The voices of Tax Policy Center's researchers and staff
In 24 days, federal spending authority under the highway trust fund comes to an end. Without legislation to keep the program going and money to finance it, road projects will slow in the midst of high construction season.
And where are Congress and the White House on this perennial issue? Nowhere.
In late June, after much drama, the Senate Environment and Public Works Committee approved a bipartisan six-year surface transportation bill that sponsors call the Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act.
There is only one problem with this innovative vision for highways and transit: It is, at the moment, totally unfunded.
The public works committee doesn’t do funding. That job belongs to the Senate Finance Committee, where a funding deal is broken down on the median strip. There is zero chance Congress will fully bankroll a six-year bill—at a cost of at least $90 billion—any time soon.
The real question, then, is how lawmakers will come up with the $11 billion they’ll need to fill the trust fund for the rest of this year. When they do, it will be the 34th temporary funding bill Congress has approved over the past six years.
The challenges are long-standing. Neither Congress nor President Obama support an increase in the gas tax, which has become an increasingly poor way to fund roads, both because people drive less and because inflation has eaten away at the value of a tax that was last raised two decades ago.
Without a gas tax, there is no obvious way to finance the trust fund. Some lawmakers like the idea of using revenue from a temporary tax holiday on repatriated foreign earnings. But that scheme got a thumbs down from business lobbyists, who want any money from taxes on their overseas profits to help fund corporate rate reductions. And Finance Committee chair Orrin Hatch (R-UT) has called the idea “not a serious proposal.”
Senators Chuck Schumer (D-NY) and Rob Portman (R-OH), among others, are still looking for a way to get international tax reform on Congress’ to-do list for this year, but chances are as remote as passage of a six-year highway bill.
Hatch, perhaps despairing of finding any new revenue for the trust fund or perhaps just looking to take a jab at Democrats, is talking about paying for a short-term extension by cutting other spending. Senate Democrats, who are demanding a long-term highway bill, will reflexively reject such pay-fors.
Of course, there are always gimmicks such as the “pension smoothing” plan that funded past extensions of the highway bill.
As if matters are not difficult enough, senators now want to tie the fate of the Export-Import Bank to the highway bill, which they consider must-pass legislation. Anti-government conservatives want to kill off the Ex-Im Bank, which in their minds has become a poster child for wasteful subsidies. But pro-business Republicans and many Democrats want to preserve the bank, which subsidizes many US-based manufacturers that are competing for overseas markets.
What’s the controversy got to do with roads? Not a thing. Except now, the highway bill will have to carry the extra weight of another controversial measure.
What will Congress do? In the end, the best bet is a temporary extension of the highway bill through the end of the year, when it will be wrapped up in a last-minute debt limit/government funding/expired tax provisions Lollapalooza.
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