR through the Carter years.” 

 Populist conservatives, especially from southern and western “Sunbelt” regions, “echoed 
the demands of the free-marketers but focused their attacks especially on the ‘new elites,’ 

nonelected and self-promoted—network news producers, liberal journalists, radical 

professors, federal bureaucrats, education administrators, left-wing writers, literary critics, 

and others of related breeds entrenched especially in northeastern and West Coast cities.” 

Another faction was gaining strength in the 1980’s: 

The evangelical and fundamentalist right, embracing such groupings as the Moral Majority 

and Christian Voices, overlapped the libertarians in its view of freedom and individualism 

as pro-market and anti-government. But the central commitment of the “new Christian 

right” was to family, religion, community, and old-fashioned morality, and its chief targets 

were moral relativism, sexual permissiveness, abortion, ERA [the Equal Rights Amendment 

to the Constitution for women], prohibitions on school prayer, the secular curriculum in 

public schools. 

The Born Again movement had been growing as a Christian religious experience, a new Great 

Awakening, since the 1960’s. In the 1970’s and 1980’s, adherents began reaching out beyond their 

personal “walk with Christ” to reshape political and cultural institutions in accordance with their 

faith. Instead of praying for change, the new Christian right sought and often won positions on city 

counculs, school boards, and other institutions where they could try to implement public policy 

consistent with their views: 

The capacity of the Christian right to build networks, operate through local congregations, 

and mobilize its strength in the Republican party had been a decisive element in Reagan’s 

1980 victory. 

As Burns pointed out, the conservative subgroups “intertwined, overlapped, and conflicted” in an 

“unstable equilibrium” that was undergoing adjustments in the 1980’s. [Crosswinds, p. 626-628] 

Participants in the December 1982 struggle to pass the 1982 STAA realized they were on the 

faultlines of the shifting alliances in reaction to the “moderate” conservative Republicans who 

controlled the levers of power. 

Helen Dewar, in an article about the end of the debate in the Senate, quoted Senator Paul E. 

Tsongas [D-Ma.] as saying the question “was whether the political center is being so ‘crowded out’ 

by extremes that the legislative process in the Senate has turned into a ‘trial by ordeal.’” 

She reported that in “weary post-mortems,” some Republicans hoped the “embarrassing and 

humbling” episode would “bring Republicans back together in renewed strength and discipline.” 

She added that “others were not as certain.” They suggested “the glory days for the Senate’s twoyear-old Republican majority probably have ended as President Reagan’s once-tight grip on 

Congress has loosened.” 

The recent election had an “unsettling effect” on the Republican-controlled Senate: 

Not only have arch-conservatives like East felt free to leave the reservation, bristling 

because they believe Reagan and Senate Republican leaders have become soft about 
conservative social issues like abortion, busing and school prayer. But more liberal GOP 

senators have read the election returns as requiring a more progressive posture for the party 

. . . . [Dewar, Helen, “Senate Ends ‘Trial by Ordeal’ on Gas Tax,” The Washington Post, 

December 20, 1982] 

Leonard M. Apcar, writing in The Wall Street Journal, agreed: 

The lines are being drawn by conservatives, led by Sen. Jesse Helms (R., N.C.), who was 

determined to cut the budget and block any further tax increase, and by more moderate 

Republicans, who are casting about for other ways to solve the nation’s complex economic 

problems. 

Republicans’ “doctrinal convictions have been shattered,” declared Sen. Daniel Patrick 

Moynihan (D., N.Y.), a supporter of the gasoline-tax bill. He adds that what has been 

played out in the Senate “was the passion and anguish (that result) when peoples’ deepest 

convictions have been falsified by events.” And even Sen. Helms concedes that the GOP 

“has to circle the wagons and decide what it stands for.” [Apcar, Leonard M., “Senate’s 

Haggling Reflects GOP Schism and is Expected to Affect Next Session,” The Wall Street 

Journal, December 23, 1982] 

The Baltimore Sun’s Schwerzler described how the schism developed during the first 2 years of the 

Reagan Administration. With the Republicans in control of the Senate, she said, President Reagan 

scored budget and tax cutting victories: 

But as the economy plunged into recession, the flush of those 1981 successes turned to 

1982 skepticism toward the president’s policies among members of the political middle 

ground of his own party. 

And conservatives in Congress who had claimed Ronald Reagan as one of their own 

became rebellious when the avowed budget-cutter and budget-balancer in the White House 

advocated a $98.5 billion tax increase and a record budget deficit. 

This was a reference to the Tax Equity and Fiscal Responsibility Act of 1982 (TEFRA, Public Law 

97-248, approved September 3, 1982) which included rollbacks of some of the corporate and 

income tax cuts approved in 1981. President Reagan, who favored budget cuts to reduce the 

deficit, had approved the projected $100 billion in tax increases, largely the work of Senator Dole, 

as a deficit reduction measure only after receiving assurances from congressional leaders that they 

would approve $3 in cuts for every dollar of tax increase. At the time, however, observers referred 

to TEFRA as the largest tax increase in history. Schwerzler said of TEFRA: 

The president’s sway over Congress seemed unstoppable in the first half of the 97th

Congress [in January 1981], but this year, the Congress itself took the lead. The president 

was nonetheless adept at claiming victories from passage of legislation that he had been 

dragged into accepting after his own initiatives were rejected or ignored by Congress. 

The budget resolution approved in the spring and a 3-year tax increase bill appalled conservatives. 
They were further upset when moderate Republicans had joined with Democrats to override 

President Reagan’s veto of a $14 billion supplemental appropriations bill. [Schwerzler, Nancy J., 

“Senate Vote on Gas Tax-Road Bill to End Lame Duck Session Today,” The Baltimore Sun, 

December 23, 1982] 

Julia Malone discussed the schism in The Christian Science Monitor. Pointing out that the 

Senate’s lame-duck session had been called a “laughing stock” and an “ordeal,” she said: 

Much maligned on virtually all sides, the post-election session nonetheless leaves the nation 

an important legacy. It pushed through a major transportation bill in a little less than four 

weeks, raising some $27.5 billion over the next five years. 

Nevertheless, she explained, the conservatives’ ability to tie up the Senate “poses problems for the 

Republican leadership.” Senator Cohen, speaking at a press breakfast during the past week, had 

referred to the “ideological split” within the Republican Party. She said: 

The problem will increase in the coming year as 19 Republican senators prepare for 

reelection bids. If “moderates see no discipline in the conservatives of the party,” said 

Senator Cohen, then they cannot be expected to follow behind the President either. 

[Malone, Julia, “Congress’s Finale—Reagan vs. The Conservatives,” The Christian Science 

Monitor, December 24, 1982] 

The schism within the Republican Party between moderates, such as Baker and Dole, and the “New 

Right,” including social conservatives such as Helms and East, would continue to play out long 

after the battle over the surface transportation bill in December 1982 was forgotten. 

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, 

http://ops.fhwa.dot.gov/freight/publications/size%5Fregs%5Ffinal%5Frpt/.) 

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 owneroperators 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 pricecutting 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 payas-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 51⁄2 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 

at http://www.tfhrc.gov/pubrds/08july/01.htm. 

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, longterm 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 autoframe 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 fivesixths 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 antiinflationary 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]