Highway crisis looms

Gridlock in Washington will lead to gridlock across the country if lawmakers can't quickly agree on how to pay for highway and transit programs, President Barack Obama and his top officials warn.
AP Wire
Jul 8, 2014

 

States will begin to feel the pain of cutbacks in federal aid as soon as the first week in August — peak summer driving time — if Congress doesn't act, Transportation Secretary Anthony Foxx said in a letter to states. That's because the balance in the federal Highway Trust Fund is dropping and will soon go below $4 billion, the cushion federal officials say is needed for incoming fuel tax revenue to cover outgoing payments to states.

The cuts will vary from state to state, but will average about 28 percent, Foxx said at a breakfast with reporters. By the end of August, the trust fund's balance is forecast to fall to zero and the cuts could deepen.

A second deadline is coming on Sept. 30 when the government's authority to spend money on transportation programs expires.

As many as 700,000 jobs could be at risk, Obama told a crowd of about 500 gathered on a sweltering day beneath the Key Bridge that spans the Potomac River and joins the District of Columbia with Virginia. "That would be like Congress threatening to lay off the entire population of Denver, Seattle or Boston," he said.

Revenue from federal gas and diesel taxes continues to flow into the trust fund, but the total is expected to be about $8 billion short of the transportation aid the government has allocated to states this year. Over the next six years, a gap of about $100 billion is forecast if transportation spending is maintained at current levels.

At the same time, transportation experts and industries that depend on the nation's highways to get their products to market are calling for greater spending on transportation to shore up aging roads, bridges and tunnels and to accommodate population growth.

"Right now there are more than 100,000 active projects across the country where workers are paving roads and rebuilding bridges and modernizing our transit systems," Obama said. "And soon states may have to choose which projects to continue and which ones to put the brakes on because they're running out of money."

Already some states are cutting back on construction projects because of the uncertainty of federal funding, Foxx said. "I think people will see it in the traffic. I think people will see it in the condition of our roads, he said.

The reason for the shortfall is that revenue from the federal 18.4-cent-a-gallon gasoline and 24.4-cent-a-gallon diesel tax hasn't kept pace with transportation needs. The taxes haven't been increased in more than 20 years, while construction and other costs have continued to go up.

The most obvious solution is to raise fuel taxes, which is what several blue-ribbon commissions have recommended and business groups like the U.S. Chamber of Commerce and the American Trucking Associations have urged. But neither political party nor the White House wants to get out front on a proposal to raise taxes in an election year. Foxx didn't rule out Obama signing legislation that raises the gas tax, but he indicated the administration doesn't believe there is enough support in Congress to pass a gas tax increase.

"We have said if Congress acts on something, we'll keep an open mind," Foxx said.

Instead, Obama is pushing a plan to close tax loopholes and use the revenue to pay for increased transportation spending for the next four years.

"We have a proposal we think is politically acceptable," Foxx said.

House Ways and Means Committee Chairman Dave Camp, R-Michigan, floated a similar proposal in April. But many Republicans say they'd rather offset increases in transportation spending with cuts to other government programs rather than tax increases. And many lawmakers say they want to continue to the trust fund's "user pays" principle by raising money from people who most use the roads, if not through a gas tax then some other means.

Nearly a dozen proposals to address the problem have been floated in Congress, but none have gained traction. House Republicans recently proposed a short-term patch based on savings associated with ending Saturday mail delivery by the postal service. The plan died a quick death when it became clear that many GOP lawmakers wouldn't support it.

Senate Finance Committee Chairman Ron Wyden, D-Ore., offered a plan last week to keep transportation aid flowing for another six months. The plan, which included raising taxes on large trucks, ran into opposition from Republican senators. He dropped the truck tax, but Republicans say they want more spending cuts as part of the package. Further action is expected when Congress returns to work from a Fourth of July break.

In the House, Camp has said he will offer a new plan to shore up the trust fund this week.

 

Comments

Vladtheimp

Obama selling his Stimulus in 2009:

"Because we know we can't build our economic future on the transportation and information networks of the past, we are remaking the American landscape with the largest new investment in our nation's infrastructure since Eisenhower built an Interstate Highway System in the 1950s. (Applause.) Because of this investment, nearly 400,000 men and women will go to work rebuilding our crumbling roads and bridges, repairing our faulty dams and levees, bringing critical broadband connections to businesses and homes in nearly every community in America, upgrading mass transit, building high-speed rail lines that will improve travel and commerce throughout our nation."

Then he spent the majority of the $850 BILLION stimulus on democrat constituencies, like public employee unions and green energy scams, devoting only 3% of the money on roads and bridges.

Now he says there is a crisis unless he gets more money (where have we heard that before?). Line up and pay higher taxes, suckers!

Lanivan

Grow up, Vlad.

"The stimulus bill passed by Democrats in 2009 with almost universal Republican criticism was split into three parts: Just over $200 billion in tax cuts, about $300 billion in direct spending on projects and other aid to states, and just under $300 billion in social safety-net spending through items such as extended unemployment benefits and health insurance subsidies.

The nonpartisan Congressional Budget Office estimates that the parts of the program that got the most criticism -- actual spending on projects and aid packages -- was the most effective in creating jobs.

Tax cuts for middle income workers were less effective while tax cuts for the wealthy were deemed the least effective.

Still, the CBO estimates that at least 1.4 million jobs were created and saved by the direct spending alone, and that as many as 3.6 million jobs were produced while stimulus funds were being spent."

http://money.cnn.com/2011/09/08/...

A request for an additional $8 billion is peanuts, just 1/3 of the $24 billion+ cost to the economy at the hands of the Republican-forced shut-down of government.

In addition, it seems that the Republican House has appropriated more millions to the committee investigating the already year-long and thoroughly investigated Benghazi incident, than they have provided for the VA committee to investigate and report on Veteran's Affairs that affect something like 40 million vets.

Lanivan

And Obama has MADE PERMANENT middle class tax cuts that make the federal income tax rate historically low for the middle class.

The Republicans MADE PERMANENT an increase in the federal tax dollar subsidies to large, mature, corporate Agri-Businesses. Yet food prices continue to climb.

Vladtheimp

Yes, Obama made permanent middle class tax cuts - inexplicably, you failed to note that he did so by enshrining the Bush Tax Cuts on the middle class that had been in effect since 2001 and which Obama and the Democrats railed against every chance they got. Since you and Obama blame Bush for everything bad, I'd think for consistency purposes you would give Bush credit for lowering taxes on the Middle Class for over a decade, which Obama simply ratified in order to raise taxes on the 1%.

Republicans didn't increase the subsidies to Agribusiness - the vote in the Senate was 68-32 with only 9 Democrats opposing the increase. http://www.senate.gov/legislativ...

And to the best of my knowledge, the big increase in subsidies could not have become law unless it was signed by one Barack Hussein Obama.

Will you never tire of these deceptive talking points you get from the pajama boys and girls at Organizing For America?

Lanivan

#1. I didn't go into a detailed account of the historical record of tax cuts because I was simply responding to your desperate cry that Obama will be raising taxes to pay for US infrastructure projects. I was illustrating how Obama had made permanent the current tax rate on the middle class. Again, you leave out a very important part of my concern about the Bush tax cuts: They were made at the same time Bush/Cheney invaded two countries and began what would amount to two decades-long, unfunded wars. Coupled with the seriously expensive Medicare Part D program, the three budget-busters quickly became blew through the fabulous deficit surplus he inherited and quickly became the impetus for the explosion in the Federal debt, which, when interest is added, are the three main reasons why the debt is as high as it is.

#2. President Obama signed the agriculture bill into law because the 5-year bill represented 3 solid years of congressional haggling, and was at least representative of a bi-partisan effort to address the issues, having come together to hammer out and integrate a bill, demonstrating a desire and the ability to actually govern.

Vladtheimp

Grow up Lanny - only 3% of the Stimulus money was spent on the infrastructure, contrary to how O'Bumbler sold it to the public:

" Yesterday's White House report, claiming 6 million jobs saved by the $800 billion stimulus plan, predictably prompted partisan debate on fiscal waste. I will not tread into the foggy land of economic theory, except to note that spending more money intuitively always stimulates economic activity -- but at the cost of economic health in the future if the money isn't invested to stimulate future growth (which economists call a "multiplier" effect).

Probably the wisest investment is in rebuilding America's decaying infrastructure. This was the focus of the president's push for the stimulus back in 2009, and also the headliner in the report issued yesterday: The stimulus "initiated more than 15,000 transportation projects, which will improve nearly 42,000 miles of road, mend or replace over 2,700 bridges, and provide funds for over 12,220 transit vehicles," plus improving 6,000 miles of rail.

These all sound like good investments to me, but I was curious how much of the stimulus plan went to these transportation infrastructure projects. Toward the back of the report (Table 8 on p. 34) there's a chart that gives the number: $30 billion. That's a little more than 3 percent of the total stimulus plan.

Three percent!! American infrastructure recently received a D+ rating from the American Society of Civil Engineers. All those repair projects, listed above, only scratch at the surface of America's decaying infrastructure. Why wasn't more spent on this urgent need? Modernizing American infrastructure will improve competitiveness, create a "greener" footprint, and has a high "multiplier" on each dollar invested. We know that's what President Obama wanted at the outset. Why didn't it happen?"

Lanivan

Perhaps this answers your question, "All those repair projects, listed above, only scratch at the surface of America's decaying infrastructure. Why wasn't more spent on this urgent need?"

"The second of these bills, was the Rebuild America Jobs Act, S. 1769, a bill to put workers back on the job while rebuilding and modernizing America, would've spent $50 billion on transportation infrastructure projects and $10 billion to fund an "infrastructure bank."[26] The bill was introduced by Senator Amy Klobuchar on October 31, 2011 and failed in a 51-49 vote for cloture on November 3, 2011.[26][27] In the failed motion to proceed to consider the legislation, 51 Democrats voted in favor of opening debate on the legislation and 47 Republicans Senators, joined by 1 Democratic Senator Ben Nelson and 1 Independent Senator Joseph Lieberman, voted no.[26] The $60 billion bill investing in roads, bridges and infrastructure, would have been paid with a 0.7% tax on Americans earning more than $1 million per year."

Although admitting this segues off-topic, some info on the green energy investment portion of the 2009 stimulus:

http://www.washingtonpost.com/bl...

This is a good, unbiased article - be sure to scroll down to the part where Romney approved of a major component of the green energy investments.

Wolverine49457

Didn't we allow the lottery, casino's, gas fees not to mentions the ever rising license plate and such to pay for schools and roads? now they are the two biggest beggars out there, more money has never equaled smarter better prepared kids and being that roads are supervised by government officials it's no wonder a road that lasted 20 years is replaced by a road that lasts 20 weeks...someone is chuckling all the way to the bank!.

Michael Johnson

Don't worry, everyone. It's far more important for conservatives to spend $5,657,142 on the House Benghazi Panel. This pretty effectively demonstrates their priorities.

retired DOC

Does anyone know how are we going to be collecting for "road use" from the electric cars that Obama wants? After all they do not buy gas and therefore are not paying in the highway funds.

newsblogger

I believe they plan to tax you per mile driven. (I could be wrong)

Lanivan

Bloody good show on admitting you might be wrong, newsblogger!

newsblogger

"'Shovel-ready' was not as shovel-ready as we expected," Obama said at a meeting with his Jobs and Competitiveness Council today (June 13, 2011) in North Carolina.

The president can admit he was wrong, why can't you Lan?

Lanivan

Allow me to put it this way:

The moment Vlad for once admits he is wrong, I will willingly follow suit (admit I might occasionally be off on an assessment, not reiterate that he is wrong, of course....:-D).

Vladtheimp

My reward for thanking you for bringing new Story information to me?

Lanivan

I'm still in a tizzy over it....

gordbzz231

I do see some of the roads are getting repaired, Grand Haven Road just before Ponaluna, Getty Street on the north side of Seaway, US31 in our county is getting repaved, i went to Lansing a couple of time about this time of year and i see bridges being replaced, new bridge project between Robinson Township and Nunica, but muskegon is the worst i see in West Michigan, Down by Hackle y is almost a two track, bad, so its not all bad new,s

 

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