Highway Trust Fund: Congress Considers Another Highway Bailout

Status: The federal government is responsible for 40 percent of national spending on surface transportation projects (highways and mass transit) through the Highway Trust Fund (HTF). Congress is looking at a bailout of the HTF that extends the federal highway program for up to 6 years and costs up to $317 billion. As a result of an $8 billion extension passed in July, on October 29 the legal authority for the HTF to distribute federal funds will expire, though sufficient funds will remain to continue covering transportation projects until June 2016.

The fact that HTF outlays have exceeded revenues since 2001 is evidence that federal surface transportation spending is out of control and inefficient. As an alternative, conservatives have long pushed the Transportation Empowerment Act (TEA) to return responsibility and revenue for transportation funding back to the states, placing infrastructure funding on a sound long-term footing.

Background: Major federal activity in highway construction began with the 1956 Federal Aid Highway Act, and with it came the HTF. The HTF was envisioned as a self-sustaining fund. Revenue would come in, and that money would be earmarked specifically for highway construction. The primary source for that revenue was, and remains, the federal gasoline tax, which at the time was 4.3 cents per gallon. Today the tax stands at 18.3 cents per gallon.

The federal highway system was completed decades ago, but Congress, accustomed to federal transportation spending, elected to continue the operation of the HTF and the taxes that supported it. Congress also created the Mass Transit Account, diverting around 17 percent of gasoline tax revenue to fund mass transit projects.

A Broken Fund: Today, the HTF is insolvent and will once again run out of money by June 2016. More fuel efficient cars and wasteful diversions have led to periodic transfers of federal money from the general fund into the HTF to cover obligations. Since 2008, more than $70 billion in bailouts have gone into the fund. Future shortfalls are growing astronomically, totaling an estimated $180 billion over the next decade. In the past, present, and future, funding methods for the HTF have proven deeply ineffective.

Wasteful Diversions: The gap between revenue and outlays in the HTF is self-inflicted, the result of excessive spending driven by a congressional infatuation with mass transit and pork-barrel diversions. According to the Heritage Foundation, 25 percent of all gasoline tax dollars paid into the HTF are used for a purpose other than highways.

Mass transit spending is ineffective. As spending on transit has climbed, transit ridership has decreased by 20 percent from 1980 to 2012, while driving increased by the same amount. In the meantime, traffic congestion has increased, with the average auto commuter spending almost a workweek every year (38 hours) sitting in traffic.

There are other diversions from the HTF. The Transportation Alternatives Program (TAP) allows funding for bike paths, museums, and highway beautification. Last year, the federal government spent almost $900 million on TAP. The Congestion Air Quality Mitigation Program, a program intended to help states reduce pollution, cost $2.2 billion in 2014 and has had little effect on air quality.

Unequal Treatment of States: The HTF has long allocated funds based on which states possessed the most political clout rather than on the basis of true highway needs. Transit money goes disproportionately to six cities: Philadelphia, Washington, D.C., New York, San Francisco, Boston, and Chicago. 28 states pay a larger proportion of the gasoline tax revenue than the proportion of federal highway spending that they receive. Northeastern states with large union presences get a bigger percentage of HTF revenue, while fast-growing southern states are left with more limited amounts.

Transportation Empowerment Act (TEA): TEA is the conservative solution to the current system. It would reduce the federal gasoline tax in increments over a five-year period, down to 3.7 cents per gallon. Over that time frame, remaining revenue from the gas tax and other user fees would be block-granted to the states. At the end of the five-year period, state governments would become responsible for their own transportation planning and financing. States have unique transportation needs that should be met at the discretion of state officials, not distant federal lawmakers.

Under TEA, wasteful diversions would be eliminated, ensuring that highway dollars fund highways. If states wish to fund transit projects with their highway dollars they are welcome to do so. The federal government would retain a small role in maintaining connections between state transportation networks.

Bad Solutions: But current negotiations seek to continue the policy of bailing out the fund rather than establishing a sustainable transportation policy. A proposal passed by the Senate in July threatened to inject up to $317 billion into the fund for 6 years, creating bigger fiscal cliffs for Congress to deal with down the road. Of the bailout, the supposed “pay fors” are expected to only provide three years of money, at most, and involve “tax compliance” measures and “fees & receipts” changes that are covert tax increases. Additionally, it is unlikely that selling barrels of crude oil from the Strategic Petroleum Reserve will raise as much money as expected – the Senate proposes selling 101 million barrels at $89 each, while the current price hovers around $50 a barrel. Because of the gimmicky nature of these pay fors, the bailout will begin adding to the deficit immediately, with later pay fors contributing even more.

The Export-Import Threat: The charter of the Export-Import Bank, a long-time hub of cronyism and special interests, expired this June. The bank faced overwhelming opposition from conservatives, but attempts to reauthorize the bank may be made by attaching an Export-Import Amendment to a HTF bill. In addition to making a bad bill worse, an Export-Import Amendment would bundle together two different policy issues that are best dealt with separately (for more information, see our Export-Import Brief). It is quite possible that Export-Import advocates will attempt to use Boehner’s lame duck status to attach a reauthorization to the Highway Transportation Fund during the month of October. For this reason, Heritage Action would support pushing the reauthorization date into next year, as long as such a move is not accompanied by an additional bailout.

Call to Action: The House should reject any long-term reauthorization that bails out the Highway Transportation Fund, especially if it includes a reauthorization of the Export-Import bank.

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Bill Lifting Crude Oil Export Ban Contains $500 Million Earmark for Labor Unions

On Friday, the House is scheduled to vote on H.R. 702, a bill which would lift the decades-old embargo on exporting crude oil.  Under current law, companies must refine crude oil domestically before they are allowed to export the resulting petroleum products.  The policy changes made in H.R. 702 are commendable, but a last minute addition to the bill has entangled good policy in corporate welfare and a $500 million labor union buyoff.

According to the Section-by-Section summary provided by the House Rules Committee, a newly added section would “increase the annual operating stipend for the 60 ship Maritime Security Fleet.”  The Maritime Security Program (MSP) was established in 1996 and currently provides contract payments of $3.1 million a year to vessels participating in the program.  The program was reauthorized for ten years on January 2, 2013.  Last week, 270 Representatives voted for the FY2016 National Defense Authorization Act (H.R. 1735), which included the following language:

SEC. 3504. PAYMENT FOR MARITIME SECURITY FLEET VESSELS. (a) PER-VESSEL AUTHORIZATION.—Notwithstanding section 53106(a)(1)(C) of title 46, United States Code, and subject to the availability of appropriations, there is authorized to be paid to each contractor for an operating agreement (as those terms are used in that section) for fiscal year 2016, $3,500,000 for each vessel that is covered by the operating agreement. (emphasis added)

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Want to talk to your Members of Congress? Check this list

Conservative accountability goes beyond casting a vote. Building a society in which freedom, opportunity, prosperity, and the civil society flourish requires a sustained effort.  That is why we have compiled a non-exhaustive list of upcoming townhalls, all of which provide excellent opportunities to discuss important issues with members of Congress.

As always, make sure to confirm the details with the Representative or Senator’s office.

Email Matthew.Lauer@heritageaction.com for any further details.

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MEMO: Conservative Expectations on House Leadership Races

To:                  Interested Parties
From:            Heritage Action for America
Date:              September 30, 2015
Subject:         Conservative Expectations on House Leadership Races

Read the entire memo.

The upcoming leadership races should not be driven by personality, quid pro quo committee assignments and fundraising prowess.  Instead, those races should be determined by policy and process.  Which candidates will promote a conservative policy agenda that advances opportunity for all and favoritism to none?  Which candidates will fight for those policies and seriously challenge President Obama?  Which candidates will reform the internal workings of the House to ensure a more open and deliberative process with less top-down management, and end the culture of punishment and retribution?

A Real Governing Vision. The complete absence of a conservative agenda by the Republican-controlled Congress must change. In evaluating leadership candidates, members should demand clarity as to how each one would put forward a positive conservative agenda that promotes opportunity for all and favoritism to none.[1] For example:

Higher Education. Younger Americans (and in many cases their parents) are suffering from the high cost and rigidity of our nation’s higher education system. The new leadership team should use the upcoming reauthorization of the Higher Education Act to embrace bold reforms. The Higher Education Reform and Opportunity (HERO) Act would break up our nation’s accreditation cartel and open the doors of opportunity for all Americans.

Entitlement Reform. The House-passed budget promised a myriad of important reforms, though none have moved through the House as standalone legislation. Sending real entitlement reforms – Medicare, Medicaid, welfare and even Social Security – to the Senate would demonstrate the new leadership is serious about advancing conservative policy and serious about forcing Senate action on those priorities.

Tax Reform. Advancing a sweeping, pro-growth tax reform that removes entrenched favoritism buried in the current code should be a priority. Doing so would demonstrate a much-needed seriousness when it comes to policy and continue to emphasize the party’s move away from K Street.

Religious Liberty. Americans should be free to practice their religious beliefs without fear of oppression or discrimination, especially from the federal government. New leadership should embrace that fundamental right by advancing the First Amendment Defense Act.

Significant Internal Reforms. More often than not, process and personnel are policy. As things stand, the House and GOP conference rules concentrate power in the hands of a few individuals, thus marginalizing conservatives and rank-and-file members. In evaluating leadership candidates, members should demand key reforms that decentralize power in the House and empower members to better represent their constituents.[2]

Near-term Trust Building. In evaluating leadership candidates, members should demand clarity as to how each one would fight the numerous legislative battles that will emerge over the remainder of the year. Members should evaluate the next Speaker and his or her leadership team on the following issues:

Planned Parenthood. Taxpayer funding of abortion giant Planned Parenthood cannot continue. A key test will occur today as outgoing Speaker John Boehner plans to use Democrats votes to continue the organization’s funding. Those seeking a leadership position should fight his plan using every tool at their disposal.

Reconciliation. The Republican budget passed, primarily, because leadership and the budget chairmen promised “the use of reconciliation for the sole purpose of repealing the President’s job-killing health care law.” Failure to uphold that promise will jeopardize the likelihood of passing a budget next year. It will also hamper efforts to fully repeal the law in 2017.

Budget Caps. In 2011, the Republican-controlled House forced President Obama to sign spending caps into law. Those caps have been raised once before and many suggest they will be raised once more, in an effort dubbed Ryan-Murray 2.0. A near-term spending increase would further undermine the party’s claim to fiscal responsibility.

Debt Ceiling. The debt ceiling is a legitimate tool to control spending and enact major pillars of the GOP budget. The next GOP leadership team must pledge to use that tool. Additionally, they should pledge to tie the debt ceiling to an actual number, as opposed to a date change that hides the true cost of such actions.

Export-Import Bank. The new leadership team must promise to keep the Export-Import Bank shuttered and limit its funding to ensure it only conducts activities necessary to winding down. Additionally, the next Speaker and his or her leadership team must stop any attempt to resurrect the bank, which has been closed for 92 days.

Highway Bailout. According to the Department of Transportation, the federal Highway Trust Fund currently has more resources than previously projected, and should have plenty of funding to continue operating well into next year. The next GOP leadership team must ensure the October 29 reauthorization deadline is not used as an excuse to pass a massive extension and expansion of federal highway funding.

No Child Left Behind. House Republicans rightly criticized the Senate’s reauthorization of No Child Left Behind. There is no reason for the House to proceed to a conference with such a bill.

The opportunity for a change in leadership should empower rank-and-file lawmakers. The Republican-controlled House should embrace this as an opportunity to align itself with the conservative grassroots and increase the likelihood the party will actually fight for conservative policy priorities. That will not happen through inertia, though. It will take a concerted effort to ensure the meaning of the moment is not lost.

No one should need an army of lawyers, lobbyists and accountants to succeed in this great nation. We have a chance to take back America, but it will require the Republican Party to fight for all Americans, not the powerful and well connected.

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Defunding Planned Parenthood

Background: Abortion giant Planned Parenthood has been a recipient of federal dollars under Title X of the Public Health Service Act and via Medicaid reimbursements, among other sources. Last reporting year, Planned Parenthood received $528 million in taxpayer dollars – 41% of its total revenue – a significant portion of which comes from these federal government programs.

In July 2015, the Center for Medical Progress began releasing a series of undercover videos documenting leading Planned Parenthood executives haggling over fetal body parts, as well as describing the use of the illegal partial-birth abortion procedure to secure intact organs. These videos have galvanized the conservative movement to demand that Congress finally defund Planned Parenthood.

Devaluing Life: Last year, Planned Parenthood was responsible for performing over 327,000 abortions – 1 in 3 abortions performed in the United States. While arguing that preventive care constitutes the bulk of their operations, the number of cancer screenings provided by Planned Parenthood has decreased by 50% since 2004, while the number of abortions performed annually has increased over the same time. In fact, abortion constitutes 94 percent of Planned Parenthood’s pregnancy-related services (number of abortion, prenatal care, and adoption referrals). Furthermore, Planned Parenthood has even opposed legislation that would protect infants born alive after a failed abortion.
Power of the Purse: Defunding Planned Parenthood involves attaching a legislative rider to a ‘must pass’ bill (a debt limit, annual spending bill, etc.) that withholds all federal dollars from Planned Parenthood. This would include the tax dollars received from both Title X family planning funds and Medicaid. There will be an opportunity to defund Planned Parenthood in the fall as funding for the federal government expires on September 30 and will need to be renewed.
Claim: Planned Parenthood cannot be defunded via the appropriations process, as its money comes from a mandatory funding stream.

Response: Annual appropriations bills routinely carry funding limitations to block all sorts of activities, as well as make changes to mandatory spending. One particular rider, the Hyde Amendment (which bars the use of federal funds to pay for elective abortion), has been attached as a rider to a number of appropriations bills since 1976.

Additionally, Medicaid’s budget is appropriated annually. According to the Congressional Research Service:

While most mandatory spending programs bypass the annual appropriations process and automatically receive funding each year according to either permanent or multi-year appropriations in the substantive law, Medicaid is funded in the annual appropriations acts. For this reason, Medicaid is referred to as an ‘appropriated entitlement.’ … While most changes to the Medicaid program are made through statute, the fact that Medicaid is subject to annual appropriations process provides an opportunity for Congress to place funding limitations on specified activities in Medicaid, including the circumstances under which federal funds can be used to pay for abortions.

Claim: Medicaid is a state-run program and the federal government doesn’t have the jurisdiction to stop funding to Planned Parenthood.

Response: Medicaid is a federal program. Though much of it is administered by states, it is funded by federal dollars and subjected to restrictions in federal law. As such, it is under the jurisdiction of the federal government. In fact, when certain states have attempted to remove Medicaid funding for Planned Parenthood in the past, their attempts have been struck down by federal courts precisely because such a measure is under the jurisdiction of the federal government.

Claim: States have already tried to defund Planned Parenthood, and federal courts have struck down the attempts.

Response: It is true that some state attempts to defund Planned Parenthood, such as Indiana’s, have been struck down by federal courts. Part of Planned Parenthood’s funding comes through Medicaid, a program that, though administered by the states, is still subject to a number of federal regulations. States which sought to restrict Medicaid funding to Planned Parenthood ran afoul of a provision in federal law that allows recipients of Medicaid to choose their own provider.

In short, states and localities face obstacles because of federal law. This isn’t an obstacle for Congress, since Congress is the body that creates and amends that law.

Claim: No federal dollars that Planned Parenthood receives are allocated to abortions.
Response: It is true that federal dollars cannot be used to directly fund elective abortions. However, the government funding that American taxpayers have provided to Planned Parenthood for other services has freed up other resources that allowed the organization to become the nation’s largest abortion provider. During its last reporting year, Planned Parenthood received over $528 million in government funding, which made up 41% of the organization’s total revenue. Because of the fungible nature of money, government funding for one program frees up resources to be allocated elsewhere. Federal dollars ultimately do end up funding abortions, even if they are listed elsewhere on a ledger sheet.

Claim: Defunding Planned Parenthood is an unconstitutional bill of attainder.

Response: Article I, Section 9 of the U.S. Constitution states that “No Bill of Attainder or ex post facto law shall be passed.” In Selective Service v. Minnesota Public Interest Research Group, the Supreme Court defined a bill of attainder as a “law that legislatively determines guilt and inflicts punishment upon an identifiable individual without provision of the protections of a judicial trial.” In order to be ruled a bill of attainder, a legislative act must 1) specify the affected persons, 2) include punishment, and 3) lack a judicial trial.

In ACORN v. United States, the Second Circuit Court of Appeals ruled that a 2009 law defunding ACORN by name did not constitute a bill of attainder because it did not meet the historical, functional, or motivational tests for punishment. Historically, the statute did not involve traditional forms of punishment, such as imprisonment, banishment, death, or other similarly severe consequences. Functionally, the statute furthered non-punitive purposes. Motivationally, there was no legislative record overwhelmingly reflecting a clear intent to punish, as opposed to merely ensuring that tax dollars no longer flowed to the organization.

A statute defunding Planned Parenthood would similarly fulfill the historical, functional, and motivational criteria. Defunding Planned Parenthood would not involve consequences historically recognized as punishment, it would further the non-punitive legislative purpose of protecting human life, and it would not overwhelmingly reflect a clear legislative intent to punish.

Claim: Defunding Planned Parenthood would result in a government shutdown, causing conservatives to lose face.

Response: This effort will set up a major political confrontation with President Obama, but it is the sort of conflict that will allow conservatives in the House of Representatives to remind the American people that it is taxpayer dollars that enable the horrors we’ve witnessed from Planned Parenthood, and that a defunding rider could pull out the supports propping up the abortion industry.

If House conservatives insist on defunding Planned Parenthood, it is possible that the Obama Administration will shut the government down. This would not be the end of the world, and it needs to be an option. President Clinton shut the government down in 1995 by refusing to sign legislation funding the government. While most pundits in Washington, DC believe this was a catastrophic political failure for Republicans, it is a fact that the House Republicans maintained their majority in 1996, even with a popular president of another party on the ticket. Their willingness to not accept all of Clinton’s demands was crucial towards eventually balancing the budget and reforming welfare.

Similarly, in 2013, House Republicans fought to defund Obamacare, and President Obama with Senate Democrats ultimately shut the government down. Again, pundits have heralded this as a political failure for the Republican Party, but the fact remains that Republicans grew their majority to their largest since 1929-30, and took control of the Senate. Meanwhile, Obamacare continues to be destabilized.

Claim: Planned Parenthood can dissolve and reform under a different name. ACORN did this in response to a bill from Congress cutting off their funding.

Response: ACORN did dissolve in 2010, after a bill passed Congress specifically defunding the organization. But they did not reform as a national organization. Instead, various state organizations splintered off and formed their own groups. While remnants of the organization were able to survive defunding by Congress, the blow to the organization was decisive.

Each organization has different structures and streams of revenue. Though Planned Parenthood’s path to becoming the nation’s abortion giant was made possible by federal funds (which provided 41% of the organization’s revenue in 2014), they still receive considerable funding from private donors. Dissolving and reforming would be a significant blow to Planned Parenthood’s branding, as well as their corporate sponsorships. Transferring ownership of facilities and resources is also a long and arduous process. If Planned Parenthood decides to dissolve and reform, it will still be a significant blow to their ability to perform 327,000 abortions a year, and a significant blow to the abortion-on-demand movement as a whole.

Claim: Congress should ban funding flowing to any abortion provider.

Response: Congress could attach a broader rider aimed at all taxpayer funding of abortions, and we would support such a policy. But given the blatant disregard for human life showed by this particular organization – which happens to perform 1 out of every 3 abortions in the country – Planned Parenthood is a good place to start.

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