» With split power in Congress and a compromised executive, moving forward on transportation will be a delicate project, to say the least.
After the 2010 elections, the future of transportation funding in the United States has been subject to yet another round of questioning. Two years of Democratic control over the White House and Congress led to little serious agreement about how to find federal funding for highways and transit; meanwhile, despite advances in the fields of livable neighborhoods and high-speed rail, those programs may be subjected to considerable rethinking or even elimination after the change in power in the U.S. House.
Whatever the current hysteria over the size of the annual federal deficit and government debt in general, the demand by states and localities for financial aid for the construction and maintenance of transportation projects is unlikely to subside. Repeated warning by groups like the American Society of Civil Engineers about the failure of our public infrastructure today and into the future are not imaginary. Thus at some point, there will have to be some agreement about how to move forward on collecting revenues and allocating grants for the purpose of relieving those difficulties.
If Republican Party candidates campaigned heavily in the 2010 election for fiscal austerity after what they claimed have been two years of Democratic-led profligacy — frequently ignoring the massive budget deficits the party managed to accumulate when it had full control of the government between 2003 and 2007 — their seriousness about the matter has been arguably put to rest this week thanks to the news that the GOP Senatorial delegation is undergoing significant in-fighting over whether to ban earmarks (which the party has been criticizing on and off for years) and the revelation that self-proclaimed budget-cutter New Jersey Governor Chris Christie was a spend-thrift with public funds during his stint as a U.S. Attorney.
Take this hypocrisy as you wish, but the moral of the story is that the Republican adherence to reducing the size of the federal government is less than firm. This could be good news for future investment in public infrastructure — as long as a significant number of the party’s members can be convinced of the importance of such spending over the next two years.
The announcement yesterday by the Co-Chairs of the National Commission on Fiscal Responsibility and Reform of a draft policy for relieving problems associated with the growth in the federal deficit was significant in terms of its handling of transportation issues. Though the draft is unlikely to go anywhere — other members of the Congressional and President Obama-appointed group immediately announced their dislike for many of the measures, especially those that would reduce Social Security payments even as taxes are reduced — its recommendations are indicative of the current thinking about how to solve the problems facing the budget.
Specifically, the proposal advocates moving Transportation Trust Fund spending to a mandatory budget line (currently, with aid from the general budget, it is partially “discretionary”) thanks to a gradual 15¢ increase in the gas tax (from 18.4¢ today) beginning in 2013. In addition, the report would eliminate all Congressional earmarks, many of which go to transportation projects. The net effect would be basically eliminating questions of transportation from debate over the budget and limiting spending to what is earned.
This is an adamantly anti-Keynesian approach that proposes “shared sacrifice” in which Washington should “tighten its belt,” despite considerable evidence that government deficit spending plays an important role in relieving depressed economies. In terms of transportation, the fuel tax increase would correspond to a prohibition on general fund bailouts of the fund and presumably make spending on mobility from any revenue source other than the fuel tax impossible, despite the report’s initial claim that it is in favor of increased investment in infrastructure. This, however, negates the possibility that we need a phase change in thinking about how to move forward on transportation funding and spending in the United States and ignores technology changes that are slowly but surely limiting the value of the fuel tax in general.
Enacting the policies framed in the draft report also would permanently enshrine the idea that transportation funding is generated entirely from automobile user fees, making the transition to an economy in which cars are not the primary mode of transportation very difficult. The effect of using a user fee on cars to fund transportation over the past 65 years has been that the vast majority of federal spending has been on highways rather than alternatives. There are arguments to be made for using user fees on automobiles to compensate for the negative externalities produced by free driving, but for the purposes of envisioning a society that moves in a different manner, separating those revenues from expenditures could be a useful rhetorical device.
The release of the draft report by the Co-Chairs of the Fiscal Responsibility commission comes just two weeks after a new funding idea has suddenly come to the fore: Reforming the fuel tax from a per-gallon fee to a percentage of sales fee. If implemented, such a system could work as following: If a gallon of gas costs $3.00, a 5% fee would provide the government 15¢ in revenues, while a $6 per gallon cost would provide the government 30¢. The current system gives 18.4¢ to the federal government no matter how much the gallon costs. The problem with this idea, of course, is that the price of gas fluctuates wildly through the years — far more so than the total number of gallons consumed — and so revenues into the trust fund would move up and down similarly. That’s a dangerous proposition.