Yesterday, the Senate passed a six-year transportation bill that increases spending on highways and transit but only provides three years of funding for that increase. As theWashington Post commented, “only by Washington’s low standards could anyone confuse the Senate’s plan with ‘good government.’”
Meanwhile, House majority leader Kevin McCarthy says the House will ignore the Senate bill in favor of its own five-month extension to the existing transportation law. Since the existing law expires at the end of this week, the two houses are playing a game of chicken to see which one will swerve course first and approve the other house’s bill.
As I noted a couple of weeks ago, the source of the gridlock is Congress’ decision ten years ago to change the Highway Trust Fund from a pay-as-you-go system to one reliant on deficit spending. This led to three factions: one, mostly liberal Democrats, wants to end deficits by raising the gas tax; a second, mostly conservative Republicans, wants to end deficits by reducing spending; and the third, which includes people from both sides of the aisle, wants to keep spending without raising gas taxes.
This third group is no doubt the largest because it is politically the easiest position to take, and is the one responsible for the Senate bill. Gas taxes and other federal highway user fees bring in about $40 billion a year, while Congress is currently spending about $52 billion a year and wants to increase it by at least the rate of inflation. To make up the difference, the Senate bill includes a hodge-podge of ideas such as increasing customs fees and selling oil from the strategic petroleum reserve. As the Post noted, the one thing these sources of funds all have in common is that “none is related to surface transportation.”
According to the Congressional Budget Office’s analysis, these funding schemes will only be enough to last through 2018, after which Congress will have to find another $51 billion to keep the spending going for another three years. That shortfall alone is probably what killed the bill in the House, though it would be nice to think that House members were also wary of a 1,000-plus-page bill sprung on them at the last minute (scroll down to “SA 2266” or search for “DRIVE Act”).
Naturally, the Senate bill does nothing to fix any of the perverse incentives found in the current law, such as the fund that encourages transit agencies to choose the most expensive, rather than the most effective, transit solution in any corridor. Instead, it rewards transit agencies that have neglected their infrastructure by creating a new “state of good repair fund” to help restore that infrastructure, effectively telling the agencies that they can continue spending on new transit lines they can’t afford to maintain and Congress will bail them out.
These games won’t end until Congress does what is right rather than what is easy by returning to a true, pay-as-you-go system. While I agree with fiscal conservatives who think that the federal government doesn’t need to be involved in most transportation issues in the first place, as long as it is involved, the deficit spending is doing more harm than good by making state and local transportation agencies increasingly reliant on the federal government rather than on user fees. Opponents of the current system need to do more than support immediate devolution; they need to find a strategic path from the current system to one that is more responsive to transportation users.
This article originally appeared in Cato at Liberty.
