Aug. 20 (Bloomberg) -- Former Transportation Secretary Norman Mineta recalls how his boss, President George W. Bush, bristled at the idea of raising gasoline taxes in the 2005 highway bill.

``He took his Sharpie out and said, `Norm, get those tax increases out. I don't want a tax increase,''' says Mineta.

While Bush is still opposing higher fuel taxes, the Aug. 1 Minneapolis bridge collapse has altered the political landscape. The calamity, in which at least 12 people died, has become a rallying cry for the U.S. Chamber of Commerce and trade groups representing the likes of Caterpillar Inc. and Terex Corp. that want to boost spending to repair the nation's roads and bridges.

The result is that, even as Bush aides warn of a possible veto, the odds are growing for the first gasoline-tax increase since 1993. House Transportation Chairman James Oberstar, a Minnesota Democrat, proposed a new bridge-repair fund a week after the collapse that would be financed by a nickel increase in the tax, which is currently 18.4 cents a gallon.

``The conversation around transportation finance changed as soon as that bridge fell,'' says Robert Puentes, a Brookings Institution fellow in Washington. ``There is an opportunity to not just raise the gas tax, but to spend transportation dollars better.''

Even Bush's former transportation chief Mineta, 75, a Democrat who also served in President Bill Clinton's Cabinet, says, ``It's unrealistic to think that 18.4 cents is sufficient to take care of all of our needs.''

`Structurally Deficient'

Oberstar's plan would finance the repair or replacement of 6,175 National Highway System bridges rated by the federal government as ``structurally deficient.'' A three-year increase in the gasoline tax would bring in $25 billion to pay for it.

``We have an immediate crisis,'' says Oberstar, 72. ``We need to address it now.'' The bridge collapse gives him the votes to win passage, he says: ``Within 24 to 48 hours after the collapse of the bridge, as I circulated on the House floor and tried this idea out on my colleagues, I found overwhelming favorable response.''

In the Senate, Patty Murray, a Washington Democrat who heads the Appropriations Committee's transportation panel, will propose $1 billion in additional bridge funding this year, says spokesman Matt McAlvanah.

At an average price of $3 a gallon in the week ended Aug. 13, Americans were paying less than half what drivers in other industrialized nations, such as France, spent. Taxes make up more than half the French price.

Biggest Obstacle

The biggest obstacle to a U.S. tax increase is Bush, whose advisers have been raising the specter of a veto if such a measure reaches his desk. ``If Congress were to pass a gas-tax hike, the president's economic advisers would likely recommend a veto,'' says White House spokesman Tony Fratto.

``Raising the gas tax is not the answer to our nation's transportation challenges,'' says Transportation Secretary Mary Peters.

The president has also signaled his opposition, while stopping short of promising a veto. Eight days after the bridge collapsed, Bush said Congress should change its transportation spending priorities before raising the gas tax.

That might leave the door open to a tax increase ``if they could be shown that it's going to the places that need it,'' says Edward Mortimer, director of government relations for Washington Group International, a Boise, Idaho-based engineering and construction firm.

``Are they going to be the ones leading the charge on it?'' Mortimer asks. ``Definitely not.''

Potent Reminder

Arrayed against the administration are such normally friendly organizations as the Chamber of Commerce, the nation's largest business lobby. In announcing a ``Let's Rebuild America'' campaign nine days after the accident, Chamber President Thomas Donohue, a long-time backer of increased road spending, called the collapse a ``potent reminder'' of aging infrastructure and said the government should consider raising the gas tax to fund more road spending.

``We rebuilt Europe after the Second World War,'' Donohue, 69, said in an interview. ``We need to rebuild the United States.''

Other supporters include the American Road and Transportation Builders Association -- the Washington-based trade group representing equipment makers such as Terex and material suppliers such as LaFarge SA endorsed Oberstar's proposal the day he made it -- and FedEx Freight, the long-haul trucking division of Memphis-based FedEx Corp.

`The Most Efficient Way'

``If more revenue is needed, raising the fuel tax is probably the most efficient way to do that,'' says Douglas Duncan, chief executive officer of the division, which was the first trucker to call for a fuel-tax increase.

The American Trucking Associations, the Arlington, Virginia, trade group whose members include United Parcel Service Inc. and YRC Worldwide Inc., also backs a fuel-tax increase -- on the condition, says spokesman Clayton Boyce, that ``if it's a highway fuel tax, it's got to go to highway infrastructure.''

Memories are still fresh of the notorious highway law enacted by Bush and the then-Republican-controlled Congress in 2005. Representative Don Young, the Alaska Republican who was chairman of the House Transportation Committee, had proposed a six-year, $375 billion six-year highway bill with a gasoline-tax increase indexed to inflation. While the plan had bipartisan support in the committee, the tax proposal was shelved and the funds were pared back.

The Bridge to Nowhere

By the time Bush signed the $286.5 billion measure into law, it had become laden with lawmakers' pet projects, known in congressional parlance as ``earmarks.'' Among them was $223 million for the project ridiculed by its critics as the ``Bridge to Nowhere,'' linking the Alaskan town of Ketchikan to a sparsely populated island.

Taxpayers for Common Sense, a Washington watchdog group, found that the measure contained 6,373 earmarks, costing more than $24 billion. Some had little to do with repairing roads and bridges: $800,000 for the Transportation and Heritage Museum in Townsend, Tennessee; $2 million for the Fort McHenry Visitors Center and related parking in Maryland.

Critics of a fuel-tax increase warn of similar consequences. ``The first step we ought to take is to look at how we're spending the current revenue stream,'' says James Burnley, 59, transportation secretary under President Ronald Reagan.

Oberstar's proposal, the subject of a Sept. 5 hearing before his committee, would put the new bridge fund off-limits to earmarks. Even so, there's no guarantee a final measure would include such a provision.

`Slush Fund'

Increasing the gas tax ``creates one more big slush fund,'' says Randal O'Toole, a senior fellow at the Cato Institute, a Washington research organization that backs free markets. ``The people who are making these proposals are the same people that were diverting gas taxes into wasteful activities. I don't think the problem is a shortage of money.''

The Minneapolis disaster has even thrust the issue of infrastructure spending into the 2008 presidential campaign. New York Senator Hillary Clinton, the Democratic frontrunner, proposed a $10 billion ``emergency repair fund'' a week after the collapse to make sure bridges, tunnels and roads are safe. One of her Democratic rivals, Senator Chris Dodd of Connecticut, called for a ``national infrastructure bank'' to finance projects.

`Fix It First'

Republican candidate Mitt Romney, who was Massachusetts governor when a Boston highway construction project collapsed and killed a motorist, is promoting a ``fix-it-first'' policy emphasizing the repair of existing roads and bridges over the construction of new ones.

Every candidate will have to devise a plan, says Nick Yaksich, vice president of the Milwaukee-based Association of Equipment Manufacturers, a group that represents companies such as Caterpillar and Deere & Co. that make highway construction equipment. ``I don't think you would have seen that prior to the tragedy,'' he says. ``Unfortunately, it takes a tragedy like we saw in Minnesota for a wake-up call.''

To contact the reporter on this story: John Hughes in Washington at jhughes5@bloomberg.net Angela Greiling Keane in Washington at agreilingkea@bloomberg.net

Last Updated: August 19, 2007 19:50 EDT