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America's roads are in bad shape, and could be getting much worse. This morning, President Obama pressured Congress to pass a one-time tax to prevent the federal government from running out of money with which to fix our highways.
What's Going On?
The money for highway repair, which totals about $50 billion per year, comes from the Highway Trust Fund, a transportation and infrastructure fund financed by gasoline taxes. Because Americans are using less gas, less money is going into the fund. The cash is set to run out by the end of the summer. The total in the fund could be down to just $4 billion by July. Bankruptcy could mean the delay of 112,000 roadway projects and 5600 transit projects, which account for 700,000 construction jobs.
To maintain the current infrastructure projects, the Congressional Budget Office would need to raise the gas tax, which is now 18.4 cents per gallon, by 10 to 15 cents per gallon—or find $13 billion to $18 billion annually from other sources. President Obama's proposed solution would collect the money by taxing overseas earning. Over four years, it would gather $150 billion in taxes by closing loopholes on overseas money that lets companies defer those obligations.
Obama promoted his plan this morning at the Tappan Zee Bridge in Tarrytown, N.Y. The bridge, designed to last 50 years, is now 58 years old. A $3.9 billion effort to replace the bridge is under way, but may be put on hold because of the funding crisis. It's not alone: States are starting to slow down their projects because of fear of the upcoming bankruptcy.
How Did It Get This Bad?
Before the founding of the Highway Trust Fund in 1956, the federal government paid for road fix-ups out of the General Fund of the U.S. Treasury. The original tax amounted to three cents per gallon. It jumped to nine cents per gallon under President Reagan, 14 cents under George H. W. Bush, and finally 18.4 cents under Clinton. Parts of the Bush and Clinton tax increases went to pay down federal deficits, though in 1997 Congress directed all of Clinton's 1993 tax increase to go toward the fund.
The Senate discussed gradually raising the federal gas tax all the way to 40 cents per gallon. But the idea stalled, and now the gas tax has not increased in two decades.
Because of the recession and rising gas prices, Americans are using less gas overall. But the roads are still getting worse, and the Highway Trust Fund cannot keep up with the cost of building and fixing highways. Between 2008 and 2010, Congress had to make emergency transfers totaling about $25 billion to keep the fund solvent. This time around the Band-Aid isn't coming, and the money is quickly running out.
Reporting by Niko Vercelletto
Andrew's from Nebraska. His work has also appeared in Discover, The Awl, Scientific American, Mental Floss, Playboy, and elsewhere. He lives in Brooklyn with two cats and a snake.
