Michael Tanner

Anyone still wondering why there is a disconnect between grassroots limited-government conservatives and the Washington establishment need look no farther than the latest highway bill currently making its way through Congress with support from Republican leaders in both houses.

The Senate version, SB 1813, would cost $109 billion over two years. The House bill, HR 7, which runs to 847 pages of pork and special-interest projects, raises the price tag to $260 billion, but extends it over five years, making it a couple billion cheaper on a year-by-year basis.

In theory, of course, the highway bill is supposed to be paid for out of the Highway Trust Fund. But according to the Congressional Budget Office, the Trust Fund, which is funded by the federal gas tax, will collect only $187 billion over the next five years, meaning that the House bill spends $73 billion more than it takes in. To fill this gap, the House would rely first on some $20 billion in unspent money currently in the Trust Fund. But this is just the same type of Washington bookkeeping we’ve seen with other “trust funds” such as Social Security. That money is not “unspent.” In reality it was spent long ago, and what the Trust Fund actually holds is simply government bonds that will have to be redeemed out of general revenues. Beyond these funds, the House bill includes a number of other revenue-raising mechanisms, such as royalty payments from allowing drilling in the Arctic National Wildlife Refuge and offshore areas. But those provisions will never survive the Senate, leaving a shortfall that will result in either greater budget deficits or higher gas taxes.

Left unasked is why the federal government should be involved in funding highway projects at all. The interstate highway system was at least ostensibly justified on national-security grounds, but it has been completed for more than two decades. Today’s highway bills are more about the type of local road construction and maintenance that is properly the province of state and local governments. The highway bill does little more than shift money around from one state to another, with an added layer of bureaucratic central planning. The result is that some states are big winners, while others foot the bill. Considering all previous highway bills, Alaska has received more than $5.38 for every dollar its citizens paid in gasoline taxes, while Texas received back just 80 cents. Other big winners have been Hawaii, Montana, Rhode Island, South Dakota, and the District of Columbia. Losers, who paid more in taxes than they received in highway funds, include Indiana, Michigan, and North and South Carolina.


Michael Tanner

Michael D. Tanner is a senior fellow at the Cato Institute, heading research into a variety of domestic policies with particular emphasis on health care reform, welfare policy, and Social Security. His most recent white paper, "Bad Medicine: A Guide to the Real Costs and Consequences of the New Health Care Law," provides a detailed examination of the Patient Protection and Affordable Care Act (Obamacare) and what it means to taxpayers, workers, physicians, and patients.