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Still Gridlocked after All These Years

July 17, 2015 in Economics

By Randal O’Toole

Randal O’Toole

Despite controlling both houses of Congress, Republicans haven’t been able to agree on a highway-and-transit bill. Instead, when the previous law expired on May31, they passed a short-term extension that expires at the end of this month, when they’ll probably pass another short-term extension.

Traditionally, transportation laws sunset and must be renewed every six years. But since the 2005 bill expired in 2011, Congress has passed more than thirty short-term extensions. The result is uncertainty for state transportation agencies, unsustainable deficit spending, and a continuation of some programs that probably do more harm than good.

The source of the deadlock is a provision in the 2005 bill requiring that spending on highways and transit grow each year even if revenues to the highway trust fund fail to cover that growth. After 2007, high oil prices and a depressed economy reduced gasoline sales, with the result that Congress is now spending $52 billion per year on highways and transit when it collects only $40 billion in highway user fees. This has led to three factions in Congress. A tax-and-spend group wants to increase fuel taxes by at least ten cents per gallon, which would cover the deficit, and preferably even more to allow increased infrastructure spending.

The solution is to distribute both highway and transit funds using simple formulas, not as political grants.”

This approach has the support of businesses that expect to profit from that spending. However, most members of Congress are reluctant to support a tax increase that voters will see almost every day.

Second are fiscal conservatives who want to reduce spending to be no more than revenues. This approach is strongly opposed by numerous special interest groups who will fight any cuts to their portions of transportation funds.

The third group, which includes both President Obama and many Republican leaders in Congress, might be called fiscal liberals, as they oppose a tax increase but want to keep spending at the current excessive levels. This may be the largest faction because it minimizes potential criticisms from either voters who pay gas taxes or special interest groups that profit from transportation dollars.

To break the deadlock, we need to go back to the first principles that Congress used when it created the Highway Trust Fund in 1956 and built the Interstate Highway System, the largest and most successful public works project in history.

The most important principle was pay as …read more

Source: OP-EDS

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