Transportation Secretary Anthony Foxx announced Tuesday that unless Congress acts to reauthorize the Highway Trust Fund, the Obama administration will slash funds, jeopardizing over 700,000 jobs, the Fiscal Times reports.
“It would be like Congress threatening to lay off the entire population of Denver, or Seattle or Boston,” President Barack Obama said. “That’s a lot of people. It would be a bad idea. Right now there are more than 100,000 active projects across the country. Soon, states may have to choose what projects to continue and what to put the brakes on.”
The fund currently draws on a federal gas tax of 18.4 cents per gallon, which is slated to run dry by the end of the August. About 45 percent of infrastructure costs are covered by the federal government, but by August, that rate could significantly plummet by at least 28 percent, meaning that states will not be reimbursed by the federal government upon request.
Instead, states will have to be content with transfer payments coming in from the federal gasoline tax every two weeks.
There are only 16 days left for Congress to reach a solution before the recess, which may prove finding a solution difficult, given that the Senate Finance Committee last week put forward a $9 billion dollar proposal which was quickly shot down.
It was viewed by Republicans as too partisan. But the funding problem remains, and the Congressional Budget Office has calculated that the fund will need approximately $8.1 billion to continue operations throughout the year. Solvency is a major concern, since current spending rates would place the Highway Trust Fund $172 billion in the red by 2024.
Obama’s suggested solution is to close a tax loophole which currently allows for companies to send profits overseas.
“It’s not crazy, it’s not socialism, it’s not the imperial presidency. No laws are broken. We’re just building roads and bridges like we’ve been doing for the last, I don’t know, 50, 100 years,” Obama said. “But so far House Republicans have refused to act on this idea. I haven’t heard a good reason why they haven’t acted. It’s not like they’ve been busy with other stuff.”
On Sunday, Republican Sen. John Thune of South Dakota expressed a certain amount of willingness to find a solution, although he was cautious about options which were not fiscally balanced.
“There’s probably something that could be found that would be middle ground, and if there are tax compliance issues that don’t represent new taxes, and some spending reforms that would get you to a place that you might be able to come up with the necessary shortfall and cover it…I think that’s a solution that’s out there,” Thune said.
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