Congress’s most recent fight over highway spending seemed awfully familiar. Once again, authorized cash for transportation projects was dwindling. Once again, no one could agree on a proper extension. And once again, Congress ended up passing a stopgap bill – the 34th in six years, in fact.
By now, it should go without saying that this is no way to pay for public works. And many in Congress had promised that this time would be different. A long-term bill, they said, was sure to materialize. Yet paying for it proved as challenging as ever. The Senate hoped a witch’s brew of budgeting gimmicks could be stirred up and transformed into cash. The House hoped more aggressive tax collection might do the trick.
What both approaches had in common was that they had nothing to do with highways. They thus negated the primary virtue of the Highway Trust Fund, which is that it’s paid for by the very people who use the roads, via an excise tax on gas. And, for good measure, both approaches aimed to effectively cover operating expenses with a one-time cash infusion. It doesn’t take an economist to spot the flaw in that.
Sadly, the substance of the Senate’s long-term bill – the nuts and bolts of surface-transportation policy – was solid. It was bipartisan and requested only modestly higher spending. It would have improved freight shipment and alleviated congestion. And it sensibly boosted funding to fix battered bridges and interstates.
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Now, optimists hope the two houses might still hash out a compromise once they reconvene, or that a separate plan – perhaps one corralling the proceeds of a one-time tax on corporate profits held abroad – can top up the trust fund when the stopgap expires.
There’s a better way. That is to modestly increase the federal gas tax – which has been stuck at 18.4 cents a gallon since 1993 – and index it to inflation. Then Congress should look for new ways to pay for highways, bearing in mind that Americans are driving less and cars are becoming more fuel- efficient. The goal should be to ensure that highway infrastructure is still largely paid for by drivers.
A federal tax on vehicle-miles traveled– an idea several states are considering – may be one path forward, once the technology is reliable and privacy safeguards are in place. Another might be to gradually wind down the trust fund and start taxing oil at refineries instead. Imposing more user fees on roads and bridges and expanding the use of public-private partnerships for construction projects would also help.
The main thing to avoid is yet more budget trickery – endless repetition of the same fiscal nonsense, while the underlying problems get worse. For a time, budgets can overlook some sleight of hand.
Roads and bridges aren’t so forgiving.