The Not Very Bipartisan Infrastructure Bill—Where’s the Money?
I thought I’d dig around a bit in “H.R. 3684—Infrastructure Investment and Jobs Act,” the not very bipartisan infrastructure bill. Everyone’s talking about how the other bill for building back better will be funded, at the perhaps current price tag of $1.75 trillion. I haven’t seen much, though, about how this $1 trillion bill will affect the deficit.
At 2,740 pages, it’s a big bill, designed to “authorize funds for Federal-aid highways, highway safety programs, and transit programs, and for other purposes.” As far as I’ve been able to tell, only a little more than $381 billion will address highways and such like. That’s the amount to be appropriated out of the Highway Trust Fund to cover the provisions in this bill. However, appropriation language is not standard throughout the bill, so I may have missed some things.
The highway portion of the Highway Trust Fund is just about bankrupt. The per-gallon federal motor fuels excise tax that everyone pays on gasoline and on-road diesel provides the bulk of the funding. It was last increased in 1993. The Congressional Budget Office projects that 2021 revenue will be $32.462 billion and that budgeted outlays will be $45.756 billion, leaving a shortfall of around $13.3 billion. I think it might actually be worse given that fewer of us are driving due to lingering COVID restrictions; the impact of almost-no international air travel, depriving America of tens of millions of tourists; issues surrounding port congestion; and much higher gas prices lessening travel.
By law, the Highway Trust Fund cannot incur a negative balance. The CBO presumes an economic recovery and projects a shortfall between now and FY 2026 of between $7 billion and $13 billion each year. To address this, the bill transfers $90 billion from general revenues into the Highway Trust Fund (section 80103). That should cover the cumulative shortfall through FY 2028, but not the $311 billion to be allocated to projects in this bill out of the highway portion of the fund.
The Mass Transit Account portion of the Highway Trust Fund is similarly situated, with deficits starting in 2022. This bill transfers $28 billion out of general revenue into the Mass Transit Account, enough to cover the anticipated shortfall through FY-2027. It does not, however, begin to touch the $69.9 billion in funds allocated to projects out of this account.
The Congressional Research Service notes that “Congress will face the need to approve some combination of new taxes, an increase in existing fuel taxes, continued expenditures from the general fund, increased federally supported debt financing, or reductions in the scope of the federal surface transportation program…”
So where does the money for all these new projects come from? Presently, nowhere. It’s all deficit spending. And that spending includes $150 million in grants for pilot programs (sections 13001-13006) to identify new revenue streams for the Highway Trust Fund.
What they’re looking for is a way to charge We the People for every mile we drive, on top of already taxing us for every gallon of fuel we consume. That includes gallons of fuel used in lawnmowers, weed whackers, and chainsaws.
Congestion is one of the issues to be addressed with highway project funds. Expanding road capacity is extremely costly, especially in areas of significant congestion. I wonder, do those stuck in rush-hour urban traffic for hours each day require more costly inputs than those of us who drive much farther, but in exponentially less time?
How do they plan to collect mileage data? Why, using our smartphones, embedded (in-vehicle) technology, from insurance companies, and from fueling stations. And they plan to incorporate weather information into the calculation. Big Brother is watching, indeed.
The mechanism we have in place, federal fuel excise taxes, is easily and anonymously collected. Can you imagine the cost of billing individual owners of the 276 million vehicles registered in the U.S. as of 2019 for each mile traveled? And keeping exact track of when those vehicles changed hands? And where those vehicles were when they experienced inclement weather sufficient to require modification of the bill? Talk about government intrusion and overreach! And the horrific 30% or so that overhead—direct or via contractors—would require to manage such a program.
What to do? Apparently, our betters in Congress have decided all this money is needed between now and 2026 for critical projects. So, how about raising the excise tax to cover it? That's what the tax is for. But oh, the howling when federal fuel taxes go from 18.3 cents per gallon to $1.51 on gasoline and from 24.3 cents to $2.01 per gallon on diesel. On the other hand, it would only be for five years, albeit during a period when Joe’s policies have prolonged job losses and inflation is rocketing up like a roller coaster.
Joe wants us out of gasoline and into electric vehicles by 2030. Increasing the federal excise tax sufficiently to cover the cost of these projects might just do it.
How about initiating a federal highways excise tax on electricity consumption to cover the cost? It would average out to $230 per person per year through 2026. A tax on electricity consumption would spread pain more evenly among the population. And we all benefit from highways whether directly, through our own use, or indirectly, through military, governmental, and logistical use of them, so we should all pay something. Anyway, the costs will just be built into the cost of goods and services we all consume.
However, if we’re all going electric, I imagine that will be on top of our gas-powered cars, rather than instead of them. Traffic congestion, very bad weather, long road trips, and the current lack of charging infrastructure likely will constrict EV movements to short runs to school or shopping.
Perhaps not everything needs to be accomplished right now. Perhaps some things in this bill are not needed at all. Perhaps all those smart lawyers we’ve elected could sit down and prioritize projects and spread them out over more years. Yeah, right. It’s a conundrum.
Invariably, if this bill passes, and it shouldn’t in its present form, costs of highway projects will simply wash into the general fund. The $381 billion in projects as well as the $118 billion to cover Highway fund shortfalls for the next few years, will just grow the burden we’ve already placed on ourselves and our youngsters.
Republicans should get together now to rewrite this bill if it passes so that a more rational project list and schedule are ready to go when we take back the Congress. Let’s go, Brandon!
Anony Mee is a retired public servant.
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