Another Highway Bailout and How Not to Finance It

On May 30, 2014, House Republican Leaders announced a plan to bail out the federal Highway Trust Fund (HTF) to the tune of $15 billion, paying for it with savings generated by reforms to the U.S. Postal Service (USPS). This proposal is flawed on a number of levels and should be rejected by Congress.

Highway Bailout:

Under current law, drivers pay a tax of 18.4 cents per gallon on gasoline and 24.4 cents on diesel fuel, which gets deposited into the HTF. Excessive spending levels set by highway bills enacted in recent years, and many spending diversions to non-road, non-bridge activities, have left the HTF with too many bills to pay but not enough money on hand. An additional $5 billion is needed to keep spending on pace through the end of the fiscal year, and that figure jumps to $15 billion for a one-year extension at current spending levels. If Congress does not bail out the HTF by the end of July, the federal government will continue to collect federal gas tax revenues, but it would have to begin slowing down its reimbursements to state Departments of Transportation.

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Leftist Feminist Propaganda on the National Mall?

Background: The National Women’s History Museum (NWHM) currently exists online “to raise awareness and honor women’s diverse experience and achievements.” For a number of years the museum and its vocal activists have been advocating for a physical location on the National Mall. H.R. 863 would establish a committee to study the creation of that location. The committee would make recommendations on the structure and governance of the site and explore fund-raising options. NWHM alleges that no taxpayer funds would be used to commission or construct the museum. While the idea of honoring the great female leaders of American History is noble and shared by all, many conservatives are concerned about the leftist ideological implications of this legislation.

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Using the Military for Amnesty

Background. In response to the surge of activist protest in the wake of the Senate-passed “Gang of 8” amnesty package, many members of Congress have come to understand that immigration reform should not be enacted given the current administration’s lawlessness. Nonetheless, since the last round of “piecemeal” amnesty proposals were thwarted in the House earlier this year, a bipartisan coalition has been angling to keep amnesty possibilities alive. Two new pieces of legislation have recently entered the debate: Representative Mike Coffman’s (R-CO) Military Enlistment Opportunity Act (H.R. 435) and Representative Jeff Denham’s (R-CA) Encourage New Legalized Immigrants to Start Training, or “ENLIST,” Act (H.R. 2377). These bills would allow DREAMers—unlawful immigrants brought to the U.S. as minors—to acquire lawful permanent resident (LPR) status in exchange for military service.

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Emergency Unemployment Benefits Brief

Background:  Unemployment insurance (UI) is the federally supervised program under which states provide benefits to involuntarily unemployed citizens, typically for up to 26 weeks. The program serves as a safety net while the newly unemployed find a new job.

In response to the 2008 economic downturn, however, Congress dramatically extended this subsidized window to up to 99 weeks–nearly two years–in some states via the federally-funded Emergency Unemployment Compensation (EUC) and Extended Benefit (EB) programs. The emergency measure was implemented with the understanding that the UI timetable would eventually return to normal (hence its reliance on periodic congressional reauthorization). At the end of last year, Congress passed the Ryan-Murray Budget Agreement to set spending levels for the next two years. The deal did not include an extension of the crisis-level EUC benefits. Instead, all benefits returned to their status quo duration of 26 weeks on December 28, 2013. As in the case of other expanded entitlements, however, the Left has sought to make this emergency subsidy a permanent reality for jobless America via continued extensions.

Republican Senators Susan Collins (Maine), Dean Heller (Nevada), Rob Portman (Ohio), Lisa Murkowski (Alaska) and Mark Kirk (Illinois) joined five Senate Democrats to strike a bipartisan deal to extend the unemployment insurance program for five months–the legislation will soon be considered by the Senate in full. As the new program will cover retroactive benefits from December, the extension would expire for all beneficiaries in late May. The $9.7 billion compromise will extend to the 1.3 million people who lost benefits at the expiration date and be paid for by extending customs user fees through 2024, boosting federal revenue, and other accounting gimmicks.

Many conservatives have a number of policy concerns with any such extension:

Increased Unemployment:  By extending emergency unemployment, the government hampers the likelihood that the unemployed will find new work. According to a recent study from the University of Chicago, recipients of UI benefits must weigh several economic factors in their job searches. For example, a new position paying $600 per week may prove undesirable considering that after additional income taxes and the costs of employment, the UI recipient will only net an increase of 23 cents on the dollar from what he or she was paid without a job. By these figures, the unemployed are more likely to be selective in their search, take their time and not bother to consider remedies like relocation or industry transition. Prospective employers cannot afford to increase the base pay to hire them. Of course, the longer they are unemployed, the less likely they are to find work, as their skills are depreciated, thus bolstering unemployment.

Historically in the US jobs market, the length of time people are paid not to work bears direct relation to the quantity of unemployed. As Heritage Foundation Senior Policy Analyst James Sherk explains, “Economic research shows that each 13-week extension of UI benefits increases the average length of time workers receiving benefits stay unemployed by approximately one week.”

Disincentives to Work:  For every group of people who receive out of work subsidy, there is another group from whom the resources are taken. This creates a system in which work itself is the least valuable commodity. The person from whom the unemployment funds are taken is being penalized for having a job, while the person who is given those same funds is being rewarded for not having one. In equally effective ways, both parties are being discouraged from working. The more this practice metastasizes on the free-market, the more we can expect less work, less respect for work, and greater unemployment.

Taxpayer Burden:  Since the 2008 EUC Program went into effect, total paid unemployment benefits equals $252 billion. To extend the program for five months would rack up another $9.7 billion. American taxpayers cannot afford such an expense amid mounting deficits and a national debt in excess of $17 trillion.

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PATH Act and GSEs Q&A

Questions and Answers:

“Do we need a broad-based government guarantee in the U.S. housing market?”

No.  A government guarantee is not necessary to have a stable housing market.  Removing the broad government guarantee in the U.S. secondary mortgage market would likely result in a more stable housing finance system.

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