Last week, John Boehner’s spokesman, Brendan Buck, falsely asserted that the highway bill is “completely paid for –without raising the gas tax,” and will not engender further bailouts.  The reality is that this bill will impel an immediate $40 billion bailout from the general fund, while relying on phantom offsets to pay for it over 10 years.  Moreover, these offsets will never pass and will never come to fruition, while the deficit-producing bailout will occur immediately.

Here are the inviolable facts.  This 5-year (2012-2016) surface transportation reauthorization bill, H.R. 7, will commit $262.8 billion in spending through 2016, even though the revenue from the user-pay taxes (gas tax and other highway related taxes and fees) will only reach $193.2 billion over the same period.  Even working with CBO’s numbers, which don’t account for FY 2012, there will still be a $55.2 billion deficit over 4 years ($210.3 billion in contract authority vs. $155.1 billion in revenue).

Boehner can propagate his protestations from now until tomorrow, but the fact is that, under this bill, contract authority for transportation will outpace its funding source by roughly $55 billion from FY2013 through FY 2016.  That is their solemn commitment to the Democrats; that spending will definitely be authorized at those levels.  Any “offsets” discussed henceforth are notional, phantom, temporary, and/or stridently opposed by Democrats.

Back in November, Boehner announced that he would agree to spend roughly $52.5 billion per year on transportation, instead of $38 billion (projected annual revenues from gas tax) as originally proposed by the House.  But fear not, he promised to offset the deficits with royalties from new drilling in ANWR, the Outer Continental Shelf, and from shale fracking in the western states.  We all agree that these are laudable proposals that should get passed as standalone measures.  But the idea of using non-existent royalties to pay off an immediate 5-year deficit was always inane.

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Last week, John Boehner’s spokesman, Brendan Buck, falsely asserted that the highway bill is “completely paid for –without raising the gas tax,” and will not engender further bailouts.  The reality is that this bill will impel an immediate $40 billion bailout from the general fund, while relying on phantom offsets to pay for it over 10 years.  Moreover, these offsets will never pass and will never come to fruition, while the deficit-producing bailout will occur immediately.

Here are the inviolable facts.  This 5-year (2012-2016) surface transportation reauthorization bill, H.R. 7, will commit $262.8 billion in spending through 2016, even though the revenue from the user-pay taxes (gas tax and other highway related taxes and fees) will only reach $193.2 billion over the same period.  Even working with CBO’s numbers, which don’t account for FY 2012, there will still be a $55.2 billion deficit over 4 years ($210.3 billion in contract authority vs. $155.1 billion in revenue).

Boehner can propagate his protestations from now until tomorrow, but the fact is that, under this bill, contract authority for transportation will outpace its funding source by roughly $55 billion from FY2013 through FY 2016.  That is their solemn commitment to the Democrats; that spending will definitely be authorized at those levels.  Any “offsets” discussed henceforth are notional, phantom, temporary, and/or stridently opposed by Democrats.

Back in November, Boehner announced that he would agree to spend roughly $52.5 billion per year on transportation, instead of $38 billion (projected annual revenues from gas tax) as originally proposed by the House.  But fear not, he promised to offset the deficits with royalties from new drilling in ANWR, the Outer Continental Shelf, and from shale fracking in the western states.  We all agree that these are laudable proposals that should get passed as standalone measures.  But the idea of using non-existent royalties to pay off an immediate 5-year deficit was always inane.

Read More →

Last week, several House committees favorably reported the $260 billion 5-year House GOP highway bill to the full body.  This 846-page behemoth is now headed to a floor vote sometime next week.  Simply put, conservatives oppose the House leadership’s highway bill (H.R. 7) because it continues the failed top-down federal approach to transportation spending, while precluding devolution to the states for at least another five years.  Moreover, it eschews the pay-as-you-go funding mechanism of the Highway Trust Fund (eerily similar to the Social Security Trust Fund!) by permanently authorizing a higher level of spending than the fund’s corresponding revenue source; the federal gas tax.

Nevertheless, let’s disregard the policy concerns for a moment and focus on the political argument.  Just as they did with the budget battles of 2011, GOP leadership is selling this bill as the best alternative, a virtuous improvement of past policies.  And undoubtedly, on paper, the version that will be presented to conservative House members (as opposed to the final version after they cave) contains many good provisions:

• It eliminates the mandate requiring states spend 10% of their transportation funds on transportation enhancements and bike lanes.
• No earmarks. Dozens of old and/or redundant programs are eliminated.
• While it continues to fund Mass Transit to the tune of $8.4 billion annually, this legislation bars gas tax revenue from being diverted in order to support public transportation. [Although, in fine print, the legislation will still fund public transportation projects with a one-time $40 billion appropriation transfer from an unknown source (general fund?) into a renamed account called the “Alternative Transportation Account.”]
• The deficit between the trust fund outlays and the gas tax revenue (anywhere from $30-60 billion over 5 years) will be offset, in part, with royalties from opening lands in Alaska, parts of the continental US, and offshore to oil and gas exploration.
• Yet again, there is a provision slipped into the bill that grants a permit to TransCanada Corp. for construction of the Keystone pipeline.

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Last week, several House committees favorably reported the $260 billion 5-year House GOP highway bill to the full body.  This 846-page behemoth is now headed to a floor vote sometime next week.  Simply put, conservatives oppose the House leadership’s highway bill (H.R. 7) because it continues the failed top-down federal approach to transportation spending, while precluding devolution to the states for at least another five years.  Moreover, it eschews the pay-as-you-go funding mechanism of the Highway Trust Fund (eerily similar to the Social Security Trust Fund!) by permanently authorizing a higher level of spending than the fund’s corresponding revenue source; the federal gas tax.

Nevertheless, let’s disregard the policy concerns for a moment and focus on the political argument.  Just as they did with the budget battles of 2011, GOP leadership is selling this bill as the best alternative, a virtuous improvement of past policies.  And undoubtedly, on paper, the version that will be presented to conservative House members (as opposed to the final version after they cave) contains many good provisions:

• It eliminates the mandate requiring states spend 10% of their transportation funds on transportation enhancements and bike lanes.
• No earmarks. Dozens of old and/or redundant programs are eliminated.
• While it continues to fund Mass Transit to the tune of $8.4 billion annually, this legislation bars gas tax revenue from being diverted in order to support public transportation. [Although, in fine print, the legislation will still fund public transportation projects with a one-time $40 billion appropriation transfer from an unknown source (general fund?) into a renamed account called the “Alternative Transportation Account.”]
• The deficit between the trust fund outlays and the gas tax revenue (anywhere from $30-60 billion over 5 years) will be offset, in part, with royalties from opening lands in Alaska, parts of the continental US, and offshore to oil and gas exploration.
• Yet again, there is a provision slipped into the bill that grants a permit to TransCanada Corp. for construction of the Keystone pipeline.

Read More →

One of the numerous legislative deadlines that Congress will be forced to confront this session is the expiration of the 8th short-term extension of the 2005 surface transportation authorization law (SAFETEA-LU).  With federal transportation spending growing beyond its revenue source, an imbalance between donor and recipient states, inefficient and superfluous construction projects popping up all over the country, and burdensome mass transit mandates on states, it is time to inject some federalism into transportation spending.

Throughout the presidential campaign, many of the candidates have expressed broad views of state’s rights, while decrying the expansion of the federal government.  In doing so, some of the candidates have expressed the conviction that states have the right to implement tyranny or pick winners and losers, as long as the federal government stays out of it.  Romneycare and state subsidies for green energy are good examples.  The reality is that states don’t have rights; they certainly don’t have the power to impose tyranny on citizens by forcing them to buy health insurance or regulating the water in their toilet bowels – to name a few.  They do, however, reserve powers under our federalist system of governance to implement legitimate functions of government.  A quintessential example of such a legitimate power is control over transportation and infrastructure spending.

The Highway Trust Fund was established in 1956 to fund the Interstate Highway System (IHS).  The fund, which is administered by the DOT’s Federal Highway Administration, has been purveyed by the federal gasoline tax, which now stands at 18.4 cents per gallon (24.4 for diesel fuel).  Beginning in 1983, Congress began siphoning off some of the gas tax revenue for the great liberal sacred cow; the urban mass transit system.  Today, mass transit receives $10.2 billion in annual appropriations, accounting for a whopping 20% of transportation spending.  Additionally, the DOT mandates that states use as much as 10% of their funding for all sorts of local pork projects, such as bike paths and roadside flowers.

As a result of the inefficiencies and wasteful mandates of our top-down approach to transportation spending, trust fund outlays have exceeded its revenue source by an average of $12 billion per year, even though the IHS – the catalyst for the gasoline tax – has been completed for 20 years.  In 2008, the phantom trust fund was bailed out with $35 billion in general revenue, and has been running a deficit for the past few years.  Congress has not passed a 6-year reauthorization bill since 2005, relying on a slew of short-term extensions, the last of which is scheduled to expire on March 31.

Short-term funding is no way to plan for long-term infrastructure projects.  In their alacrity to gobble up the short-term money before it runs out, state and local governments tend to use the funds on small time and indivisible projects, such as incessant road repaving, instead of better planned long-term projects.

It’s time for a long-term solution, one which will inject much-needed federalism and free-market solutions into our inefficient and expensive transportation policy.

Read More →

One of the numerous legislative deadlines that Congress will be forced to confront this session is the expiration of the 8th short-term extension of the 2005 surface transportation authorization law (SAFETEA-LU).  With federal transportation spending growing beyond its revenue source, an imbalance between donor and recipient states, inefficient and superfluous construction projects popping up all over the country, and burdensome mass transit mandates on states, it is time to inject some federalism into transportation spending.

Throughout the presidential campaign, many of the candidates have expressed broad views of state’s rights, while decrying the expansion of the federal government.  In doing so, some of the candidates have expressed the conviction that states have the right to implement tyranny or pick winners and losers, as long as the federal government stays out of it.  Romneycare and state subsidies for green energy are good examples.  The reality is that states don’t have rights; they certainly don’t have the power to impose tyranny on citizens by forcing them to buy health insurance or regulating the water in their toilet bowels – to name a few.  They do, however, reserve powers under our federalist system of governance to implement legitimate functions of government.  A quintessential example of such a legitimate power is control over transportation and infrastructure spending.

The Highway Trust Fund was established in 1956 to fund the Interstate Highway System (IHS).  The fund, which is administered by the DOT’s Federal Highway Administration, has been purveyed by the federal gasoline tax, which now stands at 18.4 cents per gallon (24.4 for diesel fuel).  Beginning in 1983, Congress began siphoning off some of the gas tax revenue for the great liberal sacred cow; the urban mass transit system.  Today, mass transit receives $10.2 billion in annual appropriations, accounting for a whopping 20% of transportation spending.  Additionally, the DOT mandates that states use as much as 10% of their funding for all sorts of local pork projects, such as bike paths and roadside flowers.

As a result of the inefficiencies and wasteful mandates of our top-down approach to transportation spending, trust fund outlays have exceeded its revenue source by an average of $12 billion per year, even though the IHS – the catalyst for the gasoline tax – has been completed for 20 years.  In 2008, the phantom trust fund was bailed out with $35 billion in general revenue, and has been running a deficit for the past few years.  Congress has not passed a 6-year reauthorization bill since 2005, relying on a slew of short-term extensions, the last of which is scheduled to expire on March 31.

Short-term funding is no way to plan for long-term infrastructure projects.  In their alacrity to gobble up the short-term money before it runs out, state and local governments tend to use the funds on small time and indivisible projects, such as incessant road repaving, instead of better planned long-term projects.

It’s time for a long-term solution, one which will inject much-needed federalism and free-market solutions into our inefficient and expensive transportation policy.

Read More →