Obama’s way is not the highway 

President Obama wants to rename the Highway Trust Fund (HTF) the “Transportation Trust Fund” (TTF) and establish two new accounts within it for high-speed passenger rail and a national infrastructure bank. But the administration’s proposal “is silent on how the TTF will have sufficient revenue to fund these new programs,” says a new report by the House Transportation and Infrastructure Committee, chaired by Rep. John Mica, R-Fla.

The committee rejected Obama’s request for a $556 billion reauthorization of the surface transportation bill and an additional $50 billion outlay for FY 2012, noting that the president “does not identify a way to pay for these increases without increasing the deficit." 

In fact, Obama’s transportation proposals would add another $0.2 trillion to the national deficit by 2021. A March 18 Congressional Budget Office (CBO) analysis of the president’s budget points out that transportation outlays are one of just three areas of spending that are “likely to have the largest budgetary impact” over the decade. The other two biggies are Medicare and national defense.  So if any meaningful spending reductions are made, they must be made here.

The committee promises to do “more with less” by promoting innovative financing, public-private partnerships, and consolidating over 55 federal highway programs to eliminate duplication. The committee says it “is committed to writing a long-term surface transportation authorization bill that keeps the HFT solvent without additional transfers from the General Fund." 

CBO projects HTF revenues (which have been declining) at $232 billion over the next six years, with most coming from the highway account ($201 billion) and a much smaller amount from the transit account ($31 billion). The total available over the next six years will be about $254 billion ($42 billion annually) – less than half of what the president is currently seeking. So significant cuts to his budget request will have to be made to avoid raising either the gas tax or the deficit.

Committee members singled out Amtrak’s $117 billion “Vision Plan” for high-speed rail between Washington and Boston as a good place to start: ”Amtrak’s historical failure to successfully execute capital projects strongly suggests that the United States should explore alternative solutions for future high-speed rail service,” the report noted.

The report also criticized Obama’s proposal to shift all funding for surface transportation to the “mandatory” side of the budget because one of its “highest priorities is to ensure that the user fees deposited into these trust funds are in fact used for their intended purpose…” i.e. highways, and the president’s proposal “fails to recognize the need to link HTF revenues to spending to adequately establish the user fee-based premise of the HTF.”

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