Judd Gregg: Paving the way for highway spending

It has more then a few successes to point to, especially when compared against the prior Congress. Even the Senate, under Sen. Mitch McConnell’s (R-Ky.) adept leadership, has returned to a semblance of its real self as bills have been brought forward that were open to debate and amendment.

{mosads}Now, however, as it is moving into the business of passing appropriation bills that operate the government, the Democratic leadership in the Senate has declared it will bring things to a standstill. Those leaders have stated that no appropriations will be allowed to pass unless certain Democratic priorities are met.   

Of course, if one is a fiscal conservative, this Democratic move is a toss into the “briar patch.” It means government by continuing resolution, which means that spending can be limited to last year’s level — better known as the sequester number.  

This may frustrate the defense hawks, but for folks who want real spending restraint, it is not a bad outcome. In fact, it causes a person to wonder if the Democratic leadership may be playing a hand with no winning cards.

There is, however, one more opportunity for responsible governing before the end of the year: the pending need to pass a highway funding bill.    

This could also be an opportunity for irresponsible government — spending without regard to how to pay for it, which regrettably is the recent history of highway funding bills.

But something refreshingly good could be done in an area that is a fundamental responsibility of government: the maintenance of the nation’s infrastructure.

The Highway Trust Fund was originally set up to create a way to self-fund, in full, the construction and maintenance of our transportation system. It was a good approach.  

Unfortunately, due to a significant drop in gas tax revenues as a result in part of federal policies such as CAFE standards, the trust fund is no longer solvent and has for years been raiding the general fund (which is supported by deficit spending) to pay the bills. 

This has been done through some very creative schemes that make it look like it is not so — a sleight-of-hand that has allowed purported fiscal conservatives who like road construction to vote for the spending and still claim ideological purity.

But the actual result is that the Highway Trust Fund is dipping into, and adding to, the national debt — precisely the opposite of its intended purpose.

Now, with the need to re-invigorate the fund on the front burner, two good things could happen.  

First, this Congress could again show it is willing to govern by passing a new Highway Fund bill and kicking off the economic upswing that results from significant infrastructure improvements.  

Second, the Congress could support the Highway Fund in a responsible way, renewing its original, self-funded approach.

Some in Congress are talking about linking the fund’s reauthorization to taxing the overseas earnings of American corporations.  This might be part of the solution if done correctly, but the proposal put forward by the Democratic leadership is a punitive approach.   

It is basically a tax on a tax that would mete out ridiculously high tax burdens to our companies, which of course must compete with other nations’ companies. It would be a massive handicap, and cost American jobs.   

There is a way to do this that makes sense. Either change our tax system to conform with every other industrialized nation and have a “territorial” system, or simply go to a low repatriation tax rate such as 5 percent, so the trillions of dollars sitting overseas return to the United States and are reinvested here. The revenue from this 5 percent could go to the Highway Fund as part of the solution for funding.

In addition to the repatriation revenue, there are two other approaches that should be used.   

The Davis-Bacon rules, which cause the cost of infrastructure construction to be 25 to 30 percent higher then they would otherwise be, should be repealed. 

This means that the Highway Fund money could produce a great deal more in the way of improvements and constructions —  25 to 30 percent more, presumably.   

The gas tax should also be raised a small amount over two years. 

The Simpson-Bowles Commission in a bipartisan manner agreed to a 13.5 cent increase. This is a reasonable number, especially in light of the significant drop in the cost of gas as a result of expanding oil production. 

The Highway Trust Fund is supposed to be a pay-as-you-go effort by the users of the transportation system. A gas tax increase that is reasonable and dedicated is the fiscally responsible way to do this.  

It certainly beats adding to the nation’s debt by raiding the general fund and using gimmicks to disguise what one is doing.

Combine these three approaches into one package and you produce a Highway Trust Fund that is vibrant and will be able to build America’s infrastructure. That will mean our kids will live in a more competitive nation, yet without an increased burden of debt.

Judd Gregg (R) is a former governor and three-term senator from New Hampshire who served as chairman and ranking member of the Senate Budget Committee, and as ranking member of the Senate Appropriations Foreign Operations subcommittee.