THE HIGHWAY Trust Fund, which pays for the country’s roads and rails, is nearly out of money. Unless Congress does something, it will stop paying out on Aug. 1. What that something would be, though, remains worryingly unclear.
The best approach would be to increase the gas tax. The tax-reform scheme is a second-best approach. Merely extending the status quo for another few years without significant new revenue is the worst idea out there, and President Obama should make clear he won’t accept it.
There's little doubt about the need for federal infrastructure spending. Even though they don't know how to pay the price tag yet, Senate leaders in both parties have worked out a framework to spend almost $300 billion over six years on various transportation projects. That's significantly less than a six-year, $478 billion transportation proposal Mr. Obama offered in March. But the Senate's spending framework nevertheless represents a realistic compromise, and it would allow transportation officials to plan further out than a couple of years.
It is, of course, easier to plan to spend money than it is to find the necessary revenue, and Congress needs to find an awful lot to get any six-year transportation plan out the door: some $100 billion more than what the existing gas tax will bring in, according to the Congressional Budget Office. Congress's recent habit of finding small, temporary funding patches won't work. One alternative, to shift the way the federal government taxes the foreign profits of U.S. corporations, was hashed out by Sen. Rob Portman (R-Ohio) and Sen. Charles E. Schumer (D-N.Y.), with buy-in from Rep. Paul Ryan (R-Wis.). The new system would result in a large, one-time tax windfall that Congress could invest in infrastructure. Policy-savvy Republicans and Mr. Obama favor this idea, making it the most politically realistic plan on the table.
Alas, the tax repatriation scheme still would not be the best policy. Though it would provide a lot of money for medium-term spending, the foreign tax reform windfall eventually would run out. That's why the best solution is for Congress to raise the federal gas tax, which paid for the nation's infrastructure for decades, until lawmakers neglected it; the 18.4 cent-per-gallon tax hasn't increased since 1993 .
If Congress would admit the simple logic of the gas tax, which raises money from drivers to pay for the roads they use, it could fix the country’s immediate transportation mess and go a long way to putting the nation’s infrastructure budget on sound long-term footing. Some lawmakers, including Republicans such as Sen. Bob Corker (R-Tenn.), are willing to say this publicly. It’s time for others to speak up.
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