After the crazy news day on Monday, Tuesday was much calmer—with the exception of a devastating, yet courageous defeat by the U.S. men’s soccer team. But President Obama did deliver a big speech in Georgetown, imploring Congress to pass legislation to fill the gap in the Highway Trust Fund, which funds infrastructure and mass transit projects. Without additional money, the Department of Transportation will soon have to drastically change how it reimburses states for those projects—and eventually cut off reimbursements altogether.
Anthony Foxx, the Transportation Secretary, laid out the severity of the situation yesterday. “I think it is going to be all over the map, but the reality is, no matter how you slice and dice it, it is going to be bad,” he said. The Highway Trust Fund has traditionally been funded by the gas tax, but the tax was never indexed to inflation. Over time, the real value of those revenues has slowly fallen, to the point that it cannot cover the fund’s outlays. Since 2008, Congress has transferred $54 billion from the Treasury’s general fund to the Highway Trust Fund. Now, it’s nearly used up that money: The fund faces a $12 billion shortfall in 2015 and a $164 billion shortfall over the next decade. Without additional resources, our cracked roads and deteriorating bridges will only get worse.
Congress is contemplating three proposals—none of them with broad support and all of them seriously flawed, for reasons I discussed last week. The White House proposal is not much better: It’d use revenues from corporate tax reform as a short-term patch, which would mean we’ll be back in the same position four years from now. The optimal solution remains what it’s always been: Raising the gas tax by six cents in each of the next two years, then indexing it to inflation. By recouping the value lost to inflation and ensuring such erosion doesn’t happen in the future, this would make the Highway Trust Fund whole over the long-term.Want QEDaily delivered by e-mail every morning? SIgn up here.
It’s easy to see why the White House isn’t endorsing such a policy: It’s a political nightmare. Doing so would break the president’s promise not to increase middle class taxes. Beyond that, Republicans would never agree to it. Obama has spent enough of his presidency searching for a compromise by proposing politically risky policies. He’s not about to do it again with the gas tax. But that means it’s up to Congress to craft a sensible solution to this problem. So far, it’s not looking very good.
What we’re reading:
CLIMATE: Hillary Clinton says the U.S. must do “so much more” on climate change. (Laura Barron-Lopez, The Hill)
IMMIGRATION: In California, an anti-immigration protest got ugly—and personal. (Matt Hansen and Mark Boster, Los Angeles Times)
HOBBY LOBBY: At least 82 companies have filed lawsuits to escape Obamacare's contraception mandate. (Abby Haglage, Daily Beast)
GAY MARRIAGE: A federal judge struck down Kentucky's ban on gay marriage, calling arguments "at best illogical and even bewildering." (Sarah Mimms, National Journal)
The real IRS scandal: The agency is drastically underfunded. (Jared Bernstein, Washington Post)
Statistic that might surprise five justices on the Supreme Court: According to the National Women's Law Center, nearly 60 percent of women have used contraception for medical purposes other than birth control, such as controlling cramps or menstrual pain. (Igor Volsky, Think Progress)
Stories we’re watching today: No major stories at the moment. But we’re always awaiting news.
At QED: Danny argues that reform conservatives need to make monetary policy a greater focal point of their policy agenda. At the New Republic, Rebecca Traister writes that the lack of guaranteed paid family leave in America is a disgrace, but one that policymakers may address in the not-so-distant future.