Americans Face a Bumpy Road As Highway Bill Stalls
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The Fiscal Times
June 25, 2014

Well folks, better buckle up for a bumpy ride this summer because Congress appears deadlocked over financing new federal highway and infrastructure construction projects for the coming year.

Sen. Chuck Schumer of New York, a senior Democratic leader and major player in the negotiations, offered a gloomy outlook Wednesday morning for the prospects of congressional action before the highway trust fund is projected to run out of money in late July or early August.

The House, Senate and the Obama Administration are all at odds over the best approach to replenish the federal highway program and avert a mid-summer construction shutdown that would put at risk 700,000 jobs, according to a Department of Transportation estimate.

Related: Kevin McCarthy Slams the Brakes on a Gas Tax Hike

“At the end of the day, I think it would be a disaster to let the trust fund run out,” Schumer told a gathering of reporters at a breakfast sponsored by the Wall Street Journal. “It would stop all highway projects.”

“Amazingly enough, the chances of getting it done are iffy,” he added.

The highway trust fund has operated on an 18.4-cents-per-gallon federal gasoline tax that hasn’t been raised since 1993. Currently, the tax generates about $39 billion a year but the trust fund faces annual shortfalls of roughly $20 billion as owners of more fuel-efficient vehicles pay less into the fund while construction costs rise.

Schumer said that lawmakers have abandoned  efforts to craft  a comprehensive six-year, $100 billion  reauthorization bill this summer to keep federal dollars flowing through the pipeline for highway and road paving and improvements, bridge construction and transit  projects.

Related: 700,000 Jobs at Risk If Highway Trust Fund Falters

Instead, with time running out, Senate Finance Committee Chairman Ron Wyden is promoting a short-term, $10 billion package of tax loophole closers and offsetting spending cuts to keep the trust fund afloat until after the November election.

Wyden will try to mark up his plan in committee as early as Thursday, but even there, “we are having some difficulty” bringing Democrats and Republicans together,” Schumer said.

Sen. Orrin Hatch of Utah, the ranking Republican on the Finance Committee, said recently that he and Wyden have had discussions about “a short-term agreement where we know we can raise some money and then work on the long term,” according to The Wall Street Journal.

Related: Why You’ll Need a Tank to Drive America’s Highways

However, there is little unanimity among Senate and House Republicans on how to proceed. House Budget Committee Chairman Paul Ryan (R-WI), for example, unveiled a fiscal 2015 budget proposal earlier this year that would cut surface transportation funding by $172 billion over the coming decade, according to one estimate.

House Ways and Means Committee Chairman Dave Camp (R-MI) issued a statement today signaling opposition to Wyden’s stop-gap efforts. “I am disappointed that the Senate appears to be heading down a partisan road on highway funding,” he said. “Simply put, there is no way tax hikes to pay for more spending will fly in the House.”

Last weekend, Rep.Kevin McCarthy, the newly elected House Majority Leader, dismissed a recent proposal to boost the federal gas tax by an additional 12 cents over the next two years and peg the increase to inflation.

“No, that’s a Democrat idea,” McCarthy said during an appearance on Fox News Sunday. Yet the proposal was floated by a Republican, Sen. Bob Corker of Tennessee, and Democratic Sen. Chris Murphy of Connecticut.

The Obama administration and members of Congress have floated a handful of other ways to address the trust fund crisis. The administration, for example, would close corporate tax loopholes and use the revenue to expand highway and transit funding for four years.

Senate Majority Leader Harry Reid (D-NV) and Sen. Rand Paul (R-KY) favor beefing up the fund by enticing U.S. multi-national companies to repatriate offshore profits in return for a one-time massive tax break. House Speaker John Boehner (R-OH) said he would favor ending most Saturday postal deliveries and shift the savings to the trust fund.

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Washington Editor and D.C. Bureau Chief Eric Pianin is a veteran journalist who has covered the federal government, congressional budget and tax issues, and national politics. He spent over 25 years at The Washington Post.