I noted yesterday in Linklist that “A bill was recently introduced by Senate Republicans that would allow states to opt out of the federal highway program.”
So what happens. Let’s assume half the states are donor states and half are donee states.
Day 1: All (25) the donor states opt out.
There are now 25 states in the gas tax pool. Half the states are donor states, half are donee. The funds had to be recalibrated based on the smaller pool.
Day 2: All (say 13) the donor states opt out.
There are now (let’s say 12) states left in the pool. Half the states are donor states, half are donee. The HTF allocation again had to be recalibrated based on the smaller pool.
Day 3: All (6) the donor states opt out.
There are now 6 states left in the pool. Rinse and repeat.
Day 4: All (3) the donor states opt out.
There are now 3 states left in the pool. One more time.
Day 5: All (1) the donor states opt out.
There are now 2 states left in the pool. One last time.
Day 6: All (1) donor states opt out.
There is only 1 state left in the pool. The federal government eliminates the gas tax program.
Opt-out of cross-subsidies leads inevitably to elimination of cross-subsidies.