The Highway Trust Fund: The Liberal Mind At Work

I never cease to be amazed at how the liberal/progressive/Democrat minds work. And here is yet another example of them “working.”

The Highway Trust Fund, the major source of federal surface transportation funding, risks bankruptcy as early as 2014, according to the Government Accountability Office (GAO), in part because of government-imposed CAFE standards and government-subsidized alternative fuel vehicles. (Whether CAFE is good or not is not being discussed here.) The Highway Trust Fund gets 90% of its funding via the federal gasoline excise tax. As car companies are forced to make more fuel efficient cars and are forced to produce more alternative fuel vehicles, the government expects that gasoline consumption will decline, leading to lower revenues from the federal gas tax. The government must reevaluate its transportation priorities. Simply spending more money, the GAO said, would not be the answer.

This “revelation” comes from a GAO report, “TRANSPORTATION Key Issues and Management Challenges,” issued on March 29, 2012.

Three solutions to this dilemma have been proposed:

1. A general tax, proposed by President Obama, that would essentially tax Americans twice to pay for transportation, once when they buy gas, and again through their income and investment taxes. But this proposal is contrary to the ‘user pays’ principle, and might not be sustainable in the long term given the federal government’s growing fiscal challenge.
2. Expand current loan and loan guarantee programs to the Department of Transportation (DOT) that provide up front funding for transportation projects, providing states and localities with immediate federal funds instead of the normal federal grants. This solution, however, would create problems for DOT since it would have to manage a growing portfolio of loans and loan guarantees. 
3. A National Infrastructure Bank, also proposed by Obama, which would be responsible for leveraging federal money through loans and loan guarantees for transportation and energy projects. However, the GAO said the project would be fraught with difficulties, including the normal problems that come with creating new government agencies as well as a tension between funding projects that carry national importance and funding ones that are politically well-connected (something with which Obama has demonstrated a real problem).

Despite the solution proposals, the GAO said that they all are variations on one theme – federal debt. That debt would eventually need to be backed up by revenues, which comes from only two places: higher taxes and/or higher fees.

BTW, highways are not the only projects funded by the Highway Trust Fund:

• Congestion Mitigation and Air Quality Program gave grants, totaling $8.6 billion, for light rail, buses, bike paths, traffic-signal timing and other projects dedicated to reducing air pollution and road congestion.
• The Safe Routes To Schools Program spent $612 million to make bicycling and walking to school safe and routine.
• The Recreational Trails Program spent $370 million to build hiking, bicycle and snowmobile paths.
• A grant program to prohibit racial profiling spent $37.5 million. 
• The America’s Byway Resource Center spent $13.5 million to train, inform, and provide expertise to improve the byway system.

All we can do is slowly shake our heads and say “Duh.”

But that’s just my opinion.