Bloomberg News

Highway Deal Leaves U.S. Trust Fund in Bankrupting Cycle

June 29, 2012

Congress Clears Highway, Student-Loan Measure

A college commencement ceremony at Yankee Stadium in New York City. Photographer: Mario Tama/Getty Images

The U.S. Congress today cleared a bill that will keep money flowing for highway and mass transit projects for the next 27 months. Lawmakers acted a day before the programs were due to expire.

The legislation, passed by 373-52 in the House of Representatives and then by 74-19 in the Senate, now goes to President Barack Obama, who will sign it into law.

“It’s a good, bipartisan bill that will create jobs, strengthen our transportation system and grow our economy,” White House Press Secretary Jay Carney told reporters traveling with Obama to inspect fire damage in Colorado.

The measure overhauls how projects undergo review for their effect on the environment. It will consolidate the number of programs dedicated to specific policy priorities and give states more flexibility to skip federal mandates on bicycle paths and pedestrian walkways.

“The construction sector has been hit hard during this recession,” said Senator Barbara Boxer, the California Democrat who led the House-Senate conference committee negotiating the bill. “Well over 1 million construction workers are unemployed. This is the answer.”

Spending Levels

The transportation bill maintains current spending levels through September 2014, or $94.3 billion for fiscal 2013 and 2014 combined, according to the Congressional Budget Office. The federal gasoline tax won’t provide enough to cover that level of construction, so the bill uses $18.8 billion of general tax money to bridge the gap.

Besides transportation-related programs, the legislation extends for a year current student-loan interest rates, which had been scheduled to double to 6.8 percent on July 1. The measure also reauthorizes the National Flood Insurance Program, which had been set to expire at the end of July.

Just weeks ago, the bill’s prospects were dim. Efforts in the Republican-led House to pass a highway plan fell apart earlier this year, and it wouldn’t pass the bill approved by the Democratic-led Senate.

The deal came together as the House dropped demands that an approval of TransCanada Corp. (TRP)’s Keystone XL oil pipeline to the U.S. Gulf Coast be included in the bill. The Senate agreed to policies that will speed up the approval process for highway and bridge projects, and a renewed emphasis on highways in federal grant programs.

“This is the most conservative highway bill ever, both from a fiscal standpoint and a policy standpoint,” said Representative John Mica, the Florida Republican who is chairman of the Transportation and Infrastructure Committee.

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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