Former Transportation Secretary Ray LaHood, a champion of highways and infrastructure, is furious.
With less than a month before temporary funding runs out for the federal Highway Trust Fund, Congress is nowhere close to a multi-year deal to provide increased funding and stability to the nation’s highway, bridge and transit systems, plus other infrastructure programs.
“Everybody is just left hanging, and the country is falling apart,” LaHood said in an interview late last week. “Infrastructure is falling apart, infrastructure is crumbling. The country is one big pothole right now.”
A new construction season is upon us after a brutal winter that left huge potholes and crumbling highways and bridges in its wake. Yet state officials across the country are reluctant to sign off on new projects without the certainty that federal dollars will continue to flow into their programs.
LaHood, a former Republican representative from Illinois who served in the Obama Cabinet, is co-chair of Building America’s Future, a bipartisan coalition of elected officials seeking increased investment in the nation’s sagging infrastructure. In its most recent report card, the American Society of Civil Engineers put the U.S. infrastructure spending gap at $125 billion a year just to maintain and repair highways and bridges. It gave the nation’s infrastructure a D+ and pointed to a tremendous backlog and desperate need for modernization.
For the most part, Republican and Democratic lawmakers and the White House have been flailing for more than a year in search of agreement on a new long-term transportation and infrastructure program – and more important, how to pay for it. But the politicians and policymakers appear as far from the finish line as ever.
A May 31 deadline is looming for expiration of the temporary funding approved before last November’s election that is keeping the federal Highway Trust Fund from going broke. There has been plenty of talk about major new initiatives and creative financing mechanisms to get beyond traditional reliance on the federal gasoline tax – but nothing seems to be gaining traction.
And President Obama has repeatedly bemoaned what he views as this country’s second-rate infrastructure programs when compared with those of China and other global economic rivals. “If they [China] need to build some stuff, they can build it. And over time, that wears away our advantage competitively,” the president said in a speech to business leaders last December.
Last month, China persuaded 57 countries, not including the U.S., to join its new $100 billion Asian Infrastructure Investment Bank (AIIB) – a major victory that upstaged Obama and the World Bank.
Short of a miraculous turnabout in talks in the next couple of weeks, experts say, Congress will likely do what it does best: kick the can down the road and approve another short-term fix.
“There really are no developments on the Hill to follow,” LaHood said. “Nobody is doing anything. The House wasn’t even in session this week, and there’s just nothing happening. The Senate was in, but they were obviously working on other things, like passing the Iran nuclear bill, which is an important thing.”
Senate Democrats echoed LaHood’s concerns but blamed the problem on the new Republican leadership of Congress.
“Our friends on the other side of the aisle haven’t issued a peep about what to do about it,” Sen. Chuck Schumer (D-NY) said at a news conference on Thursday, according to The Washington Post. “Please tell us how you intend to avoid a highway shutdown.”
Sen. Benjamin L. Cardin (D-MD) fretted that the summer highway construction season has been launched and yet scores of construction projects in his state are being threatened by a lack of fresh funding. “Every one of these projects requires a long-term partnership with the federal government,” he said.
Schumer, Cardin and others asserted that the current temporary levels of spending should be expanded to the level that the White House suggested last month in its six-year, $78 billion transportation plan.
If the president’s proposal prevailed, it would boost annual spending by about $25 billion, according to the Post. But the bills under consideration by House and Senate Republicans would keep funding near the current level of about $50 billion a year.
Precisely how much should be spent and where to find the funding remains the unsolved mystery.
Last summer, when the Highway Trust Fund faced insolvency because of slumping federal gas tax revenues, Congress intervened at the last minute and shifted $10.8 billion from the general fund to keep the highway fund from going bankrupt. The trust fund is financed strictly with revenues from 18.4 cents-per-gallon tax on gasoline, which has not been raised in more than 20 years and is not adjusted for inflation.
LaHood and many state transportation officials and business groups favor a simple boost in the gas tax by as much as 10 cents per gallon. But others have different ideas.
House Ways and Means Committee Chair Paul Ryan (R-WI) has said he is exploring ways to generate billions of dollars in fresh revenues needed to prop up the Highway Trust Fund through comprehensive tax reform.
Obama for his part has proposed a one-time, 14 percent tax on nearly $2 trillion of foreign earnings as a way to fund infrastructure projects. Major American companies are supposed to pay a 35 percent tax on overseas earnings, but many avoid that by using a legal loophole that allows them to keep the earnings in other countries indefinitely.
Obama and many on Capitol Hill have come to the conclusion that a strict reliance on the federal gas tax and periodic shifts in federal funds to keep the federal highway program operating no longer is an option. They believe the best funding solution is to restructure the corporate tax system to generate fresh revenues.
Until there is a meeting of the minds in Washington, state officials and highway advocacy groups will be nervously awaiting a decision.
“Clearly states are having to be very careful now because until funding is put in place beyond May 31, they can’t make any assumptions,” explained Rocky Moretti, director of policy and research for TRIP, a private non-profit transportation research organization. “Unfortunately, they have to be very conservative at a time when there are significant needs – both with declining pavement conditions and significant numbers of structurally deficient bridges.”
Moreover, he said, vehicle travel that was stagnant throughout the Great Recession is finally beginning to pick up again. “So the transportation needs are mounting just as the federal transportation spigot potentially could be turned off on May 31,” he said.
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