Trading postal funds for highway funds

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By Steve Benen,

from MSNBC,

President Obama recently gave a big speech on infrastructure, making the case that making investments in roads, bridges, and rail would boost the economy, create jobs, and keep the nation more competitive. Of particular interest, Obama also reminded Congress that the nation’s Highway Trust Fund, which finances nearly all federally-supported transportation infrastructure in the United States, will run out of money entirely this summer unless Congress acts.

“It’s a crisis, it is,” Rep. Reid Ribble (R-Wis.), a member of the Transportation and Infrastructure Committee, recently said. “The Highway Trust Fund goes insolvent in July or sometime around there, and so we’ve got to figure out how we’re going to fund it.”

House Majority Leader Eric Cantor (R-Va.) believes he’s figured it out: cut money from the Postal Service and redirect those funds to transportation.

– Republican leaders in the House last week announced plans to use about $15 billion they said could be saved from ending Saturday letter deliveries by the Post Office to pay for at least one year’s worth of transportation projects.

– Advocates for both the Postal Service and increased transportation funding have objected to the plan because they argue that the two separate funding issues should not be combined.

In a memo to his members, released late last week, Cantor agreed that the Highway Trust Fund “will require an additional transfer of funds” prior to Congress taking August off. The Virginia Republican said he and the rest of the GOP leadership “firmly believe that this is the best way to ensure continued funding.”

And that’s where this gets a little tricky.

The Highway Trust Fund is generally supposed to be financed by a federal gas tax, which hasn’t been raised in over two decades. Republicans won’t allow an increase, and so transportation financing has become far more challenging.

GOP lawmakers could also consider deficit financing – that’s still their policy of choice when it comes to tax cuts – but House Republicans have ruled this out as a possibility, too. Why can the cost of tax breaks be borrowed, but the cost of infrastructure investments not? Because GOP leaders say so.

Complicating matters a little more, because the right won’t touch the federal gas tax, Washington is facing a transportation shortfall well into the future. Cantor’s plan is intended to make up the difference this year, though it’s a temporary fix and his party has no long-term solution.

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