WASHINGTON — A roadwork slowdown reminiscent of the partial closure of the federal government last year is now hanging over the U.S. economy as Congress leaves town without a deal for replenishing the Highway Trust Fund.
Sen. Ron Wyden, an Oregon Democrat, tried to move things along Thursday with a bill in the Senate Finance Committee that would provide a six-month, $9 billion infusion. His bill, funded largely by tax changes, failed to win over Republicans and the committee chose to leave for a weeklong recess without voting as they pursue a deal all sides might agree to.
“It’s important for the committee to get something done, but also to get it done right,” said Sen. Orrin Hatch of Utah, the top Republican on the committee.
The brinkmanship is not without precedent. Congress had to pass nine brief extensions from late 2009 until mid-2012, when it finally agreed on a two-year measure for highway and mass transit programs. With the Highway Trust Fund expected to be depleted as soon as July, about 112,000 construction projects and almost 700,000 jobs await word on new federal funding.
“It is crunch time on transportation,” Wyden said, adding that he’s still going to work with Hatch to prevent a “paralyzing” halt of road projects.
The authority to levy an 18.4 cent-per-gallon gas tax that largely funds the $50 billion-a-year in federal monies for highway, bridge and mass transit projects expires Sept. 30. The U.S. Department of Transportation last month projected that the part of the trust fund that pays for road and bridge projects will have less than $4 billion in cash next month and will be short $400 million sometime in August.
More money is needed to ensure states can keep road construction and repaving projects going, especially after a harsh winter that undermined pavements across the U.S.
Even if the Senate committee approves the bill, Republican leaders in the House have already said they won’t produce their plan until next month and said they would reject any tax increases, a core part of Wyden’s proposal.
To pay for the six-month, $9 billion infusion, Wyden is proposing to change mortgage-interest deduction documentation in a way that he says can raise $2.2 billion over 10 years through better tax compliance. Banks would be required to report more information to the IRS about mortgages, including the unpaid balance and the address of the property.
The biggest chunk of money is projected to come from a provision that would force people who inherit IRAs and other retirement plans to take required taxable distributions over five years. Under current law, they take those payments over a longer period that is linked to their life expectancy.
“Simply put, there is no way tax hikes to pay for more spending will fly in the House,” House Ways and Means Committee Chairman Dave Camp, a Michigan Republican, said Wednesday.
