A proposal to fund federal highway programs for the next year is becoming increasingly divisive among conservatives, as GOP members are split on whether to accept a short-term bill funded with what many say are revenue “gimmicks,” or a longer-term proposal funded by an increase in the gas tax.
In addition, many conservative groups outside Congress are calling for a third approach that involves reforms to reduce federal spending, and giving more authority to states over highway funds.
Earlier this month, the House passed legislation providing $10.8 billion in funding through next May. But 45 Republicans voted against this bill, many of whom complained that’s paid for with new taxes on companies and higher customs fees over the next 10 years, which will pay for just 10 months of highway spending.
Heritage Action and other groups roundly criticized that bill, and said it missed an opportunity to find funding by reducing federal spending and reducing regulations that inflate the cost of federal highway projects.
On Monday, Sen. Bob Corker (R-Tenn.) agreed that the House funding plan is an “embarrassment” to Congress.
“I have long been against the disgraceful practice of spending money today and paying for it in the future,” Corker said on the Senate floor. “It is shameful, it is irresponsible, and it is generational theft.”
One of those gimmicks is known as “pension smoothing,” which changes private pension rules to allow companies to contribute less, which raises their short-term tax liabilities. Corker called pension smoothing “one of the worst kinds of budget gimmicks,” and warned that all it does is steal future tax revenue from the future.
But Corker and Sen. Chris Murphy (D-Conn.) have proposed an alternative highway plan that may be even more objectionable to Republicans in Congress — an increase in the gas tax. The two senators are proposing a 12 cent increase over the next two years to help pay for federal highway projects, and then indexing the gas tax to inflation.
The gas tax hasn’t been increased in 20 years, and Corker said if highway projects are worth doing, they should be paid for upfront.
“In Washington, far too often, we huff and puff about paying for proposals that are unpopular, yet throw future generations under the bus when public pressure mounts on popular proposals that have broad support,” Corker said back in June. “Congress should be embarrassed that it has played chicken with the Highway Trust Fund and allowed it to become one of the largest budgeting failures in the federal government.”
Based on the broad aversion to a higher gas tax, and the strength of the House vote in favor of the short-term fix, the Senate may have no other choice but to accept something similar to the House bill. As of this week, neither chamber was considering any legislation that would cut spending in other areas of the government, or give states more flexibility on highway spending as Heritage Action has demanded.
Heritage Action has also argued that constant bailouts are making it harder to undertake the reforms needed to restructure federal highway spending.
“Instead of governing by emergency fiat and continually kicking the can down the road, conservative reformers have an opportunity to focus their colleagues and their constituents on a real solution — putting more of this authority in the hands of states and localities and actually reforming highway policy,” Heritage Action CEO Michael Needham said last week.
Without congressional action, the so-called federal highway trust fund will run out, which would force the government to dole out funds proportionately to states as they come in. Many have said that would lead to a reduction to states that could shut down many highway projects this summer.
Heritage Action has said the emergency is being overstated, since the federal government funds about a quarter of all highway spending, and that triaging federal funds would mean just a 7 percent reduction overall.