Where are the Fiscal Conservatives? GOP Bailing Out Failed Highway Fund
It’s almost as if every week the GOP-controlled Congress passes more legislation to increase spending with gimmicks for offsets. Today, the House plans to bail out the failed Highway Trust Fund, which should have been devolved to the states long ago, with offsets that can only be described as intangible, and to the extent they are actualized, they will represent tax increases. I’m sure many of you had this in mind when voting for Republican candidates in 2014.
After completion of the Interstate Highway System in 1992, it would have been more efficient for the federal government to return responsibility for highways and bridges – along with the revenue from the federal gas tax – to the states. The federal system, which costs roughly $52 billion per year, only brings in about $34 billion -$39 billion in annual revenue from the gas tax. As a result, the trust fund has received $65 billion in bailout funds since 2008.
The reason the trust fund continues to lose money is because so much of the funds are diverted for special interest projects or wasted by the inefficient process of having Washington lobbyists divvy up a vital function that is inextricably dependent on the diverse geographical needs of 50 states. For example, according to the Heritage Foundation, Davis Bacon prevailing wage mandates jack up the cost of construction projects by 22%. Mass transit accounts for 15% of the cost, even though the gas tax was supposed to be a pay-as-you-go tax for those who use highways and bridges, not the holy grail of urban politics.
In addition, the Transportation Alternatives Program (TAP), which diverts gas tax funds for bike paths and highway beautification projects, sucks up over $800 million per year. The Congestion Mitigation and Air Quality Improvement (CMAQ) Program is a slush fund of mandates from environmental regulations to social engineering projects that cost several billions. Taken as a whole, these wasteful programs and federal laws account for most, if not all, of the funding gap in the Highway Trust Fund.
Finally, the paralysis, waste, and fraud that is associated with the lobbyist-driven federal transportation policy should prompt any sane lawmaker to support returning transportation policy to the states where the cost and benefit of each project could be measured fairly and efficiently.
Yet, given that both parties are stuck on stupid, they plan to spend another $8.1 billion bailing out the trust fund until December 18 – without any reforms. The reason they chose that date is because members are willing to pass anything in order to go home for Christmas. The impending doom of a highway funding lapse could then be used as a catch-all bill that will contain a number of odious provisions and more spending.
The bill before the House today (H.R. 3038), is being sold as legislation that is fully offset and budget neutral. So which other government program is being eliminated or cut as a result of this bill, you might ask? None.
For starters, this is another case of Congress offsetting a four-month expenditure with “savings” spread out over 10 years. But it gets worse. The biggest offset— $3.1 billion worth— comes from TSA travel fees…from the years 2024-2026! Under current law, the TSA is prevented from spending that revenue through 2024 and must use it for savings. This bill extends that accounting until 2026. You try paying for an immediate expenditure with potential revenue from 9-11 years from now!
The remaining $5 billion in offsets originates from what the political class refers to as “increased tax compliance.” In the real world that either means illusory and intangible savings or (if aggressively enforced) a straight up tax increase. The bulk of this projected revenue would come from empowering the IRS to force banks to document more information from borrowers, more aggressively reassess tax returns with alleged misrepresentation of property value, and squeeze out more revenue from the death tax. Suddenly Republicans are all in favor of the death tax and empowering the IRS.
Furthermore, in the absence of any serious reforms, such as devolution or refocusing the core priorities of the trust fund, Congress should at least offset the cost of this temporary patch by enforcing tax compliance of federal workers. Let the federal employees lead by example. According to an IRS report from last year, federal employees collectively owed $3.3 billion in unpaid taxes. How come this offset is never proposed for the endless list of bills increasing spending?
What is so offensive about their desire to spend more money and find more tax revenue is that the Treasury is bringing in more revenue than ever before. Due to surging revenues from a booming Wall Street, the Treasury has received $2.4 trillion in tax revenue for the first three quarters in FY 2015 and is projected to end the fiscal year with $3.1 trillion.
It’s quite evident that not only are Republicans and Democrats – many of who rail against wasteful spending – inexorably opposed to reducing the size of government, they can’t even subsist on record-high revenue. We already know that there are no social conservatives left in Washington. Where are the fiscal conservatives? (“GOP Declares: “My Way for the Failed Highway Fund”, originally posted HERE)
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