House infrastructure committee chairman Jim Oberstar (D-MN), facing steep
political odds in his push to pass a new six-year federal
transportation bill this year, has begun to pitch an outside-the-box
solution to the financing shortfall that is still
stalling congressional action: Treasury bonds.
(Photo: Popand Politics)
Oberstar's proposal would plug the
hole in anticipated highway trust fund revenue for the next transport
bill with top-rated Treasury debt securities. Those bonds, the
Minnesotan explained on Friday, would "be repaid with revenues from the highway
trust fund out into the future. And we would delay the
repayment for the first perhaps four years, giving the economy time to
recover."
In order to repay the Treasury for its up-front bond issue,
Congress would ultimately need to raise the gas tax -- a step lawmakers
have been unwilling to take since 1993, and one that the White House has
ruled out for the time being.
"The idea of waiting
three or
four years for the economy to recover would be an appealing part of" the
idea, Iowa state DOT chief Nancy Richardson told Oberstar when he
sought her reaction to the plan at a Friday House hearing. "[That] would
allow it to appeal to some of the dissenters in
terms of increasing funding."
Delaying for three or four years, however, also would assume that
future Congresses would be more open to voting on a gas-tax hike that
few lawmakers are eager to debate, even in rosy economic times. The
evidence of success for such kick-the-can-down-the-road moves is few and
far between: both parties, for example, have habitually voted
to postpone previously scheduled cuts in Medicare reimbursement
rates for doctors rather than fix the long-term formula.
In addition, the growing production
boom in semi- and fully electric cars casts
doubt on the gas tax's ability to raise sustainable revenue for
transportation going forward. Depending on how popular highly
fuel-efficient cars become by the time Congress considers a future gas
tax change, the cents-per-gallon increase needed to repay the Treasury
may be much higher than any current predictions.
The gas-tax bonding plan has a third potential hiccup.
Oberstar suggested that $130 billion in Treasury
bonds would be sufficient to close the gap between the cost of his six-year
transport bill and anticipated gas-tax revenue. Yet that total
would not appear to cover the estimated $50 billion that Oberstar's
legislation would set aside for high-speed rail.
Securing sufficient votes from fiscally conservative Democrats and
Senate Republicans for deficit spending on high-speed rail would be
difficult on its own, and adding the bonding proposal could add
complications.
Oberstar spokesman Jim Berard cautioned that the bonding idea is
among several "proposals that have been floating around" for financing a
new transport bill, adding: "There isn't a magic bullet out there that
seems to have captured everybody's imagination. So we don't want to get
too far out in front of this thing because we don't want to give the
impression that we've found the answer."
