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Highway Trust Fund Racing to Insolvency as Congress Gridlocked

Image: Highway Trust Fund Racing to Insolvency as Congress Gridlocked

Tuesday, 15 Jul 2014 09:21 AM

By Melissa Clyne

The deadline is fast approaching for the federal Highway Trust Fund’s insolvency, but even the threat of the fund’s certain depletion isn’t enough to get Congress to pass a long-term fix, according to The Wall Street Journal.

Not only do Democrats and Republicans disagree on the length of an emergency patch, they also differ on where the money should come from.

The White House has expressed support for a GOP bill by Ways and Means Chairman Dave Camp, a Michigan Republican, which would keep the fund solvent through May 2015 via $10.8 billion from pension tax changes, customs fees, and taking money from a fund to repair leaking underground storage fuel tanks, Fox News reports.

Some Democrats, however, want to approve just $8 billion, which would exhaust the fund by Dec. 31, forcing Congress to figure out a long-term solution. Oregon Democratic Rep. Earl Blumenauer told Fox that temporarily extending the fund further only puts the onus on the next Congress.

"When you take off the pressure that's forcing us to work, what incentive is there to take on the hard questions?" he asked.

The Highway Fund is expected to become insolvent by the end of August, according to the Department of Transportation.

The fund is responsible for paying for all of the country’s federally supported transportation infrastructure, MSNBC reports, and if it becomes insolvent, 700,000 workers would be unemployed, and infrastructure projects would be abandoned.

And then there’s the issue of the funding source.

Some members of the GOP don’t like that funding, even temporarily, comes from sources that have nothing to do with highways. The overarching recommendation has been to raise fuel taxes, a politically unpopular move that is gaining little traction in an election year, according to Fox, which notes that doing so in the early 1990s was a catalyst for President George H.W. Bush’s 1992 defeat and the ouster of House and Senate Democrats in 1994.

Compounding the issue today is that even with a gas tax increase –as proposed by Tennessee Sen. Bob Corker, a Republican, and Connecticut Sen. Chris Murphy, a Democrat, to hike the gas tax by 12 cents a gallon over the next two years and tie it to annual inflation increases – people drive less and cars are more fuel efficient, making a gas tax increase insufficient as a long-term solution for the fund’s solvency, according to the Journal.

The Transportation Department has warned states to expect a 28 percent reduction in aid, Fox reports, with some states already delaying or canceling projects.

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