Driving the Highway Trust Fund Into the Ground

Failure to fix the nation's transportation-funding system would be the latest economic wound inflicted on the country by the feckless 113th Congress.

Eric Thayer/Reuters

The incipient deal between Senate Veterans' Affairs Committee Chairman Bernie Sanders and his House counterpart Jeff Miller on a VA-reform bill to deal with the terrible backlogs of medical treatment is the first encouraging sign that the last stages of the 113th Congress will not be a total, embarrassing failure. There is also a chance, though not a great one, that we will see some kind of patch to deal with the border crisis. Still, with only two days left before the August break, with a minimal schedule set for the fall, and with Republicans determined not to rock their own boat by forcing votes that divide the GOP Conference between radicals and conservatives—which means votes on almost anything that could result in a signing ceremony—it is hard to be very bullish.

And that is profoundly depressing. The fact is that there are multiple crises or pressing problems out there, and the deep dysfunction in Congress is like a force field where progress on solutions bounces off to die. Nowhere is this more true than in the broad area of infrastructure, and the narrower and more immediate need to replenish the Highway Trust Fund.

The fund has been financed through the gasoline tax, and a combination of factors has seen it dwindle to next to nothing. With crumbling highways and bridges and greater demand, the needs have grown. But the revenue from the gas tax, which has not changed from the 18.4 cents a gallon imposed in 1993, has not come close to keeping pace. Inflation has reduced its value by nearly 40 percent; if inflation indexing had been in place, the tax on autos would now be 29 cents a gallon. At the same time, the dramatic advances in fuel efficiency have substantially eroded the amount coming in, and the value will erode much further as the new fuel-efficiency standards take effect over the next decade.

The Senate wrestled Tuesday with a short-term patch for the highway fund, and the House passed a $10.8 billion bill last week that would keep projects going through May. But the efforts represent only a quick fix. The Congressional Budget Office tells us that to meet the expected needs for highway infrastructure, the trust fund will require an additional $172 billion over the next 10 years. The good news is that this spending is a bargain, given its propellent effect on the economy and jobs.

There is an immediate need to replenish the Highway Trust Fund to prevent a disaster in the peak construction season coming up. The estimates are that failure to do so will cut federal transportation dollars going to the states by 28 percent, affecting 100,000 projects that employ 700,000 workers, and dealing a serious blow to an economy trying now to recover from the long period of economic downturn and stagnation. The way to do that is to increase the gasoline tax. Problem-solvers Bob Corker of Tennessee and Chris Murphy of Connecticut have proposed a commonsense and modest plan calling for an increase of 12 cents per gallon in the tax, indexing it to inflation. But House Republicans have balked at any tax increase (thanks, Grover Norquist!). And plenty of Democrats in Congress and the White House are fearful of a gas-tax increase right before the election—it is, after all, the most visible federal tax, something most Americans see every time they go to fill up.

Still, given the regressive nature of the tax (wealthier Americans are more likely to have fuel-efficient cars than poorer ones, and spend a much smaller share of their incomes on gasoline), and the continuing improvements in fuel efficiency, the gas tax is not the long-term solution to the problem. Democratic Representative Earl Blumenauer of Oregon has been working on this issue for some time, and he has come up with a constructive and thoughtful approach, embodied in something he calls the Update Act. Blumenauer would phase in a tax of 15 cents a gallon over the next three years—but move to a more sensible and stable source of funding to be put in place by 2024. What would that be? Most likely, it would follow the recommendations of two commissions that addressed these issues in 2008 and 2009, both of which called for examining mileage-based user fees as a replacement for the gas tax. A fee of 2 cents a mile would raise the same amount as a gas tax of 15 cents a gallon. Gas taxes are actually rough-cut mileage fees; you drive more miles, you use more gas. But gas taxes are a greater burden on those who drive heavier and less fuel-efficient vehicles, which means it hits the poor and rural residents harder. Contrary to conventional wisdom, mileage-based user fees would actually be less of a burden than are gas taxes on rural residents who have to drive long distances to work or shop.

There are lots of ways to make a mileage-use system work. Oregon and other states are using state-of-the-art technology that can track how many miles a vehicle is driven and at the same time not be intrusive. It is easily done with systems like GM's OnStar, and could be phased in to include basic technology limited to counting miles on all cars. In his bid to ultimately get rid of the federal gas tax, Blumenauer wants to take a substantial period of time to let states experiment with options that fit their residents' needs and desires, taking into account privacy concerns.

There should be nothing ideological about finding rational ways to pay for surface-transportation infrastructure, and clearly those who use it more should pay more. But our tribal wars have gotten in the way of rationality on this as in so many other issues—including of course broader infrastructure needs such as rebuilding and strengthening the electrical grid while protecting against cyberthreats; moving to greener and more efficient fuels; expanding high-speed Internet connections to all Americans; rebuilding aging sewers, water lines, and subways; and many more needs that must be addressed to enable the country to compete in the 21st-century global economy.

Action in the immediate term is a test for the current Congress on whether it can barely inch over the bar of acceptable performance. Action to complete a strong and meaningful long-term plan where funding is clearly the best investment the country can make is a bigger test for our institutions. Inaction on either or both fronts would cement the 113th Congress as a top contender for worst Congress ever.