Gridlock II

Congress has three work weeks to figure out what to do about the highways & transit law that expires on July 31. As noted here a month ago, Congress remains gridlocked over the issue. Two weeks ago, the Senate Environment & Public Works Committee bravely passed a bill that increases spending by 3 percent, but failed to spell out where that money would come from.

That’s the heart of the issue: Congress is spending $52 billion a year on highways and transit, but is collecting only $40 billion a year in gas taxes and other highway user fees. Though there are just two political parties, the gridlock results from the fact that there are four different factions, each with its own solution to the problem of how to reconcile the difference between spending and revenues.

First are those who want to raise highway user fees to cover the entire $52 billion, and maybe a little more. A six-cent increase in taxes would cover the $52 billion, while even a nine-cent increase would still result in a tax that, after adjusting for inflation, would be less than it was in 1994, the last time it was increased.

At the opposite end of the spectrum are those who want to reduce spending to be no more than revenues. Most but not all of the necessary cut of $12 billion per year could be achieved by cutting transit out and just spending money on highways. Representative Thomas Massie (R-KY) has specifically proposed to stop funding transit out of highway user fees to help reconcile the $12 billion deficit.

In-between these two positions are those who want to keep on spending but don’t want to raise highway user fees. They want their cake and eat it too because they fear the special interest groups that would be hurt if spending were cut and they fear the voters who would be upset if user fees were increased.

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Republicans don’t like the idea of raising taxes on anyone, and certainly not on corporations. They tend to like the idea of increasing oil & gas drilling on federal lands and dedicating the royalties to transportation. But as far as Democrats are concerned, that’s just as much of a non-starter as raising corporate taxes.

Wherever the money goes, the Antiplanner thinks the most important thing is to return the Highway Trust Fund to a pay-as-you-go basis, meaning Congress should spend no more than it takes in. Federal highway funding operated this way from 1956 through 2005 with Congress renewing the law about every six years with hardly any problems. Since going off the pay-as-you-go system, Congress has had to pass more than 30 short-term extensions because it can’t figure out how to make up the deficit.

That means the outliers–the ones who want to either raise user fees or cut spending–are the only ones with sensible approaches. The idea of magically making new money from corporate taxes, oil & gas drilling, or other sources makes no sense because even if that money were real there is no particular reason why it should go for transportation and not defense, education, deficit reduction, or anything else.

To the Antiplanner, the Democrats who want to raise fuel taxes are more fiscally conservative than the Republicans who oppose raising them. Those Republicans are just as much tax-and-spend liberals as the Democrats who want to raise corporate taxes.

Would it be possible for those who want to raise taxes–mostly left-wing Democrats–and those who want to reduce spending–mostly tea-party Republicans–to work together to develop a sensible bill? Maybe not, but I suspect such a coalition is the only hope Congress has of passing anything other than short-term extensions for the foreseeable future.