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

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Congress

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.

From left, House Republican leaders Eric Cantor, Kevin McCarthy, and John Boehner continue to press plan for shoring up the highway fund by cutting Postal Service deliveries.(Mark Wilson/Getty Images)

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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