Economy

Blame game sabotages highway trust fund

If you live in America, undoubtedly you drive on roads and highways maintained by the state in which you reside. And, just as certainly, many miles of those byways are in poor repair. They’re not safe. The rutted, pot-holed macadam causes expensive damage to your vehicle. Don’t count on this changing any time soon.

Friday, Transportation Secretary Mary Peters asked the Senate to prop up the federal highway trust fund with $8 billion. The fund, established in 1956 as the national financial engine of road building and repair, has a deficit. The fund provides the money the federal government uses to reimburse states for up to 80 to 90 percent of highway construction and maintenance costs. The House has already approved the extra cash.

If the Senate fails to add its approval, at the end of this month the federal government will delay and occasionally reduce the payments it sends to the states for construction it has agreed to underwrite. That means you’ll keep on driving your vehicle over the same badly damaged, poorly maintained roads that you have been, probably for years.

What should anger you is that every time you fill your tank, you’re paying 18.4 cents a gallon into that fund (24.4 cents if you’re tanking with diesel).

Why has this deficit come to pass?

Americans have been driving less — 50 billion miles less between November 2007 and June than the same period a year ago. Writes Eric M. Weiss of The Washington Post:

The trust has been hammered because its main source of funding is the gas tax, which has not been increased since the Clinton administration. The high cost of gasoline has resulted in less consumption and, therefore, fewer dollars flowing into the trust fund.

What are the consequences?

Secretary Peters says the fund will take in $4.4 billion in funding requests this month — with only $2.7 billion available. Payments will delayed or pro-rated. Projects may be stalled or stopped. Added interest costs may be shifted to the states. Reports Mr. Weiss:

Transportation officials said the move will not result in the wholesale cancellation of road projects, but could have a profound effect on future contracting and the reliability of the federal government as a partner. [emphasis added]

Whom should we blame?

The usual suspects, of course, are the legislative and executive branches of government. Congress has not raised the federal excise tax on motor fuels since 1993. In January, after a two-year study, the National Surface Transportation Policy and Revenue Study Commission called for raising the tax by 40 cents a gallon over five years as a drastic fix for just as drastic national infrastructure needs. But a few years ago, even a modest increase of 5.45 cents brought on the analytical ire of conservatives.

Politicians won’t touch the gasoline tax. They believe it would be political suicide to add a greater burden to taxpayers and consumers already stuck paying on average $3.68 a gallon as of Sept. 1.

But politician do, in fact, touch the federal highway trust fund. Repeatedly. Reports Joan Lowy of the Associated Press:

Compounding the problem, Peters said, is federal lawmakers’ habit of loading up highway spending bills with pet projects, or earmarks, for their home states. The current highway spending bill has more than 6,000 earmarks totaling $24 billion, she said. [emphasis added]

Secretary Peters pointedly blames Congress for failing to act on administration initiative (she is, after all, a September 2006 appointee of President Bush) in a DOT press release:

Secretary Peters noted that today’s problem would have been avoided had Congress acted on the President’s fiscally responsible proposal from last February to transfer funds from the highway trust fund’s mass transit account, which has a surplus. That measure would not have affected current transit investments at all …

Congress, of course, does not believe robbing Peter to pay Paul is wise. If the mass transit account has a surplus — why? Is it because the Bush administration has not properly focused on maintaining present mass transit and expanding it as a means to lower overall transportation costs for commuters and reduce national greenhouse gas emissions?

Congressional Democrats blame the Bush administration for the delicate condition of the highway trust fund, accusing it of “nickel and diming our degrading roads, bridges, highways,” said Sen. Chuck Schumer, D-N.Y. In a statement, he said:

For years, we have been trying to increase funding to repair our nation’s antiquated infrastructure, but the Bush administration and the Republicans in Congress have thrown up ideological roadblocks in front of every effort. Now, we are facing a severe crisis that could delay vital modernization projects across the country.

Meanwhile, Sen. Schumer’s lovely scapegoating rhetoric notwithstanding, the trust fund remains in arrears. The gas tax remains untouchable. Earmarks in transportation persist. Democrats blame Republicans; Republicans blame Democrats. In the next two months as one Democratic senator pummels a Republican senator before we vote for president, just now much attention do you think the federal motor fuels excise tax and the highway trust fund are likely to get?

About as much as those potholes you see every day.

Additional reading:

• “Highway Trust Fund: Fact Sheet” by the federal Department of Transportation.
I-35W bridge and the nation’s infrastructure: Little has changed.
Pols fail to comprehend breadth of infrastructure crisis.
Bad highways? Blame politics, technology, new driving habits.
Bad bridges? Still far too few fixes.

1 reply »

  1. Great article, Denny. The funny thing is, this problem could have been fixed long ago — well before the current upturn in energy prices. It should have been clear to anyone paying attention (and I’ll bet staffers were) that a sudden rise in gasoline prices would reduce tax revenues for roads, since the gasoline tax is a flat tax per gallon. What was needed way back when was a percentage sales tax on gasoline that equaled the flat tax at the time. There would have been no public outcry, then, because there would have been no net increase in taxes. A percentage tax follows the price of gasoline, so that a drop in gasoline usage due to price increases can yield more, not fewer, tax revenues. A drop in gasoline prices would normally increase use, so tax revenues would be unlikely to plunge too badly.

    It was a flat tax on volume, and it always needed to be a sales tax on revenues. And that’s what it needs to be now.

    But you’re right. The American public is so stupid that any attempt to increase the tax will get you thrown out of office as the other side attacks you for raising taxes.

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