In theory, of course, the highway bill is supposed to be paid for out of the Highway Trust Fund. But according to the Congressional Budget Office, the Trust Fund, which is funded by the federal gas tax, will collect only $187 billion over the next five years, meaning that the House bill spends $73 billion more than it takes in. To fill this gap, the House would rely first on some $20 billion in unspent money currently in the Trust Fund. But this is just the same type of Washington bookkeeping we’ve seen with other “trust funds” such as Social Security. That money is not “unspent.” In reality it was spent long ago, and what the Trust Fund actually holds is simply government bonds that will have to be redeemed out of general revenues. Beyond these funds, the House bill includes a number of other revenue‐raising mechanisms, such as royalty payments from allowing drilling in the Arctic National Wildlife Refuge and offshore areas. But those provisions will never survive the Senate, leaving a shortfall that will result in either greater budget deficits or higher gas taxes.
Left unasked is why the federal government should be involved in funding highway projects at all. The interstate highway system was at least ostensibly justified on national‐security grounds, but it has been completed for more than two decades. Today’s highway bills are more about the type of local road construction and maintenance that is properly the province of state and local governments. The highway bill does little more than shift money around from one state to another, with an added layer of bureaucratic central planning. The result is that some states are big winners, while others foot the bill. Considering all previous highway bills, Alaska has received more than $5.38 for every dollar its citizens paid in gasoline taxes, while Texas received back just 80 cents. Other big winners have been Hawaii, Montana, Rhode Island, South Dakota, and the District of Columbia. Losers, who paid more in taxes than they received in highway funds, include Indiana, Michigan, and North and South Carolina.
And with Washington setting priorities, lawmakers get their pet projects funded — even in the absence of explicit earmarks — while true local concerns frequently go unfunded. In fact, much of the spending under the “highway bill” does not even involve roads or highways. Both the House and Senate bills divert at least 20 percent of the funds to mass‐transit projects. And, while the House has stripped out many extraneous projects, the Senate bill requires that at least 10 percent of funds go to the usual mishmash of bicycle trails, hiking trails, and “traffic calming techniques.” It also sets up “safety and education for pedestrians and bicyclists” and programs to “encourage walking and bicycling to school.” Whatever the merits of such programs, how did they become the responsibility of the federal government?
Moreover, the strings that can accompany federal highway funding can actually make road building more expensive. Federal road standards are often higher than state standards, driving up the cost of projects. Federally funded projects also require payment of much higher union‐scale wages (under the Davis‐Bacon Act). These regulations can drove up road building costs by as much as 30 percent under previous highway bills, and often preempt local zoning laws and building plans. Federal administrative costs and paperwork can add another 5 percent to road‐building costs.
A much better approach would be to revive the Reagan‐era idea of abolishing the federal highway trust fund and eliminating the federal gasoline tax, returning a source of revenue to the states in order to design and fund their own transportation priorities.
Under other circumstances, this would be an opportunity for the Republican presidential candidates to cement their small‐government credentials by speaking out against this boondoggle. But, unfortunately, this is yet another area where both Rick Santorum and Newt Gingrich have baggage. Santorum voted for both the 1998 and 2005 highway bills, which were even more costly and pork‐laden than this one. (The latter, in fact, contained funding for the infamous “Bridge to Nowhere.”) And, as speaker, Gingrich was influential in pushing through the 1998 bill. Romney is more of a blank slate, never having had to take a position on earlier bills, although as governor he was, of course, happy to accept federal highway funds for his state. So far, though, he has been silent about this year’s bill.
The Republican leadership hopes that slipping in sweeteners such as a renewed push for the Keystone Pipeline will mollify restive conservatives. They miss the point. The upcoming vote over the highway bill is about much more than one bill. It is a question about whether the Republican congressional establishment got the message of 2010, or whether it will simply continue with business as usual.