Claim and Fact: Transportation Empowerment Act (TEA)

Blog Articles · Jul 17, 2015 · Infrastructure

Claim: TEA does not fix the Highway Trust Fund (HTF)

TEA reduces the federal role in transportation once prior obligations of the HTF are met. The bill does not (and should not) propose a solution to past mismanagement and past commitments that were based on unrealistic projections of revenue and/or the assumption of a general fund bailout. Conservatives have proposed numerous offsets and reforms that would enable the HTF to be brought to solvency through spending reductions and devolution of responsibilities to the states.

Claim: TEA will require states to raise their gasoline taxes.

TEA gradually reduces the federal gas tax over a five-year period, while block-granting a portion of those revenues to states over that same time period. This is intended to allow states to transition to a funding structure that allows them the independence to manage their unique infrastructure requirements. Under the current HTF financing structure, one in four of the dollars states send to the federal government are diverted to non-highway spending. Eighteen percent of gasoline taxes go to the account dedicated to mass-transit within the Highway Trust Fund. Transit users do not pay anything into the Highway Trust Fund. There is more than enough funding at the current taxation levels to fund the maintenance of the national highway network-the issue is the wasteful federal diversions and mandates that increase project costs. State tax burdens will be much lower without federal mandates and wasteful spending absorbing billions of dollars in revenue. TEA returns the responsibility for raising revenue to the states, gradually phasing out federal gas taxes to a low, but sufficient level. States then have the flexibility to fund right-size transportation budgets how they see fit.

Claim: TEA will damage the national transportation network.

The federal highway system was finished in the early 1990s. Since then, the federal government has maintained and expanded its control over the funding process. Lawmakers have become attached to doling out transportation monies to favored causes, leading to a dilution of the user-pays concept that was established by paying for highway construction via gas taxes. Bob Poole of the Reason Foundation notes that, of the nearly $51 billion of HTF spending in 2013, only $24 billion was spent directly on roads and bridges. According to the GAO, of that amount, only $4.6 billion was spent on major highway and bridge projects (projects with a total cost of $500 million or more).

Keeping this in mind, TEA maintains a 3.7 cents per gallon federal gasoline tax and a 5.0 cents per gallon diesel tax to provide for the maintenance of other federal infrastructure still in place. Even under the current regime, states are already responsible for the lion's share-three quarters-of transportation funding. Returning to them the lion's share of autonomy would allow their flexibility and authority to be congruent with their funding responsibilities.

Claim: A federal role is required for interstate transportation connections.

The idea that, with a completed and maintained federal highway system in place under TEA, interstate transportation connections will suffer is implausible. States have long entered into agreements to connect their respective transportation networks, and have long held the understanding that mutual transportation cooperation between states is good for all involved. For instance, New York, New Jersey and Connecticut have joint responsibility for the infrastructure surrounding New York City. The reality is that in the event TEA is passed, added flexibility and lessened federal regulations will make these kinds of agreements even easier to produce, strengthening interstate transportation networks.

Claim: Federal transportation spending creates shovel-ready jobs.

While it has long been understood that federal spending in one area of the economy does not create jobs, but rather transfers funds from productive sectors to areas of political priority, some continue to believe in the connection between federal spending and employment. However, even for those who believe that federal spending is an engine of employment, spending in the infrastructure sector yields particularly poor results.

According to the Department of Labor, just over 300,000 Americans work in street, highway or bridge construction. Infrastructure construction requires relatively small amounts of highly skilled labor. For instance, according to the Heritage Foundation, as of 2013 there were only "13,500 unemployed cement masons, concrete finishers and terrazzo workers in the entire country." Many construction employees require thousands of hours of training, training that can't be rushed or acquired as the result of government spending.

The intermittent, gridlocked nature of Washington transportation legislation adds to the problem by causing labor demand fluctuations. Just during this past year, 15 states considered or implemented construction delays and cancellations because of the uncertainty surrounding federal legislation. Allowing states the authority to determine their own transportation will keep demand for construction employees more stable, leading to an inflow of workers into construction, and therefore an increase in jobs. The stability offered by avoiding Washington gridlock is a major virtue of TEA.

Claim: The Framers of the Constitution believed in a large federal role in transportation.

Thomas Jefferson, in a letter to James Madison, wrote:

Have you considered all the consequences of your proposition respecting post roads? I view it as a source of boundless patronage to the executive, jobbing to members of Congress & their friends, and a bottomless abyss of public money. You will begin by only appropriating the surplus of the post office revenues; but the other revenues will soon be called into their aid, and it will be a scene of eternal scramble among the members, who can get the most money wasted in their State; and they will always get most who are meanest.

Thomas Jefferson's prescient assessment of the future of federal transportation belies any suggestion that infrastructure spending is somehow a constitutionally conservative position. In any case, the above quote is in reference to a much more limited system of national post roads. There is little chance that the Framers envisioned an overarching, long-term federal role in transportation. In keeping with the Framers vision for limited government, TEA continues the federal role in managing the Dwight D. Eisenhower National System of Interstate and Defense Highways as well as in transportation research and emergency assistance. However, the bill returns maximum discretionary authority and fiscal responsibility for state infrastructure back to those best positioned to identify and respond to the unique needs of individual communities.

Claim: A large federal role is essential for national security.

The Federal Aid Highway system was finished in the 1990s. The present system is more than sufficient to move troops and materiel throughout the country. The suggestion that American roads and bridges are crumbling, which is a predicate of the suggestion that without massive spending, the interstate highway system will fail to support American military maneuvers, is not supported by the evidence. According to the Heritage Foundation, the percentage of bridges that are structurally deficient has plunged since 1992. According to the Federal Reserve, "accelerated expenditures on improving road surfaces are unlikely to yield significant direct benefits..." TEA also continues to fund the Dwight D Eisenhower National System of Interstate and Defense Highways.

Claim: TEA would damage mass transit.

According to the Heritage Foundation, transit spending is heavily concentrated in only six cities: Boston, Philadelphia, Washington, D.C., San Francisco, Chicago, and New York. The average American commute is 28 minutes long. The average transit commute is 45 minutes long. Only a small number of Americans actually use mass transit to get to work: just 5 percent of commuters use transit to travel to their jobs. The figure is only slightly higher-6 percent-for low-income Americans, over 80 percent of whom rely on cars for their commute.

Decades of diverting gas tax dollars into mass transit have not made it a viable mode of transportation outside of select few cities. TEA does not, however, constrain states from funding transit. Once the highway program is returned to the states, those authorities are free to design and create any surface transportation program they choose. If states have mass transit needs they are free to fund those projects themselves.

All claims about the explosion of transit alternatives are based on two faulty suggestions: one, that transit ridership is becoming a commonly-used mode, and second, that transit alleviates congestion. A cursory look at the statistics belies both. Transit uptake has not kept pace with population growth-not even close, and congestion is worse than ever. According to the Heritage Foundation, between 1980 and 2010, traffic congestion increased by 125 percent. 1980 also marked the inception of the mass transit account.

Claim: One of the diversions, the Transportation Alternatives Program, successfully supports growing modes of transportation.

The Transportation Alternatives Program provides funding for local projects from federal sources. A typical TAP funding target might be a bike path in Brownsville, Texas. Federal funding for state transportation projects is cumbersome enough. When the federal government is funding tiny, local projects, inefficiency and waste become even more severe. TAP enabled more than $800 million in money intended for federal highways to go to local museums, beautification, and bike paths. Under TEA, states will not receive federal money specifically for TAP purposes, but they are free to fund these programs under their own financing mechanisms.

Claim: States will get less money and have to pay more taxes under TEA.

Since 2008, the HTF has suffered from chronic revenue shortfalls. Each shortfall requires a general fund transfer. The uncertainty surrounding these periodic transfers significantly damages states' ability to plan and fund long-term infrastructure projects-the same major projects that some use to justify a federal role. In addition to the core issue of funding uncertainty, there are a host of federal regulations which increase costs unnecessarily. According to the Heritage Foundation, "the Davis-Bacon Act requires [government entities] to pay construction wages that average 22 percent above market rates." The National Environmental Policy Act requires the production of costly environmental impact statements at the beginning of every project. Governor Patrick McCrory, representing the National Governors Association, testified in front of the Transportation and Infrastructure Committee that one-third of North Carolina's transportation funding was entangled in litigation relating to federal laws and regulations.

Claim: TEA will lead to a construction shutdown.

TEA is intended to devolve responsibility to the states only when the HTF's prior obligations are met. In the event that this occurs, the devolution occurs over a five-year window, during which federal transportation funds are block-granted to the states. The resolution of prior contract obligation combined with the five-year timeline means that states and localities will have ample time and funds to prepare for taking responsibility for their own transportation needs.