Obama to Propose Four-Year Transpo Bill Funded By “Business Tax Reform”

President Obama will unveil a proposal for a $302 billion, four-year transportation bill during a speech today in Minnesota, according to an announcement from the White House. A fact sheet from the administration indicates the proposal would increase dedicated funding for transit more than funding for highways.

Obama will appear in St. Paul, Minnesota today to announce a new transportation plan he says is part of his "year of action." Photo: PRX.org
Obama will appear in St. Paul, Minnesota today to announce a new transportation plan. Photo: PRX.org

The proposal would represent a 38 percent spending increase over the current $109 billion, 2-year law, known as MAP-21, and is the most concrete long-term transportation bill proposed by the Obama administration, which has never put forward a funding stream until now.

The $300 billion spending plan does not raise the gas tax. Instead, it calls for directing some $150 billion from “business tax reform” to help shore up the Highway Trust Fund, which is set to go broke late this summer. The White House has not released more information about how the funding stream would operate, but the press release calls it “one-time transition revenue,” so the idea seems to be that in four years, a different revenue stream would have to be identified.

The White House announcement said Obama’s proposal “will show how we can invest in the things we need to grow and create jobs by closing unfair tax loopholes, lowering tax rates, and making the system more fair.”

Such a funding method would represent a major break from relying on the gas tax to pay for the national transportation program. The gas tax hasn’t been raised in two decades, and inflation and rising fuel efficiency have eroded its value. In 2012, the federal gasoline tax brought in $35 billion, but the feds allocated $54 billion in transportation spending, with other sources, including general tax revenues, making up the difference.

Obama will also announce the upcoming $600 million round of funding for TIGER, US DOT’s popular competitive grant program for local transportation projects, which has already been approved by Congress. The program has funded $1 billion in city transit projects, nearly as much for intercity rail, and $153 million in biking and walking projects since it was introduced in 2009.

More details about the president’s “vision for a 21st century transportation infrastructure” will be available after the speech today in St. Paul, which will take place inside the city’s restored Union Depot train station.

  • Mark R. Brown

    In my public finance class in grad school, this type of thing was called a “budget gimmick”: A one time revenue source used to cover up chronic, unsustainable budget shortfalls which are politically dangerous to deal with head on.

  • jeisenbe

    Raise. The. Gas. Tax.

  • thegreengrass

    I guess we’re just doomed. As much as the obvious answer here is to raise the fucking gas tax and peg it to inflation, Americans are gonna whine and bitch about the how much gas costs, because they’ve never visited a place where gas is *actually* expensive and has bridges that aren’t falling down. I’d gladly pay a lot more for gas for better infrastructure, and so do most people who want to live in a society that works.

  • Adam Herstein

    One time gain? Ridiculous. Raise the gas tax already.

  • Spectrall

    Any transportation budget that continues to privilege driving above all other forms of transportation is a budget I’m against.

  • valar84

    The worst thing is, every single coherent ideology leads to the same conclusion on this: raise gas taxes and put tolls on highways.

    Libertarian ideology hates subsidies in general, so roads should be priced according to the market, which means gas taxes and tolls so that consumers may better choose whether or not to “buy” access to it.

    Conservative ideology is a bit the same as libertarian ideology on that level.

    Social-democratic ideology (what Americans call Liberal) says that governments should use fees and subsidies as a carrot and stick approach to incentivize behavior that is beneficial to society and discourage behavior that is negative to society. Driving has a lot of externalities, the first of which is congestion, and the more people drive, the more roads governments have to build and maintain, which is very expensive and leads to an increase in public and private spending on transport as distances increase. So according to that ideology, car drivers should pay more to encourage them to consider transport options with less externalities (walking, biking, transit, etc…).

    Green ideology says that the user of an infrastructure or limited resources should pay the true cost of it (in French , it’s called the “Utilisateur-payeur” principle, literally “user-payer”, paraphrased, “those who use it, should pay for it”). That way, expensive infrastructure or limited resources are expensive and people are encouraged to opt for less expensive infrastructure and more plentiful resources.

    No coherent ideology is against raising gas taxes and tolls… but the issue here is populism. Populism isn’t a coherent ideology, it’s “whatever the people like, they get”. And most people in the US are car drivers and here is what they don’t want: higher gas taxes. Yes, they end up paying elsewhere for their cheap gas, but as the cost is rolled over into general taxes, they don’t realize it. It’s pure populism, even demagogy, that keeps gas taxes low.

    In Europe, many people do not use cars, and even when they do, they realize the negative impacts of their driving, so they are much more open to the idea of high gas taxes and tolls. But the US voting population is in vast majority drivers, and, not to be too insulting, not that well informed about public issues to start with. So intelligent policy proposals have quite an uphill battle.

  • thegreengrass

    That’s a really great, well thought out reply. I agree with all of it. “[W]hatever the people like, they get” really is the crux of so many American problems in my mind. As if we have a right to exurban living without having to deal with any of the consequences thereof.

  • Don’t raise it because then you have certain crazies going ballistic. Change it to a percentage or link it to inflation so then it will never have to get raised again.

  • valar84

    I think you pointed out maybe the root of the problem… the exurban lifestyle model was always extremely expensive and one for the very rich. Unfortunately, this model, of the mansion in a forest or a field, has been portrayed as the “american dream”, and governments have subsidized it to make it within the reach of as many people as possible.

    The problem with that is that this model is still extremely expensive, less than in the past, but still far more expensive than the big city model or small town model. When governments subsidize this lifestyle, it doesn’t make the costs go away, not at all, it just shifts them around and collectivizes them. Everyone ends up subsidizing those who choose that lifestyle, and the more people choose it, the more expensive it gets for society as a whole. You end up paying for that lifestyle no matter what, so you can either give in and adopt it, and shift your costs onto others, or you can try and resist, but then you pay for it but receive nothing.

    That’s a perverse incentive: you encourage people to do the thing that has the highest cost for others and for society.

  • Libertarian ideology may point that way, but the party’s politicians have not budged in that direction. Somehow it only gets applied to transit. They’re even plenty cozy with highway lobby denialists.

  • thegreengrass

    Oh yeah, very expensive and inefficient. Sprawl always is, it’s depressing. As someone who grew up in standard American East Coast sprawl, I absolutely can’t stand it anymore. I moved to a town much closer to the city I work in, and my commute and overall happiness is so much higher than when I had to drive an hour a day (in time spent in traffic, not even distance). Traffic is such a horrible waste of life.

    But yes, it’s vey perverse. I definitely agree that “someone pays for it somehow”, things are always a lot more connected than people think. The general attitude seems to be that roads just happened, when in fact they were so ridiculously subsidized by the government in the 50s. Relatedly, I read this article on the train in to work this morning that says the feds matched *90%* of new highway construction when the were building interstates. I knew they subsidized it, but I didn’t realize it was that much. It’s actually a fairly interesting article all around. http://www.theatlanticcities.com/commute/2014/02/9-reasons-us-ended-so-much-more-car-dependent-europe/8226/

  • Bolwerk

    At least one facet of conservatism is maintaining the status quo. That’s why America’s conservatives, the Democratic Party, tend to be against raising gas taxes.

  • Coolebra

    Unfortunately, the gas tax is a non-starter on many levels, not the least of which being that it fuels – almost exclusively – road building and expansion.

    Let’s see some innovative road pricing strategies that carry mandatory transit revenue sharing eligible for both operating and capital expenses. Let’s see other forms of revenue, like corporate tax reform that reallocates dollars in a meaningful way to advance 21st century transportation solutions.

    Getting away from the notion that road users generate the revenue and thus the revenue needs to go back into constructing and expanding roads is as obsolete a concept as the belief that the world is flat. Unfortunately, however, the gas tax is forever lost to a fear of sailing off the edge of the world.

    The gas tax is a useless relic.

  • EastBayer

    What an excellent post; I’ve been trying to articulate this elsewhere, but you round it out very well.

  • Lars Ulrich

    Yawn. Call me when the Presidents budget means something

  • Nathanael

    90% was the standard match, applied to even the weakest and most useless projects. The Feds actually put in 100% on some projects!

  • http://blackobama.beep.com
    http://blackdiamondobama.beep.com/apps/photoalbum?aid=41136828

    From all of the religious Confession, the Islamic had positive feedback.
    The Patient Protection and Affordable Care Act, called Obamacare seems to be supported by the musulmans. Not for

    nothing…
    Decreasing the population of Christian people with abortion and contraceptive can cause serious changes in the

    percentage religious divisions in a few decades.
    Obama’s program does not Christian at all, and seems that the only supporters are the musulmans.
    He needed time to show his real face. He kept his religion secret, but with his steps he left no doubt about it:

    he does not believe in Christian teachings, nevertheless: he wants to dilute the Christian bloodline.

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