Are We Heading for an Infrastructure Bailout?

President Obama likes to point out that infrastructure spending is something “both parties have voted for in the past.” And, like many bipartisan agreements in the past (see the debt limit increase from last August), the “agreement” is almost always to increase spending.

When it comes to current levels of highway funding, that’s not an option because revenues are down significantly. Unless highway spending is reduced, we’ll need to take money from the general fund to cover the deficit from the highway trust fund.

The Safe, Accountable, Flexible, Efficient Transportation Act (SAFETEA) was passed in 2008. It was the last highway authorization passed (it has been 852 days since it expired), and it increased spending 31% above previous levels. The current highway bill, as it sits in Congress, would keep funding at these highly elevated levels for the next 5 years.

Normally, highway funding is financed by the federal gas tax, but since spending on infrastructure projects was massively increased, Congress has had to use general revenues in order to fill in the shortfall from gas tax revenue. This has lead to highway “bailouts” of $8 billion in 2008, $7 billion in 2009 and a whopping $19.5 billion in 2010. If we continue spending at these levels, then we’ll need to continue these taxpayer-funded bailouts for the next 5 years. Given the current state of the economy and the fact that people are driving less in order to save money, the bailouts will be even higher – to the tune of $59 billion over the next 5 years.

Remember, the House-passed budget would have kept federal transportation spending in line with federal gas tax revenues. To bridge that gap, some have suggested opening up new areas for domestic energy production and diverting some of the new royalties to transportation. While conservatives are most certainly in favor of increased domestic energy production, it should not be tied to transportation. Doing so eliminates pressure on Congress to reduce federal spending and enact transformational reforms.

So instead of continuing the status quo of unaffordable higher spending, conservatives should rally around a bill introduced by Congressman Tom Graves (R-GA), which would devolve highway spending back to the states. H.R.3264, the Transportation Empowerment Act (TEA) give states the flexibility to use their own gas tax revenues on infrastructure projects they deem important. It removes the micromanaging tactics of the federal government and gives that power back to the states.

Our national debt is expected to reach $16 trillion before the November elections; we can’t afford more budget gimmicks and more government spending. Spending on infrastructure projects should not be above the level that revenue allows.

Please Share Your Thoughts