Will Highway Funding Solution Be Pushed Off ‘Cliff’ Into Lame-Duck?

At least a short fix is needed before elections, though, with money for projects running out by summer’s end.

WASHINGTON, DC - JANUARY 08: House Majority Whip Kevin McCarthy (R-CA) speaks to the media while flanked by House Majority Leader Eric Cantor (R-VA) (L) and House Speaker John Boehner (R-OH) (R), after attending the weekly House Republican conference at the U.S. Capitol January 8, 2014 in Washington, DC. Speaker Boehner spoke on various issues including unemployment insurance. (Photo by Mark Wilson/Getty Images)
National Journal
Billy House
June 4, 2014, 4:09 p.m.

A key Sen­ate com­mit­tee on Wed­nes­day began privately de­vis­ing a plan for keep­ing the na­tion’s High­way Trust Fund from go­ing broke this sum­mer, even as House Re­pub­lic­an lead­ers con­tin­ue to press the idea of cut­ting Sat­urday de­liv­er­ies by the U.S. Postal Ser­vice as a way to find more money for trans­port­a­tion pro­jects.

A con­sensus seemed to be emer­ging, though, that Con­gress won’t be able to de­vel­op and pass a long-term solu­tion to the prob­lem be­fore the high­way fund runs out of money, so a short-term fix is most likely to be found as mem­bers rush to­ward the midterm elec­tions want­ing to avoid a na­tion­wide eco­nom­ic dis­aster.

The Sen­ate Fin­ance Com­mit­tee is con­sid­er­ing about 10 op­tions for res­cuing the fund, which faces a pos­sible zero bal­ance at the height of the con­struc­tion sea­son in Ju­ly or Au­gust. But the House GOP’s pro­pos­al for Postal Ser­vice cut­backs is not among the ideas be­ing ser­i­ously con­sidered, said Fin­ance mem­bers from both parties as they emerged from a closed-door meet­ing called by Chair­man Ron Wyden, D-Ore.

Rather, sev­er­al new or in­creased user fees are on the list of pos­sib­il­it­ies. The lead­ing pro­pos­al, as de­scribed by sev­er­al sen­at­ors, is a new fee that would be paid by oil whole­salers. Few oth­er de­tails, in­clud­ing wheth­er that would re­place an ex­ist­ing gas­ol­ine tax, were provided.

House Re­pub­lic­an lead­ers have already re­jec­ted most fee or tax in­creases, such as rais­ing fuel taxes or tolls.

What is def­in­itely not be­ing con­sidered in the Sen­ate is what House Re­pub­lic­ans are now push­ing — tak­ing money from the Postal Ser­vice by al­low­ing it to cut Sat­urday mail ser­vice.

Fin­ance Com­mit­tee mem­bers on both sides of the aisle said Wed­nes­day they were pess­im­ist­ic that any long-term solu­tion to the high­way-fund crisis can get through Con­gress by late Ju­ly, when money for hun­dreds of thou­sands of road and bridge pro­jects is pro­jec­ted to run out.

“I sup­pose the best we can do is a short-term” fund­ing ex­ten­sion, said Fin­ance rank­ing mem­ber Or­rin Hatch.

That was echoed by Sen. Bill Nel­son, D-Fla., who said he wants a “full and ro­bust” long-term fund­ing solu­tion, but get­ting one prob­ably won’t be pos­sible un­til after the elec­tions, in a lame-duck ses­sion.

Nel­son also joined the chor­us of Demo­crat­ic sen­at­ors who are pok­ing fun at the House GOP’s Postal Ser­vice plan. Nel­son labeled the idea “ri­dicu­lous” and Wyden called it a “a real head-scratch­er.”

But Wyden said “his sense” is that he, Hatch, and oth­er mem­bers of his com­mit­tee will be able to reach some oth­er bi­par­tis­an “pre­ferred solu­tion” by next week. “The goal is to be able to get a bill out of com­mit­tee” be­fore law­makers break for the Ju­ly 4 re­cess, he said.

Against this back­drop, the of­fice of House Ma­jor­ity Whip Kev­in Mc­Carthy sent out a mes­sage on Wed­nes­day to top policy aides of GOP mem­bers an­noun­cing, “We will be hold­ing a spe­cial whip le­gis­lat­ive brief­ing [Thursday] to dis­cuss high­way fund­ing.”

The top­ic is de­scribed as the lead­er­ship’s Postal Ser­vice pro­pos­al. The email said staffers from the Trans­port­a­tion and In­fra­struc­ture, Over­sight and Gov­ern­ment Re­form, Ways and Means, and Budget com­mit­tees will be on hand to de­scribe the plan and an­swer ques­tions.

Seni­or House Re­pub­lic­an aides on Wed­nes­day con­firmed that the pro­pos­al to stop most Sat­urday mail de­liv­er­ies ex­cept for such things as pack­ages, medi­cine, and pri­or­ity or ex­press mail is likely to be in­cluded as a pro­vi­sion in a mul­ti­year trans­port­a­tion bill to be taken up by the House.

Mean­while, mem­bers of the Sen­ate Fin­ance Com­mit­tee met late Wed­nes­day be­hind closed doors to dis­cuss al­tern­at­ive plans for keep­ing the High­way Trust Fund from go­ing broke this sum­mer at the height of the con­struc­tion sea­son. Thou­sands of high­way and bridge pro­jects and hun­dreds of thou­sands of jobs could grind to a halt in two to three months un­less a solu­tion is found to keep the fund’s bal­ance above zero.

The di­lemma stems from the fact that 90 per­cent of the fund’s rev­en­ue comes from the 18.4-cents-per-gal­lon fed­er­al tax on gas­ol­ine and the 24.4-cents-per-gal­lon tax on dies­el, neither of which has been in­creased since 1993. As mo­tor­ists drive more fuel-ef­fi­cient vehicles, rev­en­ues go­ing in­to the fund have de­clined while con­stric­tion costs have ris­en. But Re­pub­lic­ans led by House Ma­jor­ity Lead­er Eric Can­tor say they op­pose rais­ing fuel taxes or high­way tolls as a solu­tion.

The idea of trans­fer­ring money to the fund from the Postal Ser­vice by cut­ting Sat­urday ser­vices was first floated in a memo Fri­day to rank-and-file House Re­pub­lic­ans from Speak­er John Boehner, Can­tor, and Mc­Carthy. They wrote that de­clin­ing mail volume has led the Postal Ser­vice it­self to sug­gest this, and said it would lead to an es­tim­ated $10.7 bil­lion in sav­ings over 10 years that could be used as an off­set to a gen­er­al-fund trans­fer to keep the high­way fund in the black through May 2015.

The short-term fix would also al­low time to de­vel­op a longer-term solu­tion to the high­way fund’s sta­bil­ity, they said, while at the same time al­low­ing the Postal Ser­vice — which has more than $100 bil­lion in pro­jec­ted un­fun­ded li­ab­il­it­ies in the long term — to re­duce its costs.

Said one House Re­pub­lic­an aide: “The thing people have a hard time grasp­ing is that the Postal Ser­vice is still a gov­ern­ment agency, and when they are ba­sic­ally los­ing money — ul­ti­mately the fed­er­al gov­ern­ment is li­able.” So, the think­ing goes, the plan to re­duce ser­vice will cut a fu­ture li­ab­il­ity that would even­tu­ally have to be paid for out of the gen­er­al fund, and those sav­ings can be used now for the high­way fund.

But the pro­pos­al has been mocked by some top Demo­crats, in­clud­ing Sen­ate En­vir­on­ment and Pub­lic Works Com­mit­tee Chair­wo­man Bar­bara Box­er, D-Cal­if., who called it “strange” and “un­work­able.”

Some oth­er groups out­side of Con­gress, like Her­it­age Ac­tion, have called the move a “fake off­set.” A blog post­ing on the web­site of the Com­mit­tee for a Re­spons­ible Fed­er­al Budget also ar­gues that “en­act­ing re­forms to the USPS and count­ing those sav­ings as both im­prov­ing the fin­an­cial con­di­tion of USPS and us­ing those funds for trans­port­a­tion pro­jects is double count­ing.”

The Postal Ser­vice it­self, mean­while, seems to be walk­ing a care­ful line in a re­sponse about the GOP plan re­layed by a spokes­wo­man to Na­tion­al Journ­al.

“Al­low­ing the Postal Ser­vice to im­ple­ment a five-day mail/six-day pack­age de­liv­ery sched­ule is one of sev­er­al le­gis­lat­ive re­quire­ments that are in­cluded in our re­quest for com­pre­hens­ive postal re­form le­gis­la­tion,” the state­ment ac­know­ledges. “With de­clin­ing First Class Mail volume, there isn’t suf­fi­cient rev­en­ue to sus­tain six-day mail de­liv­ery. If the pro­posed five-day mail/six-day pack­age de­liv­ery sched­ule were to be­come law, it would provide the Postal Ser­vice with some fin­an­cial re­lief.

“However, the Postal Ser­vice’s li­ab­il­it­ies cur­rently ex­ceed its as­sets by ap­prox­im­ately $40 bil­lion,” the state­ment ad­ded. “Com­pre­hens­ive le­gis­lat­ive re­form would still be ne­ces­sary to re­store the Postal Ser­vice to prof­it­ab­il­ity and put the or­gan­iz­a­tion on a stable, long-term fin­an­cial foot­ing.”

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