Bloomberg News

Highway Bill Hinges on Resolving Disputes on Spending

March 30, 2012

Congress was able to avert a disaster for construction jobs and a Federal Highway Administration shutdown. This week’s wrangling to get that far was only a taste of what’s to come.

Before the House and the Senate can pass a long-term transportation bill, lawmakers will have to overcome differences over how much to spend, how many years to fund and how to pay for somewhere between $109 billion and $260 billion for highways, bridges and transit.

Waiting in the wings is a diverse coalition of interests that includes the U.S. Chamber of Commerce, retailers such as JC Penney Co. (JCP:US) and Home Depot Inc. (HD:US), the construction industry and the Laborers’ International Union of North America.

“A program that has traditionally enjoyed strong bipartisan support is being used as a means to advance political instead of policy objectives,” Peter Ruane, president and chief executive officer of the American Road and Transportation Builders Association, and Stephen Sandherr, chief executive officer of Associated General Contractors of America, said in a statement.

House and Senate lawmakers voted yesterday to extend U.S. highway programs through June 30, averting for the next three months a shutdown of construction projects and the furlough of 3,500 federal-government workers. President Barack Obama signed the legislation into law today, Josh Earnest, a White House spokesman, said in a statement. That headed off the lapse of federal highway programs tomorrow.

Road Projects

“The president was pleased that Congress acted to prevent construction workers from having to go off the job because of a lapse of funding,” Earnest said. “However, we encourage Congress to act in a bipartisan fashion on a longer term extension.”

Road projects in every U.S. state would have been affected if Congress failed to act. The U.S. would have been forced to stop collecting all but 4.3 cents of the 18.4 cents-per-gallon federal tax on gasoline, putting further strain on the Highway Trust Fund, which pays for highway and transit projects.

Most Democrats said a vote on a two-year, $109 billion highway plan, passed by the Senate March 14 and blocked in the House, would give states and localities more certainty.

Democrats took to the Senate floor repeatedly to denounce the House’s inability to pass a long-term bill. Senator Mary Landrieu, a Louisiana Democrat, made clerks record her “no” vote after the Senate’s voice vote to pass the extension, after telling Majority Leader Harry Reid of Nevada that she would block any future short-term extension.

‘Not Benign’

Barbara Boxer, the sponsor of the Senate bill, vowed to campaign throughout the two-week congressional recess to talk about how states can’t commit to major projects because of the uncertainty over long-term policy. The three-month extension will cost the construction industry about 100,000 jobs, she said.

“These extensions are not benign, these extensions are dangerous,” said Boxer, a California Democrat. “We will make sure the American people know the truth.”

When House leaders attempted to move a five-year, $260 billion measure to the floor in February, they faced a rebellion from Tea Party-backed lawmakers, who said the bill spent too much, and members from city and suburban districts, who didn’t like cuts to mass transit systems.

Yesterday, House Speaker John Boehner indicated he wanted to make sure increased spending is backed by revenue from expanded offshore energy production.

“When we get back, we will move quickly to move a highway bill with our energy initiatives and ship it over to the United States Senate,” said Boehner, an Ohio Republican.

Live Within Means

Representative Bill Shuster, a Pennsylvania Republican, responded to Democrats’ pleas to take up the Senate’s bipartisan bill with a warning that the House would want to change highway policy before agreeing to a bill. Streamlining federal approval of projects might save enough so a lower spending level won’t matter, he said.

“Will we spend less money? Yes,” Shuster said. “We have to live within our means.”

There also may be a discussion on earmarks, the practice of lawmakers designating U.S. money for specific roads, bridges and transit projects. House leaders say their bill is clean. The Senate measure locks into law past spending allocations, rewarding states that had a lot of earmarks when the last long- term bill passed in 2005, Representative David Dreier, a California Republican, said at a March 28 hearing.

“The era of the biggest gorilla walking off with the most bananas is over,” House Transportation and Infrastructure Committee Chairman John Mica, a Florida Republican, said on the floor yesterday.

Fund Almost Insolvent

Congress’s struggles to agree on a multiyear bill have drawn out so long that the Highway Trust Fund, which pays for highway and mass transit projects, is almost insolvent. Its highway account may be unable to meet its obligations as soon as October, the American Association of State Highway and Transportation Officials said Jan. 31 in a report analyzing Congressional Budget Office data.

The fund’s finances have declined as cars have become more fuel-efficient and Americans drive less because of higher gasoline prices, according to the U.S. Transportation Department.

“Our members are growing increasingly frustrated that Congress seems incapable of passing critical legislation that improves the flow of commerce and promotes economic growth,” Ruane and Sandherr, leaders of the two largest U.S. construction industry groups said.

The Senate bill is S. 1813 and the House bills are H.R. 7 and H.R. 4281.

To contact the reporter on this story: Jeff Plungis in Washington at jplungis@bloomberg.net

To contact the editor responsible for this story: Bernard Kohn at bkohn2@bloomberg.net


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Companies Mentioned

  • JCP
    (JC Penney Co Inc)
    • $7.68 USD
    • 0.43
    • 5.6%
  • HD
    (Home Depot Inc/The)
    • $91.85 USD
    • 1.61
    • 1.75%
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