Sometime during the next fiscal year (FY 2009) the federal
Highway Trust Fund will run out of money, forcing the U.S.
Department of Transportation to reduce federal highway spending to
an amount that matches revenues raised by the federal fuel tax.
According to some estimates, the shortfall could be as much as $8
billion, although the Office of Management and Budget and the
Congressional Budget Office are currently projecting a $5 billion
The pending deficit is a consequence of flaws in the most recent
highway reauthorization bill (SAFETEA-LU) enacted into law in
August 2005 covering all federal highway and transit spending until
September 2009. In an effort to provide funding for the more than
$24 billion worth of earmarks included in SAFETEA-LU, Congress
authorized levels of spending well in excess of the fuel tax
revenues expected to flow into the trust fund, thereby drawing down
the fund's balance to support the excess spending. Although the
leadership of the House Transportation and Infrastructure Committee
(T&I) hoped that the fund's balance would be sufficient to make
it through the current reauthorization period, many independent
transportation analysts doubted that would happen, and their dire
projections have been proven correct.
Two Competing Proposals
Predictably, some in Congress propose that even greater levels
of deficit spending be adopted to maintain the program's current
spending levels, including money for all of the remaining earmarks.
Representative Charles Rangel (D-N.Y.), chairman of the House Ways
and Means Committee, has joined with Representative James Oberstar
(D-Wisc.) and Jon Mica (R-Fla.) to introduce H.R. 6532-"To Amend
the Internal Revenue Code of 1986 to Restore the Highway Trust Fund
Balance"-to transfer over $8 billion in general revenues to the
highway trust fund to cover the shortfall through the early part of
FY 2010 in the event that the reauthorization bill is delayed, as
it has been for the past two decades.
In contrast to the committee leaders' "borrow and spend"
proposal, Representative Jeff Flake (R-Ariz.) has introduced H.R.
6534-a bill titled "Resisting Offsetting with Additional Debt Act"
(ROAD Act)-that would require the trust fund shortfall to be
financed by rescinding the authorized, but unobligated, funds that
would otherwise be spent on hundreds of earmarks now incorporated
in 23 questionable programs created by SAFETEA-LU.
Of the two options, Representative Flake's represents the better
approach. Rather than borrow money to perpetuate waste, as the
leaders of the T&I Committee recommend, Flake proposes to fund
the shortfall by eliminating a modest portion of the waste
incorporated in SAFETEA-LU. As SAFETEA-LU is one of the worst
pieces of legislation ever enacted by any Congress-it is already
notorious for its earlier inclusion of the Bridge to Nowhere-any
effort to redirect SAFETEA-LU money to more sensible purposes would
be a win-win plan for the economy.
Not the Time for More Taxes
Unfortunately for the taxpayer, there is much more at stake in
this debate over the shortfall than just the potential for a single
incident of fiscal irresponsibility, however costly H.R. 6532 may
be. In recent months Representatives Oberstar and Mica-respectively
the chairman and ranking member of the T&I Committee-have
proposed that the next highway reauthorization bill spend as much
as $500 billion, compared to the $284 billion limit in the previous
With the highway trust fund expected to be empty when the
current highway legislation expires next year, this level of
spending can be accomplished only by a near doubling of the federal
fuel tax on gasoline and diesel fuel. With gasoline prices now more
than $4 a gallon and diesel fuel approaching $5, any attempt to
sustain an even higher level of wasteful transportation spending
would only worsen an already severe burden on moderate income
Ronald D. Utt,
Ph.D., is Herbert and Joyce Morgan Senior Research Fellow in
the Thomas A. Roe Institute for Economic Policy Studies at The