Hate Potholes? Would You Pay a Higher Gas Tax to Fix Roads?
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What short market and borrowing updates kick off the money briefing?
With your money briefing, I'm J.R. Whelan at The Wall Street Journal in New York. We found something that Republicans and Democrats agree on, and it involves raising the price you pay at the gas pump. And you know what? A lot of voters seem to support it also. We'll spell out the details in a moment. First, these money and market stories you should know. It's getting cheaper for Americans to borrow money. Mortgage rates fell last week to their lowest level since February 2018.
How have mortgage and auto loan rates changed recently and why?
The average rate on a 30-year fixed rate mortgage was 4.31% on March 14th. That's down from 4.62% after the Fed's most recent rate increase in December and from a recent peak of 4.94% in November. Rates on auto loans also declined in recent months as well, with the average rate on a five-year new car loan falling to 4.74% last week. That's down from nearly 5% in the wake of the Fed's December rate increase. You can thank the Fed for the lower rates, the result of lenders adapting to the Fed's message that it's likely to hold off on raising interest rates for the foreseeable future. But it's not all good news. The cost of variable rate credit card debt has risen to 17.84% a year as of last week, from 17.59% in late December.
That reflects rising concerns at the Fed and in credit markets that the U.S. economy may be slowing more than anticipated. And a new report from the Bureau of Labor Statistics breaks down how Americans across several income classes spend their money. The average household brings in about $73,500. Most of that comes from salary with Social Security accounting for about 11%. Most expenditures, 22% that is, goes to housing, followed by gas and insurance. And there's about $10,000 left over for savings. For the top 20% of households specifically, Average total income comes in at about $188,000 a year, but there's roughly $50,000 left over after expenditures to put towards savings. For the bottom 20%, average yearly income is about $25,000, but every penny is accounted for, with nothing left over for savings.
President Trump with the spotlight on the nation's infrastructure and his State of the Union address last month and the need for repairs. And that brings the usual question, who's going to pay for repairs to the nation's roads and bridges? The U.S. Chamber of Commerce may have an answer. And Wall Street Journal executive Washington editor Jerry Seib is on the line from our Washington bureau with some details. So, Jerry, the chamber suggests raising the gas tax to fix roads and bridges and actually got Congress's attention.
Right. And in fact, the chamber's been saying this since last year, but it got a little more attention this month because the president of the chamber, Thomas Donahue, was before the House Ways and Means Committee and delivered testimony and said, look, the gas tax, the federal gas tax hasn't been increased since 1993. It's at 18.4 cents a gallon. Let's increase it by 25 cents over the next five years. That will produce $400 billion in revenue. And in a time when the rest of the federal budget is running a trillion dollar a year deficit, where else are you going to find that kind of money to make what everybody agrees are really necessary repairs to America's infrastructure? And there's support on both sides of the aisle.
I think the Democrats like this because the Democratic unions want the jobs that come along with the construction that this would finance. Republican business interests, as the chamber's position suggests, like this because they're tired of dealing with infrastructure that makes it difficult to move goods and people and products around the country. Even environmentalists like it to some extent because it's essentially a carbon tax, and they've long advocated carbon taxes to make it less desirable to burn fossil fuels. So you have a kind of an odd bedfellow combination and some bipartisanship. In a rational world, that might translate into action this year, and it still could.
And that's a broad swath of support across both sides. Still some hurdles here, and we're still a ways away from it actually happening.
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Chapters
4 chapters
1
What short market and borrowing updates kick off the money briefing?
0:05–0:30
2
How have mortgage and auto loan rates changed recently and why?
0:30–6:13
3
Why is variable-rate credit card debt rising and what does it signal?
6:13–7:55
4
What does the BLS report reveal about household income and spending?
7:55–8:01
Speakers
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