Congress last week again failed to address the structural challenges facing the Highway Trust Fund. Instead lawmakers approved a 5-year bill that increases spending on highway and transit projects but relies on unrelated revenue sources and budget gimmicks.
Supporters say the legislation, which President Obama signed into law Friday, puts the trust fund on solid financial footing. But it fails to secure an adequate and sustainable revenue source to support the trust fund and responsibly pay for transportation work that lawmakers in both parties want.
The trust fund faces a growing gap between rising costs and the revenue collected from motor fuel taxes, which have not been raised in over two decades. The new legislation, bridging differences between earlier House and Senate bills, promises $70 billion to cover projected trust-fund shortfalls through Fiscal 2020.
But the funding gimmicks drew well-deserved criticism, with Rep. Reid Ribble (R-Wis.) saying he was “deeply discouraged by the phony pay-fors.”
The $70 billion will supposedly come from various offsets, the largest of which siphons off certain funds from the Federal Reserve. Fed Chair Janet Yellen called this a “bad precedent” for using Fed funds to support other government programs.
Further demonstrating lawmakers’ distaste for fiscal reform, the legislation also reversed a modest cut to agricultural subsidies they had approved in October.
External links:
CBO Cost Estimate of Reconciled Transportation Bill
Fixing the Highway Trust Fund (Concord Coalition)
The Dumbest Way to Fund America’s Infrastructure (Bloomberg View)
Highway Bill Takes Congress on FAST Track to More Debt (TaxVox)
