In the battle of nerves that has been brewing between House Republicans and the Democratic-majority Senate over an extension of the Highway Trust Fund … the Senate blinked first.
In a vote of 81-13, the Senate held their noses and voted to pass the $10.8 billion House-passed Highway Trust Fund bill, which extended funding of the HTF through May 2015, according to news reports. Senators had been trying to scale back the length of the extension to December to pressure lawmakers to come up with a long-term solution after the midterm elections in November but before newly-elected lawmakers take their seats in January.
Obama to Sign the Extension
The House version of the bill has now been sent to President Obama, who has indicated that he will sign it, even though he had previously called for a four-year, $302 billion extension of the bill.
The stakes over highway funding were high and the deadline was looming. Both houses were scheduled to adjourn for five weeks for their August recess beginning August 1.
High Stakes Pressure
Before the bill passed, the Transportation Department announced that it would begin delaying and cutting payments to states for highway projects immediately after the Congress adjourned. That would mean Congressmen would have to return to their districts and face constituent anger over halted road and transportation projects.
Senate Finance Committee Chairman Ron Wyden (D-Ore.) acknowledged that the high-pressure atmosphere probably contributed to the Senate’s action, but added that it would have been “legislative malpractice” for the Senate to simply accept the House version without amending it. But, in the end, with the pressure on and the odds against Senate Democrats, enough Senators crossed the aisle to approve the House Republican’s version of the bill.
Inaction Would Have Been Disastrous
Had the most recent extension of the highway bill been allowed to expire, it could have been devastating for the nation’s infrastructure. The HTF would have run dry and states would no longer have access to federal funding for transportation infrastructure construction projects.
Earlier, the Obama administration had called for a $302 billion, four-year extension of the highway funding, which would have added $87 billion in new funding to address the nation’s backlog of crumbling bridges, highways and transit systems.
In the end, however, the administration had to compromise and agree to a short-term extension, one that is based on a funding mechanism known as “pension smoothing”, that many lawmakers — as well as US Transportation Secretary Anthony Foxx — have criticized as a budget gimmick.
Pension smoothing allows companies to temporarily reduce their pension contributions, generating additional revenue for the government because companies lose out on the tax deductions associated with adding money to pensions.
The House bill also relies on boosting customs user fees to extend highway funding. But it does not increase the $.18.4 cent per gallon gas tax, which provides most of the funding for the HTF. The federal gas tax has remained the same for 20 years, despite calls from lawmakers to raise it so that it keeps pace with infrastructure spending.