The Highway Bill—Compromise or Stalemate?

Posted by Ken Orski on Tuesday, April 10th, 2012

Innovation NewsBriefs
Vol. 23, No. 14 rev

Before leaving town for a two-week Easter vacation, Congress voted a  90-day “clean” extension of the current highway program. When Congress gets back in session on April 16, the House will have 20 legislative days in which to pass a new highway bill and convene in a joint House-Senate conference to reconcile it with the previously approved Senate bill (S. 1813).  The window for legislative action is narrow because the House will be in recess again from May 21 through May 29 and the Senate from May 28 through June 1. Will Congress be able to send a reauthorization measure to the President before the expiration of the current extension on May 31?  Or will it “kick the can down the road” again —this time probably until next year?

The Senate Bill Under Critical Scrutiny

Despite pleas from liberal advocacy groups and despite insistent pressure from Senate Environment and Public Works Committee Chairman Barbara Boxer (D-CA),  the House has never seriously considered embracing the Senate version of the bill and adopting it as its own. The bill was never popular with rank-and-file Republicans and it became even less so  when the budgetary maneuvers employed by the Senate leadership became fully known. One of the most egregious instances was the use of the  “Managers’ Amendment” to insert  shortly before the final vote a provision transfering $5 billion in general funds (“out of money in the Treasury not otherwise appropriated…” ) without offering any immediate offset.  This provision (Sec. 40313, Additional Transfers to Highway Trust Fund), buried in the 221-page amendment,  was adopted — probably unread by most Senators— by unanimous consent without debate. The text of the Manager’s Amendment was not publicly revealed until it was posted online the day of the final floor vote (The full text can be found in the Congressional Record of March 13 at pp. S1618-1638).

Many other substantive changes to the initial version of the bill  were inserted into the Senate bill late in the legislative process according to the  Washington Letter on Transportation (WLT). Some of them have nothing to do with the nation’s surface transportation program.  For example,  the bill creates a new National Endowment for the Oceans, Coasts and Great Lakes to be housed in the Department of Commerce. It also provides for a seven-year reauthorization of, and a $1.4 billion appropriation for, the Land and Water Conservation Fund, a federal program of the National Park Service within the U.S. Department of the Interior.

Another provision in the Managers’ Amendment appears designed to deny state departments of transportation the full authority to decide which types of “enhancements” are funded with federal dollars, thus unraveling a key element of the “compromise” that was supposedly reached only  three months earlier among leaders and members of the Senat EPW Committee at its markup of S. 1813 on November 9, 2011(for a detailed analysis of the changes quietly slipped into the “Managers’ Amendment” see the Washington Letter on Transporation, March 26, April 2 and April 9).   

Using offsets over a period of 10 years to cover spending over just 15 months ( the effective length of the Senate bill at the termination of the current extension), is another feature of the bill that critics have found questionable.  Nor has criticism of the funding provisions been confined to the House Republicans.  Many senators “held their noses and voted for the bill knowing full well that the $12 billion shortfall was funded with budgetary accounting gimmicks,” as one Senate Republican aide told us.

With the Senate bill finally receiving  a closer scrutiny, criticism is beginning to emerge even within the liberal community. The Building America’s Future coalition, for example, is troubled by several provisions that could make it more difficult for states to leverage funding with private sector partners. “BAF is particularly concerned about language that would provide a disincentive to states to consider partnering with the private sector for fear of losing a percentage of its federal funding,” wrote BAF’s Director of Policy Kerry O’Hare in the National Journal’s transportation blog.

Other troubling provisions BAF has found in the Senate bill include eliminating the use of Private Activity Bonds to finance leased highway projects and lengthening  the depreciation timetable for long-term highway leases from 15 to 45 years. “Taken together or individually, these provisions would have a chilling effect upon future private investment in infrastructure,” wrote O’Hare. As one House Republican observed to us,  the longer the Senate bill is left out there to be scrutinized, “the more it is found wanting”

Compromise or Stalemate?  

With the Senate bill enjoying little popularity among the rank-and-file House Republicans (even though House Democrats loudly proclaimed it  as “bipartisan”),  House leaders are determined  to proceed with their own version of the bill.  Right now, the goal is still to move a five-year $260 billion bill (H.R. 7) according to John Mica, Chairman of the House Transportation and Infrastructure Committee. The 90-day extension, through June 30,  was supposed to give House leadership more breathing space to build support for the bill.

H.R. 7 contains many of the same reforms sought by the Senate, so from the policy standpoint the two bills seem eminently reconcilable.  The bill’s duration, many observers think, could be compromised at three years  (the Senate bill’s effective 15-month duration would make it little more than another extension). The main source of a potential stalemate is the question of the bills’ funding. House Republicans are likely to question and reject the “gimmicky” offsets in the Senate bill;  Senate Democrats are likely to find unacceptable the House provision to fund the bill with royalties from future offshore oil and gas leases  (assuming the House still intends to use this questionable and much disputed funding approach).

Adding to the problem of finding a mutually acceptable way to pay for the bill is the general mood among House Republicans as we approach the November election. For the rank-and-file, the goal of reducing spending, as reflected in the adopted FY 2013 House budget, would likely take precedence over any concerns about  “infrastructure deficit.”  Claims about “crumbling infrastructure” are taken with a grain of salt and are discounted by many lawmakers as a thinly disguised excuse for asking for more money.  For many House conservatives, the better solution lies not in increased spending but in narrowing the scope of the federal-aid program, eliminating programs that have no clear national purpose, and shifting more responsibility for local transportation to states and metropolitan regions.  

Moreover, many congressional  Republicans would just as soon see the current law extended into next year in the hope that a Republican-controlled Senate  would give them a better chance to craft a long-term bill to their liking. As for the lame-duck session, the approaching  prospect of spending cuts mandated by sequestration and other impending fiscal battles will hardly be conducive to a major new spending initiative in the waning days of the 112th Congress.

In sum, the temptation for both parties to dig in their heels will likely outweigh the perceived political benefits of  a negotiated compromise —which critics and political opponents on both sides would inevitably call a “political capitulation”. Despite the threat of a looming  insolvency of the Highway Trust Fund (expected early in 2013 if the Fund receives no additional transfer of money), only confirmed optimists still hope to see a genuine multi-year highway reauthorization bill end up on the President’s desk this year.

C. Kenneth Orski is a public policy consultant and former principal of the Urban Mobility Corporation. He has worked professionally in the field of transportation for over 30 years, in both the public and private sector. He is editor and publisher of Innovation NewsBriefs, now in its 22nd year of publication.

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