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Congress Will Just Figure Out How to Pay for $500 Billion Transportation Bill Later

Leonard Gilroy
June 19, 2009, 8:15am

Bob mentioned this in his post yesterday, but it is worth repeating: Reps. Oberstar and Mica put forth a blueprint for a $450-500 billion transportation bill, but left out the not-so-small detail of how they plan to pay for a near doubling of transportation spending at the very same time that the Highway Trust Fund is (yet again) nearly broke and the gas tax has run out of gas.

This quote from Rep. Oberstar in the Minneapolis Star-Tribune offers great insight into how the federal government has run up trillions of dollars in debt:

The cost is about $450 billion over six years, nearly a doubling of the nation's current investment in infrastructure. But Oberstar's blueprint, still under construction, is silent on the key question of where the money will come from.

"What is it going to cost to deliver this? That's an issue you have to put off till the end," Oberstar said of the bill, which he expects to roll out in the coming days. "You can't talk investments and dollar amounts until you have something to show the public."

Wait...put off how to pay for it until the end?

Just the other day President Obama suggested that “pay-as-you-go” should be federal law. "Paying for what you spend is basic common sense," Obama said. "Perhaps that's why, here in Washington, it's been so elusive."

Setting aside all of the massive debt-financed spending since President Obama took office, let’s assume for the moment that he actually believes the country should use PAYGO going forward. Here we are a week later and Congress wants to come up with half a trillion dollars worth of transportation spending and “put off till the end” figuring out how to pay for it.

In the real world of no free lunches, benefits come at a cost. Infrastructure is expensive. As much as policymakers would like to shift the public's attention to the projects they are championing, it's naive to assume that the increasingly bailout and deficit-weary public will buy into any "plan" offering no substance about how to pay for a $500 billion wish-list. The "trust us, we'll figure it out later" approach isn't going to pass Americans' smell test, I suspect.

For example, the latest NBC News/Wall Street Journal poll finds Americans are upset about the federal deficit

"Almost 60 percent say that President Obama and Congress should worry more about keeping the deficit down — even if that means it will take longer for the economy to recover."

A lot more than 60 percent of Americans would be outraged if Congress were to try to raise the gas tax during a recession to pay for this highway bill, though by most accounts, that idea seems to be dead in the water in the White House and most corners of Congress. 

So what about tapping the roughly $180 billion in private infrastructure capital that's looking for projects to invest in? As Shirley Ybarra noted yesterday, the blueprint seems to embrace transportation public-private partnerships on one hand while it tries to give the Feds authority micromanage and control them on the other. The latter will certainly have the effect of usurping states' authority, tying their hands and decreasing their flexibilty to solve their own problems. Not to mention the new layers of political risk that would be superimposed over a public-private partnership market already burdened by political risk, which tends to drive up costs and drive out competition. This isn't exactly a reassuring sign when the overarching goal is to expand the revenue pie.

Now the proposed National Infrastructure Bank may offer a partial solution (if properly set up and structured, an issue for another day). But even there, no one on Capitol Hill is talking about capitalizing it to anywhere near the level it would take to put a dent in $450+ billion in new spending both parties (through Oberstar and Mica) are calling for in this highway bill blueprint.

So all we're really left with here are more questions than answers on this "transformational" plan. What would have been truly transformational here would have been for the bill's sponsors to spend as much time thinking through the hard issues of funding as they did the politically easier issues of what their "vision" entails. Without this due diligence, I suspect Americans will view this as yet more Congressional snake oil, which isn't exactly helpful when it's more critical than ever to build broad public support for increased infrastructure investment that is focused on improving mobility and helping the economy.

» Reason's Transportation Research and Commentary


Leonard Gilroy is Director of Government Reform


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