The other road funding fight: Congress punts on highway fund

Congress has not adopted a full, 6-year highway funding bill since 2009 and, with a July 31 deadline fast approaching when federal money for road projects will run dry, it appears that lawmakers again will resort to a short-term patch for the nation’s crumbling infrastructure.
The House voted Wednesday in favor of a 5-month extension of the Highway Trust Fund but, beyond that, it appears that the closest Congress will come to completing the job in the near future is a bill that would kick the can down the road until after the 2016 elections.

The fight over federal road funding in Washington contains some direct parallels to the battle over state road funding in Lansing.

Washington and Lansing have both ducked on keeping pace with adequate revenues, levying the same federal/state gas tax over the past two decades. Many Republicans in both capitals refuse to raise the gas tax. And lawmakers at the federal and state level continue to rely upon small infusions of money for road construction projects rather than settling on a long-term fix.

According to Politico, Democrats and a small cabal of Republicans on Capitol Hill, fed up with Congress’ tendency to slap on short-term patches, are pushing for a transportation bill that runs for several years.
Senate Majority Leader Mitch McConnell, following House Speaker John Boehner’s lead, has said no to new revenues and he dismisses the possibility that the Senate can hammer out a multi-year pact before the trust fund deadline.

Politico reports:

“The federal gas tax has been flat for more than two decades even as it brings in billions less than Congress chooses to spend each year building infrastructure. But raising that tax is politically unpalatable to the vast majority of Congress, and McConnell stomped on the idea (last week) after House Speaker John Boehner (R-Ohio) did the same earlier this year.
“‘Let me just say, we’re not going to raise the gas tax. We’re not going to raise the gas tax,’ McConnell said. ‘The environment committee has come out with a 6-year bill … but there is considerable skepticism that you could pay for a bill of a 6-year duration.’”
“McConnell (R-Ky.) also said he was “skeptical” about the prospect of using a bipartisan plan from Sens. Chuck Schumer (D-N.Y.) and Rob Portman (R-Ohio) to overhaul some corporate taxes as a way to pay for crumbling highways, bridges and public transportation and said it would be too difficult to take on something so ambitious with just three weeks before the deadline.”

That tax would impact $2 trillion in foreign profits held overseas by US corporations. Their tax rate—as yet unspecified—would be lower than the current U.S. corporate rate of 35 percent, according to the TaxVox blog.

The Senate still has to approve the temporary fix and it's unclear if they will capitulate to Boehner and his crew. The House’s $8.1 billion patch, running through mid-December 2015,  would offset the expense by  tightening IRS compliance rules.

The nonpartisan Committee for a Responsible Federal Budget reacted this way:

“‘The offsets are solid, no question. But any short-term patch should also be accompanied with a process for long-term reform as we proposed in the Road to Sustainable Highway Spending,’ said Maya MacGuineas, CRFB president. ‘Washington needs to come to grips with reality -- our highway system needs a secure financing system. Instead of wasting time debating a 5-month fix, our leaders need to begin working on a more permanent solution to responsibly pay for our national infrastructure.’”