The next time you are stuck in traffic because a congestion-relieving road project has been placed on the back burner, or the next time you have to jam yourself on an overcrowded bus or rail car, consider the vote House Republicans cast Tuesday night to sharply limit funding for the nation’s transportation projects.
Remember that vote, too, when the conversation turns to the millions of people still looking for decent jobs. We’ve said it repeatedly: We have an aging transportation infrastructure that is increasingly inadequate and even dangerous. We have millions of people who need decent jobs, including more than 3.3 million people who have been out of work for more than 26 weeks. Notably, the 6 million construction jobs counted by the Labor Department in May is 1.2 million less than there were in May 2008.
The House had a golden chance to connect people who need work to work that needs to be done when it took up the Transportation-Housing appropriations bill this week. Instead, House Republicans did what they have done since they took over that body – slashed and burned the basics of a middle-class economic recovery, even as they pursue tax relief for corporations and the wealthy.
The bill authorized $52 billion in discretionary spending (and $105 billion in total spending) for the Department of Transportation, the Department of Housing and Urban Development and related agencies in fiscal 2015. The total is $17 billion less than what the two agencies were authorized to spend in fiscal 2010. (The Democratic-controlled Senate Appropriations Committee, by contrast, approved $108 billion for these agencies.)
The Obama administration had wanted Congress to approve a four-year, $302 billion program called “Grow America” to make major improvements in the nation’s transportation grid. The program would have increased highway spending by more than 20 percent and public transportation funding by more than 70 percent – a long-overdue recognition that as more people live in cities and depend less on cars, federal funding priorities have to adjust.
The administration’s proposal is pointed in the right direction. But it has a serious flaw: Because it depends on unspecified corporate tax reforms for a short-term funding fix, it opens the door wide for plan that would basically reward corporations for hiding their profits overseas to avoid taxation. That plan would allow those corporations to bring home or “repatriate” those profits at a deeply discounted tax rate if they vow to put a small amount into infrastructure bonds to help fund transportation projects.
The administration chose this route because the traditional way the federal government funds transportation projects – a gasoline tax that is placed into a highway trust fund – is no longer working. Shortfalls in the trust fund have already compelled Congress several times in the past to appropriate general fund revenues to fill in the gap. This time the fund is due to run out of money smack in the middle of the summer construction season (and as fall congressional campaigning ramps up), and the Washington political establishment is grasping for politically palatable alternatives.
The administration would have been better off slamming the door on these too-cute-by-half tax schemes and force the choice that Congress, and the nation, needs to face: If we want to repair the middle-class economy and position the nation for the future, sustainable growth, we need to make the investment – and the companies that profit most from an efficient transportation network should be the most willing to shoulder their fair share of the cost.
If that means continuing to fund transportation projects out of general fund revenues – as other major countries do to at least some degree – so be it.
There are some new funding ideas that ought to be debated – such as a proposal being introduced today by Rep. Peter DeFazio (D-Ore.) to replace the gasoline tax with a refinery tax that would be paid directly by the oil companies. (And then there are ideas that are being rightfully hooted off the stage, such as a Republican leadership plan, endorsed by soon-to-be-departed House Majority Leader Eric Cantor, to cancel Saturday mail delivery and use the savings for transportation projects.)
While Republicans show so little regard for the common sense that now is the time to spend, not cut, to shore up our transportation network and to create jobs, the remainder of Congress should not make the perhaps more grave mistake of caving to this idea of enticing corporations to invest a little money in infrastructure by offering them a big tax giveaway.
Just last week, the Joint Committee on Taxation warned it’s a fool’s errand: making such a step would cost the government almost $96 billion in lost revenue over 10 years. Plus, “a second repatriation holiday may be interpreted by firms as a signal that such holidays will become a regular part of the tax system, thereby increasing the incentives to retain earnings overseas,” JCT Chief of Staff Thomas Barthold wrote in the estimate.
A majority of the public is on board with the general principle that not only should creating jobs be our number one economic priority, but that government should play a key role in helping to create those jobs, through means such as infrastructure investment. Getting consensus on the specifics of how best to do that, to be sure, can be hard. But that is the function of principled leadership, to reject political expediency when it leads to bad policy. It’s time for our allies in Congress to abandon the repatriation-for-infrastructure scheme, call out congressional conservatives for the insanity of their budget priorities, and point toward a better way.
