At the end of the week, authorization for federal highway and transit programs expire. Many, including the U.S. Chamber of Commerce, are urging lawmakers to find “common ground” and extend the programs. To be clear, any extension or reauthorization will simply perpetuate the status quo that has led to tens of billions in taxpayer bailouts of the federal Highway Trust Fund.
In a nod to the fiscal realities, the Chamber also urged Congress “to establish a road map for a long-term sustainable user-fee based revenue model.” What does sustainable funding mean when it comes to transportation? Well, three years ago – on the heels of President Obama’s stimulus – the Chamber launched a campaign to raise the federal gas tax to support a 40% increase in transportation funding.
With gas tax revenues dwindling thanks to high prices and more fuel-efficient cars, many in the transportation community are looking at other funding mechanisms, including a Vehicle Miles Traveled (VMT) tax. As the name implies, a VMT would tax drivers based on the number of miles they drive, which would require government tracking and reporting.
A few months ago, during a question and answer session, the Chamber said it was “open to looking at those options,” but noted a rush to implement could “set back the question of VMT for years and years.” With major business groups keeping the door open to a VMT, you can be certain this week’s battle over transportation will not be the last.
Also set to expire at the end of the week are the Pelosi-era rates on federally subsidized student loans. Absent action from Congress, those rates will double from 3.4% to 6.8%. Sure, a doubling of rates sounds dramatic, but the real world impact is marginal. According to Douglas Holtz-Eakin, an extension of the lower rate would only lower monthly payments by an average of $7.
But while the impact on future students is minimal, the immediate cost to the Treasury is significant: $6 billion for a one year extension. Press reports suggest the congressional Republicans and Democrats are closing in on a deal to pay for the largess, but a gimmick-ridden pay for misses the larger point: the subsidies haven’t worked!
As Congressman Rob Woodall (R-GA) said earlier this year, this is nothing but “pandering” to our nation’s young people. The result will simply be that “the one out of two young people that come out of college and can’t find a job can default on those loans at a lower rate instead of a higher rate.” As with most things in Washington these days, this is nothing but a bipartisan short-term gimmick that fails to address the underlying problems.
Fortunately, not everyone in Washington is thinking about government-centric solutions. When Commerce Secretary John Bryson resigned for health reasons last week, Senators Jim DeMint (R-SC) and Rand Paul (R-KY) raised the possibility of breaking up or eliminating the Department.
On the heels of the Republican Revolution, there was a serious effort to shutter the Commerce Department. In 1995, then-Senator Spencer Abraham (R-MI) said the battle over Commerce represented “a historic opportunity to stop the growth of government” and “it would be a tragedy” if the “effort to eliminate the Department of Commerce is defeated.”
He told a gathering at The Heritage Foundation that it would “be impossible, in my judgment, to successfully address the massive growth of government and balance the budget if we cannot even address dismantling this department and redesignating its core functions to other agencies.”
Senator Abraham’s warning proved prophetic. Not only did we fail to shutter Commerce, a Republican-controlled government went on to expand entitlements and explode spending, all of which laid the groundwork for a Democrat-controlled government to sweep in and saddle us with Obamacare.
From Congress to the Court, conservatives must remember we cannot miss out on another “historic opportunity to stop the growth of government.” That is why it is important to remember that regardless of what the Court decides on Obamacare, the American people have the last word. One way or another, the entire law must be scrapped from the books. Then, and only then, can the process of real, patient-centered reforms that cut costs begin.