Bloomberg News

Transportation Bill’s Demise Points to 2014 Fiscal Stalemate (1)

August 02, 2013

The collapse of U.S. transportation funding bills in both houses of Congress points to a broader stalemate over fiscal 2014 spending and threatens to extend across-the-board budget cuts into next year.

Senate Republicans yesterday blocked a $54 billion measure funding highways, aviation, passenger rail and other transportation projects because it exceeded spending limits earlier agreed to by both parties. House Republican leaders called off this week’s vote on a more-austere $44 billion measure amid signs it lacked enough support to pass.

“This is the political equivalent of taking your ball and going home,” Stan Collender, a former congressional budget aide who is now managing partner of Qorvis Communications LLC, said as lawmakers prepared to leave Washington today for a five-week recess.

House Speaker John Boehner said yesterday that Congress will need to extend current federal funding a “short period of time” when the next fiscal year begins Oct. 1 because appropriations bills won’t be finished by then.

“The prospects for passing this bill in September are bleak at best, given the vote count on passage that was apparent this afternoon,” House Appropriation Committee Chairman Hal Rogers, a Kentucky Republican, said in a statement.

Little progress has been made in the appropriations process this year. Of the 12 annual spending bills that fund the government, not one has passed.

Consensus Lacking

Analysts said the lack of funding consensus means that agencies may be forced to continue operating under the forced spending cuts that began in March. The cuts, known as sequestration, were a default method of curbing federal spending after talks for a bipartisan debt-reduction plan failed in 2011. The cuts in fiscal 2014 reach $109 billion.

Transportation programs have been at the center of the biggest fights so far over the across-the-board cuts. President Barack Obama’s administration last spring began furloughing air-traffic controllers -- a move it said was one of the few ways the Federal Aviation Administration could comply with the 2013 cuts.

Lawmakers in both parties fought the decision and pushed through a measure giving the FAA temporary authority to shift money within its budget to eliminate the furloughs.

Nothing in current law prevents the administration from reimposing furloughs after September or again seeking to shut some control towers at small and midsized airports, another move it proposed earlier this year, said James Burnley, who was secretary of transportation under President Ronald Reagan.

Support Wanes

The demise of the spending bills in both chambers this week came at the hands of Republicans.

House leaders pulled the bill funding transportation, community development grants and housing came amid signs support was falling within the Republican ranks.

Party leaders risked losing votes of some members who wanted more funds for the community project grants, and also from those representing Northeast states where Amtrak -- the taxpayer-supported national passenger railroad -- carries most of its traffic and wants to increase train speeds.

The House measure would have reduced Amtrak funding to $950 million, $468 million less than was signed into law for this year.

“For most of the Northeast, that was an issue,” Pennsylvania Republican Charlie Dent said in an interview.

Breaking Limits

The Senate’s bill was blocked when it fell six votes short of the 60 needed to end opponents’ delaying tactics. Republicans said they opposed the measure because it breaks with budget limits that Congress approved in legislation that raised the federal debt limit in 2011.

“I’d remind my colleagues on the other side that we’ve got a $16 trillion debt; that we’re spending hundreds of billions of dollars a year we don’t have,” Minority Leader Mitch McConnell, a Kentucky Republican, said on the Senate floor. “This is how you get Greece. This is how you get Detroit. So we can’t do this.”

Continuing sequestration will force cuts to all government programs, including transportation.

FAA Administrator Michael Huerta testified to Congress this month that sequestration is delaying work on its plan to switch to satellite-based air-traffic control systems, a project known as NextGen.

Amtrak Funds

Amtrak can keep running under the status quo while being constrained in spending on maintenance, capital investment and equipment, Burnley said. The railroad isn’t commenting on the appropriations talks breakdown, Steve Kulm, a spokesman, said.

The Senate bill would have provided Amtrak $1.45 billion, a $37 million increase from the amount enacted for fiscal 2013, not counting $118 million to repair damage from last year’s Hurricane Sandy. Amtrak had asked for about $2.7 billion -- $2.1 billion of it for capital needs including new locomotives and railcars.

While highway programs are generally exempt from sequestration, there will be growing pressure on lawmakers to change that, Burnley said.

A Congressional Budget Office official testified July 23 that the Highway Trust Fund, which pays for road and transit projects, will go bankrupt in fiscal 2015 unless Congress deeply cuts spending or raises the federal gasoline tax by 10 cents a gallon.

‘Free Pass?’

“People might say, ‘Why should they get a free pass?’” Burnley said. Companies and state governments benefiting from highway and transit funding “may have a debate on their hands.”

Any effort to dislodge the debate on the transportation and other appropriations bills later this year is complicated by the 2014 midterm elections, said Scott Lilly, a former Democratic staff director of the House Appropriations Committee.

House Republican leaders may not want to keep advancing austere spending bills that expose some in their rank-and-file to casting votes that could be used against them, he said, especially if the Senate won’t accept them.

Complicating matters, it won’t be easy for both parties to agree in September to a stop gap measure to keep the government operating under current policies, because they are so far apart on how much to spend, he said.

“This has been the train wreck that they’ve been headed toward for a long time,” Lilly said.

To contact the reporters on this story: Laura Litvan in Washington at llitvan@bloomberg.net; Derek Wallbank in Washington at dwallbank@bloomberg.net

To contact the editors responsible for this story: Bernard Kohn at bkohn2@bloomberg.net; Jon Morgan at jmorgan97@bloomberg.net


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