Highway Funding: Is 7 Percent a Crisis?

Blog Articles · Jul 1, 2014 · Budget and Spending

"It's not socialism...We're just building roads and bridges."

That was President Obama's argument today as he urged Congress to bail out the federal Highway Trust Fund (HTF). In a letter sent to states yesterday, Obama's transportation secretary Anthony Foxx "attempted to provides states with the most equitable, straightforward approach possible for managing this crisis."

What exactly is the crisis?

In comments made earlier in the day, Foxx said states will, on average, see a 28 percent reduction in funding from the federal Highway Trust Fund. This figure is shockingly misleading though because the overwhelming majority of highway funding comes from state and local governments, not the federal government.

The Congressional Budget Office (CBO) broke down the numbers earlier this year:

In 2013, governments at various levels spent $156 billion to build, operate, and maintain highways, and they spent $60 billion on mass transit systems. For both types of infrastructure, most of that spending was by state and local governments; about one-quarter of that total came from the federal government, mostly through the Highway Trust Fund.

The 28 percent reduction Foxx mentioned is of the federal share, which is about 25 percent. In other words, the "crisis" Obama is warning Americans about is a 7 percent reduction in total spending.

Bottom line: America is not facing "a transportation government shutdown" and lawmakers should stop trying to create an artificial crisis which they can use as an excuse to raise taxes or increase spending.