The Countdown
Our major federal trust funds are approaching insolvency.
What is the Highway Trust Fund?
The Highway Trust Fund finances the federal government’s surface transportation programs. The fund has two accounts, one for highways and one for mass transit. Most of the revenue flowing into the trust fund comes from the 18.4-cent-per-gallon federal gas tax. Smaller amounts come from other transportation-related taxes and fees.
Why is it in trouble?
For over 20 years, transportation spending has exceeded the dedicated revenue flowing into the trust fund as the gas tax has failed to keep pace with inflation. (It hasn’t been raised since 1993.) Vehicles are also becoming more fuel efficient. Lawmakers have been regularly transferring general revenues into the trust fund to keep it afloat instead of enacting reforms to actually fix the disconnect between spending and revenues.
What can we do to fix the Highway Trust Fund?
Lawmakers will need to find ways to increase revenue and acknowledge new transportation technology when doing so. Or spending will have to be cut to close the current structural imbalance.
Get Into the Weeds
Ten Options to Secure the Highway Trust Fund
Options exist to shore up the Highway trust fund's finances and close the structural imbalance between spending and revenue. Although one-time general revenue transfers have kept the trust fund afloat in recent years, they have done nothing to correct the widening gap between dedicated revenue coming into the trust fund and spending coming out of it.
We highlight ten possible options to improve Highway Trust Fund solvency by increasing revenue or reducing spending. These options are meant to serve as illustrative examples and could be scaled up or down in a variety of ways.
A Deeper Dive
Trust Fund Solvency Could Stabilize the Debt
Restoring solvency to the major trust funds could stabilize debt as a share of the economy, albeit at a very high level. We estimate that when dynamic...
Restoring Trust Fund Solvency Would Reduce Long-Term Debt Growth
Restoring solvency to the major trust funds would reduce one-half to four-fifths of the projected debt-to-GDP growth over the next three decades. The...
CBO's Budget Options to Improve Trust Fund Solvency
The Congressional Budget Office (CBO) recently published its latest Options for Reducing the Deficit reports, outlining 76 policy options across two...
What Can I Do?
Reach Out to Congress
We need Congress to fix these tough issues before our seniors, our economy, and future generations are in jeopardy. Find your representative and share your concerns.