Marc Goldwein: Feds Warn Transit Agencies About Funding Cut Off

Marc Goldwein is the Senior Vice President and Senior Policy Director of the Committee for a Responsible Federal Budget. He wrote a guest post that appeared on the RealClearPolicy blog. It is reposted below.

Congress faces yet another deadline, and yet again is set to stall. This time, there literally could be a bumpy road ahead.

The current legislation authorizing highway and mass-transit spending is scheduled to expire at the end of the month. Not long after that, the Highway Trust Fund (HTF) will run out of reserves, which will cause road-improvement projects across the country to grind to a halt. Legislative action is required to avoid delaying critical infrastructure projects and the jobs they produce.

A two-month extension of highway funding has already been passed by the House and is likely to be enacted soon. Lawmakers should use the extra time to end the cycle of temporary fixes and produce a long-term solution that is free of gimmicks and is fiscally responsible.

Another short-term extension is in keeping with Washington's recent track record in dealing with similar circumstances. Time after time, deadlines have been nearly missed or even outright disregarded when it comes to important budget and fiscal matters. Lawmakers have often kicked the can down the road with short-term patches, only to be forced to address the same issue again and again. Steering haphazardly over these "fiscal speed bumps" has imperiled the nation's finances and caused voters to question the ability of Congress to function.

In the relatively few instances when an issue was actually resolved, it was done in a way that worsened the already unsustainable long-term national debt outlook. This was the case with the recent "doc fix" that permanently replaced the Sustainable Growth Rate (SGR) formula for Medicare payments to physicians. By our calculations, the "fix" will add over $500 billion to the long-term debt.

Now, Congress faces a highway-funding shortfall of about $175 billion over the next decade. That's the equivalent of a 14-cent-per-gallon gas-tax increase, or more than a 35 percent cut in future spending.

After multiple temporary patches, lawmakers want to kick the can yet again, this time in the hopes that tax reform can be enacted later this year and can provide revenue for the Highway Trust Fund.

With our infrastructure spending underfunded and our tax code badly in need of reform, marrying tax and highway policy offers a rare two-for. But passing tax reform is also very hard — which is why it hasn't happened in almost 30 years — and counting on its passage to fund current highway projects puts those and future projects at risk.

Legislators must come up with a plan that charts a course for stable highway funding while avoiding potholes and wrong turns without driving up the debt.

My colleagues at the Committee for a Responsible Federal Budget and I have written a new paper, "The Road to Sustainable Highway Spending," that lays out such a plan — one that would encourage the passage of tax reform to fund highway spending, but not count on it to keep the program solvent.

The proposal has three components:

1. Get the trust fund up to speed by paying off $25 billion of "legacy costs" from past highway commitments by reducing unnecessary farm subsidies and extending certain spending cuts from the Ryan-Murray budget deal.
2. Bridge the financing gap by ensuring that revenue and spending remain closely in line through a default policy that schedules a 9-cent gas-tax increase one year in the future and limits annual highway spending to revenue collection and interest income.
3. Create a fast lane to tax and transportation reform that uses a special process to give Congress the opportunity to utilize tax reform to find alternative revenue to replace some or all of the scheduled gas-tax increase, pay for higher infrastructure spending, or both.

The plan described above gives Congress both the power and the responsibility to decide how we should finance our infrastructure spending and how large the federal investment should be. But it ensures that every dollar of highway spending is fully paid for, and puts an end to the process of temporary gimmick-ridden patches that pave over the real problem.

We face a rocky road for highway funding because policymakers refuse to work together and make the decisions necessary to move forward. There are lots of options available; Congress must build on those ideas. In "The Road to Sustainable Highway Spending," we illustrate one potential route.

We can't afford any more "my way or the highway" attitude from lawmakers. We need collaboration and leadership. It's time to get to work.

"My Views" are works published by members or staff of the Committee for a Responsible Federal Budget, but they do not necessarily reflect the views of all members of the committee.