The great money raid
Now that a long-term highway bill has been signed, sealed and delivered, it’s on to other work for Congress. Unfortunately, that will likely not include the work necessary to truly fix our infrastructure and safety programs.
The compromises that were made by Republicans and Democrats to make this highway bill, officially called Fixing America’s Surface Transportation Act, or FAST Act (I love how politicians try to trick us by inserting the word “fixing” when we all know it accomplishes something far less), possibly pale in comparison to the compromises that will be needed to effectively fund infrastructure investment going forward. Sure, this bill is paid for—more or less. But it was done in the tradition of that Grand Ole Washington parlor game that has been played for so many years—shuffling money from one account to another.
In past situations where the Highway Trust Fund was about to run out of funds, Congress shifted money from the Dept. of Treasury’s General Fund. Prior to the Federal Aid Highway Act (FAHA) of 1956, which created the Highway Trust Fund, infrastructure was paid for with money from the General Fund. FAHA instituted a federal fuel tax for highway construction and maintenance. That tax, originally 3¢ per gallon, was increased periodically through the years, reaching 14¢ when President George W. Bush boosted it in the Omnibus Budget Reconciliation Act of 1990. President Bill Clinton increased it to 18.4¢ in 1993, which is where it sits today, some 23 years later.
What the tax has never been, though, is tied to inflation, which is why our infrastructure funding faces a continual shortfall. The simple answer is to increase the gas and diesel taxes. But the current political environment means few politicians have the stomach to push a tax increase of any kind. And we’re not talking about a few cents. Some estimates suggest we need at least a 15¢ increase just to maintain the current state of infrastructure, let alone improve it.
In this new $305 billion, five-year highway bill, Congress has found offsets to pay for it. Those offsets, totaling some $70 billion, include changes to custom fees and passport rules, outsourcing some IRS tax collection efforts, and using some dividends from the Federal Reserve Bank, reports The Hill. In other words, Congress has shifted money around once again to fund the status quo.
Despite its best efforts in forging a long-term bill, Congress was unable, or unwilling, to figure out how to pay for a $16 billion annual shortfall from the Highway Trust Fund. The fund takes in about $34 billion per year in fuel taxes but pays out nearly $50 billion to cover transportation projects. I’m no economist, but I know that funding formula doesn’t work long term. And with rising construction costs and fewer tax dollars generated from ever more fuel-efficient vehicles, I think that ever-wise Jedi Master Yoda would sum up our current situation as thus: In trouble, we seem to be.
And this is where the real work begins—or should begin. It’s often said that Americans vote with their pocketbooks. Simply put, politicians who want to raise taxes have trouble getting re-elected.
If our elected leaders are unwilling to take that risk to truly fix our infrastructure funding needs, then now is the time to start working on alternative plans. When 2020 rolls around, hopefully the negotiating team for the next highway bill can focus on moving our transportation system into the 22nd century rather than on which federal department’s coffers can be raided to pay for upkeep of a crumbling highway system.
