Obama proposes $302 billion transportation bill, funded partly by tax code reforms

During a trip to Minnesota, President Obama proposed spending $302 billion on transportation over the next four years, especially constructing transit systems to resist harsh weather. (whitehouse.gov)

President Obama came to a renovated bus and rail terminal here Wednesday to call on lawmakers to pass a four-year, $302 billion bill to revitalize the nation’s transportation infrastructure, a plan that would derive part of its funding from reforms to the tax code.

The president’s proposal came on the same day that House Ways and Means Committee Chairman Dave Camp (R-Mich.) announced his plan to rework the tax code, with a proposal that would dedicate $126.5 billion to fund highway and infrastructure investment.

The two sides remained far apart, as the White House said Camp’s plan would contribute to the deficit and fail to extend the earned-income tax credit. But the dueling proposals suggested the two parties might reach some sort of accord on transportation funding.

The current two-year highway bill is set to expire Nov. 1, and the gasoline-tax-reliant trust fund is expected to run short of money in the heart of the summer highway repair and construction season. When that happens, money that states use to pay for those projects will trickle to a halt.

The president’s plan to fill the gap in the trust fund would represent a major policy shift. It relies on a one-time, $150 billion boost from corporate tax reform — a proposal that Obama has floated before and that has been largely ignored by Congress.

The decision to present a proposal was a calculated gamble by the administration, which had weighed whether any plan from the White House would fall prey to partisan warfare on Capitol Hill.

“If Congress doesn’t finish a transportation bill by the end of the summer, we could see construction projects stop in their tracks, machines sitting idle, workers off the job,” Obama said in front of a crowd of about 1,300 at St. Paul’s Union Depot, which was modernized with economic stimulus funding. “Roads and bridges should not be a partisan issue. . . . We want to create jobs right now, and to grow our economy right now.”

Funding for many transportation projects is due to expire later this year, putting more than 700,000 jobs in jeopardy, the White House said.

White House deputy press secretary Josh Earnest said Wednesday that the administration would fund its transportation proposal by closing corporate loopholes, such as ones that encourage U.S. companies to invest overseas.

Speaking to reporters aboard Air Force One, Transportation Secretary Anthony Foxx said the president was seeking to “establish a framework that gives us a seat at the table to engage in this conversation” about meeting the nation’s infrastructure needs.

In Washington, Rep. Bill Shuster (R-Pa.), chairman of the House Transportation and Infrastructure Committee, issued a statement praising Camp’s plan for providing “greater certainty” about federal funding for transportation. But he said he was willing to look at Obama’s proposal as well.

Obama’s plan would end almost 60 years of reliance on a user fee — the gas tax — to pay for transportation, substituting significant direct funding from the general tax fund. Joshua L. Schank, president of the nonprofit Eno Center for Transportation, called it a “substantial break from past policy.”

“It’s the ‘pay for’ that is a sticky, sticky wicket,” Sen. Barbara Boxer (D-Calif.), chairman of the Senate Environment and Public Works Committee, said Wednesday in Washington. “I don’t see any support for raising the gas tax, and there’s no way we’re going to cut spending. We’ve got to be pragmatic and not engage in ideological squabbles.”

The nonpartisan Congressional Budget Office calculated this month that a six-year transportation bill funded at current levels would require $100 billion more than the trust fund is projected to produce. A six-year bill is considered ideal by federal and state planners because multiyear major projects demand a stable funding source.

In proposing a four-year bill, the White House said the additional $150 billion from its tax reform plan would fill the trust fund shortfall and provide an added $90 billion.

“I really have no idea what he means by corporate tax reform,” Schank said. “But it does seem to me to be more specific than some of the previous ideas.”

Earnest, the White House spokesman, praised aspects of Camp’s plan, such as its proposal to eliminate loopholes for expenses such as corporate jets. But he said the administration was concerned that the revenue generated under the proposal would not go to reduce the deficit, and the plan’s overall impact might contribute to the long-term deficit. He also questioned why Camp’s draft did not include an extension of the earned-income tax credit.

“It doesn’t seem like a very good time to be raising taxes on working people,” Earnest said.

More broadly, Earnest played down the idea that an ambitious tax reform plan could pass Congress this year. “There’s not a great amount of optimism on Capitol Hill for any sort of legislative proposal that seems complicated,” he said.

Schank said Congress has run out of options on transportation. Even extensions that might get lawmakers past midterm elections will require transferring money from the general fund

“When push comes to shove, and members face the prospect of having to go home to explain how their district’s now lost 40 percent of their transportation funding, they’re going to find a way to patch together funding in Washington instead,” he said.

But some transportation advocates said that raising the 18.4-cent-per-gallon federal gas tax remains the best approach for securing more transportation funding. Kathleen Bower, AAA vice president of public affairs, said an increase in the gas tax “is the most viable, responsible and effective near-term solution to keep the Highway Trust Fund solvent.”

Terry O’Sullivan, president of the Laborers’ International Union of North America, agreed. He said the “duct-tape approach by Congress has destabilized the construction industry, stalled projects, cost jobs and slowed our economy.”

Halsey reported from Washington.

Ashley Halsey reports on national and local transportation.
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