As Highway Fund Drains, Are We on the Road to Ruin, or Not?

The nation’s Highway Trust Fund remains on the road to insolvency this summer, with a zero balance expected by Sept. 30, because fuel taxes that feed the fund haven’t kept pace with construction needs.

It’s something the Transportation Department has been warning lawmakers about for months.

But no sooner did Senate Democrats this week describe a $9 billion “patch” plan to keep the federal spigot open for highway and transit projects through the end of the year, partly by raising taxes on commercial trucks, than House Republicans flatly rejected it.

House Republican leaders had their own plan last month—which, oddly for some, involved cutting back Saturday postal delivery to find some money. But Senate Democrats and outside conservative groups ridiculed that idea. In fact, many of the Republicans’ own rank-and-file members did not like it much either.

The White House also has put forward a rescue plan. But that has not gained traction in either the House or the Senate, despite warnings that hundreds of infrastructure projects could soon grind to a halt and thousands of construction jobs could be put on hold.

So what are lawmakers now preparing to do? They are set to leave Washington on Thursday for their Independence Day recess and not planning to return until July 8.

Is the nation facing a real crisis then, or not?

“Today, we are facing a mayday situation, and I am here to send an SOS call to Congress and the American people,” Sen. Barbara Boxer, chair of the Environment and Public Works Committee, said Wednesday. “We are on the verge of a transportation government shutdown.”

That sounds horrible. But wait, House Speaker John Boehner was giving off a somewhat less urgent tone across the Capitol.

“I know the House Ways and Means Committee is working on a package, and I expect that after the district work period, over the Fourth of July, we’ll see some activity there,” said Boehner. Will that be something that both chambers can agree on, then? “We’ll let the Ways and Means Committee do their work,” Boehner replied.

Meanwhile, Ways and Means Chairman Dave Camp said he was “disappointed that the Senate appears to be heading down a partisan road on highway funding.”

He was referring to the new stopgap plan unveiled this week by Senate Finance Chairman Ron Wyden, to be formally marked up by his committee Thursday. Along with a higher tax on commercial trucks, it includes such things as a provision requiring people who inherit IRAs and other retirement plans to take taxable distributions over five years.

“Simply put, there is no way tax hikes to pay for more spending will fly in the House,” Camp added.

This, then, is shaping up to be latest round of an all-too-familiar legislative dance.

On one hand, some conservative groups and Republican lawmakers appear to be seizing on the funding shortfall as an opportunity to reopen a policy debate over what they see as another broken program in Washington. At the same time they are downplaying the dire “mayday” warnings as they engage in that debate.

“We’ve been through real crises—this is not one of those,” said a senior House Republican aide. “No highways are being shut down; nobody’s going to be stacking tires in the road. It just simply means that some projects will not get funded for a while.”

Many conservatives say it is time for Congress to consider “evolving” the federal government out of some transportation decisions and giving more authority to the states. They point to legislation such as bills introduced by Sen. Mike Lee, R-Utah, and Rep. Tom Graves, R-Ga., that would phase out the federal gasoline gas and turn over most of the federal transportation program to the states.

“What sense does it make for [fuel] tax dollars to come up from Tennessee to Washington, then have Tennessee fight to have those tax dollars brought back home?” asked Barney Keller, a spokesman for the conservative group Club for Growth. Keller said the trust fund is an example of what’s wrong with Washington, where there is resistance to fixing a broken system.

Dan Holler, a spokesman for Heritage Action, offered a similar argument, saying the highway fund is clearly spending beyond its means. Like Keller, he said Heritage applauds the efforts of some lawmakers to consider other solutions and cut through what he called the “hyperbole” of warnings that a crisis will occur if Congress fails to act now.

But in the Senate, Democrats such as Boxer and Budget Committee Chairwoman Patty Murray nonetheless insist that Congress does need to act.

“Republican leaders are going to have to find a way to come to the table and work with Democrats on a responsible solution to this looming construction shutdown—and they should do so sooner rather than later, because the window is closing on reaching an agreement to avert this crisis,” Murray said Wednesday.

Boxer, in declaring an outright “mayday situation,” said Wednesday that thousands of businesses and millions of jobs depend on the fund. She added that the impacts of “this uncertainty” are already being felt, as many states have announced that they are postponing or canceling critical transportation projects due to the fear that federal funds will be delayed or cut off.

“This will have a domino effect that will be felt throughout the economy,” she said, adding, “The House has done nothing thus far to mark up any legislation to save the trust fund.”