Written by Randal O'Toole
The Highway Trust Fund will be out of money in a few months, mainly because Congress insists on spending more than it takes in. To avert this supposed crisis, Republican leaders are proposing to cut Saturday deliveries of mail and use the savings to replenish the trust fund.
There’s actually a tiny grain of Constitutional sense behind this proposal. The original legal justification for federal involvement in highways, back when members of Congress actually cared about such things, was that the Constitution authorizes Congress “to establish Post Offices and post Roads.” If the “post roads” aren’t paying for themselves, then who better to pay for them than the post offices?
In this sense, the Republican proposal is slightly more rational than President Obama’s proposal to use the increased revenues from a corporate income tax reform that will eliminate loopholes but reduce corporate tax rates. The administration predicts reducing rates will reduce corporate tax obligations in the long run but closing loopholes will increase revenues in the short run (interesting how Obama is promising corporations lower taxes after he is out of office in exchange for higher taxes when he is still in office). Obama wants to use some of those increased revenues to supplement the Highway Trust Fund.
More than offsetting the tiny Constitutional sense of the Republican proposal is that it will take ten years of Postal Service cuts in order to cover one year’s worth of red ink from the Highway Trust Fund. In other words, the plan is far from sustainable and will simply lead to another transportation cliff in a year or so.
The reason we see these nonsensical plans is that Congress likes to pretend it has a rule that increased expenditures in one part of the federal budget must be offset by savings somewhere else. In fact, Congress has freely ignored this rule in the past–no one asked where the revenue to pay for the wars in Iraq or Afghanistan would come from–but the rule is there, so anyone proposing to replenish the trust fund must find something to offset that cost.
“The Saturday delivery change makes a lot of sense on its own,” observes the Washington Post. “So does corporate tax reform. But continuing to jury-rig the highway budget with unrelated ‘offsets’ does not.” The Post implores Congress to “develop some backbone” and “make the obvious policy choices,” which to the Post means increasing gas taxes.
But, as I’ve noted elsewhere, even increasing the gas tax is, at best, a medium-term fix. Inflation combined with more fuel-efficient cars steadily eats away at the value of this tax, which also provides little revenue for local roads and does nothing about fixing congestion, the nation’s swept-under-the-asphalt $200-billion problem. Instead, higher gas taxes will simply enable Congressional pork-outs on inane projects such as streetcars and other high-cost, low-capacity transit lines.
Instead of increasing gas taxes, my modest proposal is for Congress to stop spending more than it collects in gas taxes and other transportation revenues. Congress managed to build the Interstate Highway System, widely considered to be the largest and one of the most successful public works projects in history, entirely out of highway user fees without once ever letting the Highway Trust Fund run out of money. It did so by funding construction out of user fees on a strict, pay-as-you-go basis, which meant that if costs were underestimated, construction simply took longer rather than be rewarded with taxpayer-funded bailouts.
It was only in the 1990s, when up to 20 percent of gas taxes were being diverted to transit and Congress was earmarking the heck out of the hexennial transportation bills, that Congress decided that what it spent was too important to be limited by such things as, you know, revenues. It was one thing when we were building the Interstate Highway System, which cost less than $2 million per lane mile (in today’s dollars) yet carries 20 percent of all passenger travel and 15 percent of all freight in America. It was quite another thing when Congressman Porko’s pet $20 million pedestrian bridge or Senator Spendo’s pet $100-million-per-mile light-rail line might be delayed by revenue shortfalls.
Since Congress first mandated that funds be spent regardless of revenues, Congress has had to spend $55 billion in general funds bailing out the trust fund. As it happens, this is roughly the amount of federal gas taxes that are diverted to transit every ten years.
That these kinds of proposals have any credibility at all is due to the apparent weakening of the Tea Party in recent elections. After 2010, when the Tea Party had won numerous seats in Congress, House Speaker John Boehner and then-House Transportation Committee Chair John Mica fell all over themselves to produce a fiscally conservative bill that was, unfortunately, rejected by so-called “transit Republicans” who didn’t want to see cuts in federal transit spending. Now that the Tea Party’s apparent influence is waning, established Republicans are once again willing to take a principled stand in favor of pork-barrel spending.
Personally, I think the best thing would be for Congress to go off the transportation cliff. As pointed out by transportation expert Ken Orski, the states increasingly regard the feds as an unreliable partner in transportation funding, and nearly half have developed alternatives ways of financing highways. It is time for members of Congress who think the whole country would grind to a halt without their careful control and spending to learn that, at least with regards to transportation, we are actually better off without them.
Randal O’Toole is a Cato Institute Senior Fellow working on urban growth, public land, and transportation issues