Skip to comments.A Simple Solution to the Highway Trust Fund Deficit
Posted on 07/22/2014 3:20:33 PM PDT by Kaslin
Im a big believer in federalism, both as a matter of policy and politics.
So you wont be surprised that Ive called for the abolition of the Department of Transportation. On more than one occasion.
But when youre trying to convince politicians to give up power and money, it takes a lot repetition. So, to paraphrase what Ronald Reagan said to Jimmy Carter, here we go again.
Dan Mitchell Urging Abolition of Department of Transportation
I want to emphasize one part of the interview. Im agnostic on the issue of whether America as a whole needs more infrastructure spending, but Im sure some parts of the nation could use more roads.
But that doesnt mean that Washington should be in charge of that spending.
My colleague at Cato, Chris Edwards, is an expert on these issues. Heres what he recently wrote about the various schemes in DC to fund more transportation spending with higher taxes.
HTF spending on highways and urban transit adds up to $53 billion a year, while the HTF rakes in $39 billion in revenues, mainly from the federal gasoline tax. That leaves a gap of $14 billion. President Obama wants to fill the gap with corporate tax revenues, but that bad idea is dead on arrival in Congress. Senator Bob Corker (R., Tenn.) has a different idea. His bill, co-sponsored by Senator Chris Murphy (D., Conn.), would hike the federal gas tax by 12 cents per gallon. Corkers position is the opposite of conservative. If Tennessee needs more money for roads, it can raise its own gas tax any time it wants.
And here are some of the numbers that Chris put together showing that highway spending has been rising rather than falling.
Elizabeth Nolan Brown of Reason adds more context.
About 27 percent of highway and transit spending currently comes from the federal government, via the HTF, while states kicking in about 38 percent and 35 percent coming from municipalities. The HTF isnt set to run dry in August, as many are reporting, but it did tell states to expect an average 28 percent reduction in aid at that point unless Congress acts. theres nothing stopping states from taking this matter into their own hands. Since 2013, seven states have raised fuel levies, reports Reuters When left a little more to their own devices, it seems states get innovative. They develop localized solutions. They experiment.
Lets close with one interesting piece of data. The International Institute for Management Development recently published its World Competitiveness Yearbook.
The good news is that the United States maintained its hold on first place. Thats a lot better than were doing in the Economic Freedom of the World rankings.
But whats particularly relevant and fascinating is to see Americas scores in the various sub-components of the Yearbook. The United States may rank only 22 out of 60 nations for government effectiveness, but we beat every nation for infrastructure.
So if we have an infrastructure crisis in the United States, it certainly doesnt show up in either the hard data or the business leader opinion survey that generate those rankings.
P.S. Back in 2011, I shared a couple of serious videos about bitcoin.
On a lighter note, heres bitcoin girl encouraging more people to use this private money.
Bitcoin Girl Music Video (Official)
But since I dont want anyone to accuse me of bias, fans of the Federal Reserve can enjoy this alleged film clip from Ben Bernankes childhood.
Rep Kerry Bentivolio is pushing the ROAR act to take highway funding away from the feds and sell state specific road bonds. I think it needs some tweaking but I think its a move in the right direction.
Why is the Highway tax fund paying for 'urban transit'? I believe the local 'rail' fiasco is somehow funded with 'urban transit' dollars.
Let's find how much of the HTF, we're told it takes in 39 billion dollars, is being wasted on 'urban transit'. We're told that there's a 14 billion shortfall out of 53 billion spent.
If 14 billion is spent on 'urban transit', then the HTF is bringing in enough money to do what it's intended to do. My memory says the 'light rail' boondoggle that's only a few miles long will cost a couple hundred million dollars. You can reach 14 billion real fast spending that kind of money in only a few cities.
I do agree that states should fund most of the highway system, so long as they maintain a first rate interstate system.
User taxes are deposited in the General Fund of the Treasury and the amounts equivalent to these taxes are then transferred on paper to the HTF. Transfers are made at least monthly on the basis of estimates by the Secretary of the Treasury and later adjusted on the basis of actual tax receipts. Amounts in the HTF in excess of current expenditure requirements are invested in public debt securities. Until October 1, 1998, the securities were interest-bearing and interest from the securities was credited to the fund. Since that time, the HTF balance has been invested in non-interest-bearing securities.A Ponzi scheme like any other so-called federal trust fund.
It would take away some of the leverage DC has over the states. i.e., withholding highway funds.
He’s pretty good. He just returned from Central America.
Nothing about reducing outlays-- not one word. This Mitchell guy is a real banjo hitter, you know? Find a conservative next time and get some ideas for cutting useless spending like ten billion dollars on bike trails and such.