Can Congress Keep the Economy from Driving into a Pothole?

As Americans begin taking to the road for summer holidays, the controversy in Washington over a new highway funding bill appears as intractable as ever, despite widespread complaints about pothole-strewn roads and the threat of layoffs in the construction industry as project funds run out.

The long-underfunded Federal Highway Trust Fund is riding on fumes and could effectively run out of money within the next couple of months unless Congress can break a deadlock over new sources of funding. Without new fiscal 2016 federal highway funding, most states will have to shelve highway and mass transit projects, cut back on repaving efforts and toss thousands of construction workers out of their jobs.

Related: Congress Likely to Kick the Can Down America’s Potholed Road

Interstate congestion this year alone is likely to cost the trucking industry far in excess of the $9.2 billion companies lost in 2013 as drivers wasted 141 million hours standing in traffic and taking detours, according to industry figures. And many Americans are being stuck with mechanics’ bills of $500 or more to replace or realign wheels damaged by potholes, according to AAA Mid-Atlantic.

“It is important for all to understand that the decisions made by this committee over the next few months will have effects beyond the immediate solvency issues,” Bill Graves, the president and CEO of the American Trucking Associations, told members of the House Ways and Means Committee on Wednesday. “The federal commitment to investment in transportation, if not properly addressed this year, could be placed in jeopardy for many years, or even decades, to come.”

State officials across the country are reluctant to sign off on new projects without the certainty that federal dollars will continue to flow into their programs. Congress passed a two-month extension of highway funding before its Memorial Day. Now Senate Democrats are threatening to oppose another extension this summer if Congress fails to act on comprehensive legislation within 45 days.

“This is not just an esoteric debate about a line item in a budget,” Graves added in prepared testimony. “Congress’ actions have real consequences, and the decisions this committee makes will determine whether a business succeeds or fails and whether a job is created or eliminated. And most importantly, these decisions will determine the safety of the motoring public.”

Related: Why Winter Ravaged Roads and Bridges Need a Gas Tax Makeover

Business and transportation advocates, along with some lawmakers, have proposed raising the 18.4 cents per gallon federal gasoline tax as a solution for the looming $10 billion shortfall in the current fiscal year, often noting that the tax hasn’t been increased once during the past two decades.

Federal spending on highway programs will total about $44 billion, plus $8 billion for mass transit programs, in the current fiscal year, according to the Congressional Budget Office. Revenues collected for those purposes are projected to be just $34 billion for highways and $5 billion for transit. The CBO has estimated that it will take about $100 billion to close the gap long enough to finance a comprehensive six-year transportation funding bill — the length of time favored by the Obama administration and transportation advocates.

If Graves and other industry and state officials were looking for solace or reassurances from Capitol Hill, they came to the wrong place yesterday.

House Ways and Means Committee Chairman Rep. Paul Ryan (R-WI) — the House’s chief tax writer — opened the hearing on highway and infrastructure funding by declaring he adamantly opposed raising the gas tax. House Speaker John Boehner (R-OH) is also opposed to raising the tax.

“There’s not much happening in this economy to help it grow, but lower gas prices is one of them,” Ryan said, according to The Hill. “Working families have been struggling for years to get by. They’ve looked high and low for good-paying jobs. Their paychecks haven’t grown much at all. And now they’re finally catching a break. It would be downright unfair to take that away from them. So we are not raising gas taxes — plain and simple.”

Related: Obama Says China’s Infrastructure Puts the U.S. to Shame

Both Ryan and President Obama have previously floated proposals for funding a new, multi-year highway program by taxing overseas corporate revenues as part of a comprehensive reform of the federal tax code. Under the so-called repatriation scheme favored by Ryan and other Republicans, the Internal Revenue Service would grant multi-national corporations a reprieve from penalties for dodging prior taxes if they voluntarily agree to move money back to the U.S. and pay a 6.5 percent tax rate on it.

The administration argues that the tax on overseas profits should be mandatory and that the tax rate should be higher. Obama has proposed a one-time, 14 percent tax on about $2 trillion of foreign earnings as a way to fund infrastructure projects.

But with the Republicans and Democrats once again deadlocked over a raft of issues this summer — including trade, defense spending, domestic programs and highways — the notion that the two sides might agree to major tax reform to replenish the highway trust fund seems far-fetched at best.


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