More From Chicago Lawyer on Stimulus Funding For Construction Industry

[Guest SUNTZU]

Construction Law Developments

Congressional Highway Trust Fund Split Widens

Evidence of the widening split in Congress over how to deal with the $7 billion shortfall in the Highway Trust Fund, looming well before the current legislation expires September 30, is becoming clear as details of an "off the record" June 26 meeting of about 75 transportation lobbyists and other industry leaders with Democratic Congressional Campaign Chairman Chris Van Hollen are beginning to leak out. Maryland Congressman Van Hollen, who is also a member of the House Ways and Means Committee and Assistant Speaker of the House, spoke at the event hosted by Congressman Earl Blumenauer of Oregon.

Van Hollen told the assembled thought leaders of the transportation industry that House Transportation and Infrastructure Chairman James Oberstar's bold six year proposal to fund surface transportation with $450 billion for roads and bridges and $50 billion for high speed rail will require "support ... from both the left and the right." Van Hollen predicted that "unless groups like the U. S. Chamber of Commerce are willing to provide political cover so members know they are not going to get absolutely skewered ... there is no way we can talk about a revenue solution." Oberstar's six year plan will cost $140 billion more than motor fuel taxes will bring in to the Trust Fund. These taxes - currently 18.4 cents per gallon - have not been raised since 1993. U. S. Chamber of Commerce President Thomas Donahue has testified before the House Transportation and Infrastructure Committee that, if Oberstar's proposed legislation includes program reforms like limits in earmarks and non transportation spending, Oberstar can expect "the full weight of the Chamber ... behind an effort to increase user fees to provide the revenue our transportation infrastructure badly needs."

There are wide rifts developing among Oberstar's panel members, some of whom favor a straightforward motor fuel tax increase, and others, led by Highways and Transit Subcommittee Chairman Peter De Fazio, who favors a tax on crude oil futures and options, and a third faction headed by Congressman Blumenauer, who wants a temporary motor fuel tax increase while phasing in a new tax on miles traveled rather than gallons pumped. De Fazio has also proposed an alternative measure which would index motor fuel tax levels to inflation after 2011, and immediately issue bonds for $60 billion against the anticipated future revenue increases to fill the Highway Trust Fund shortfall.

Talk about voodoo economics! How is taxing crude oil futures or indexing future motor fuel taxes to inflation, while paying interest on $60 billion in government bonds, going to avoid pump price increases?

Further complicating the already Gordian complexity of the political situation is the Obama administration's insistence that a temporary 18 month funding measure be enacted to put off the revenue issue until after mid term elections - while throwing the question directly in the path of Obama's own 2011 re-election campaign. Ibuprofen, anyone?

The level of uncertainty these political maneuverings throw into the planning processes of state and local governments which depend on this cash to flow at a steady pace, and hence on the heavy civil segment of the country's construction industry, is literally unimaginable. Add to it the utter failures to advance capital expenditure budgets in the legislatures of several heavily urbanized states this session, and it seems the big appropriations for "shovel ready" infrastructure projects in the American Recovery and Reinvestment Act this spring will be useless for producing any long term job creation in the construction sector of the American economy. No wonder Biden and Obama are already running a second stimulus package up the flagpole!

Senate Panel Unanimously Approves $23.6 Billion Military Construction Spending

Yesterday the Senate Military Construction and Veterans Affairs Appropriations Committee approved a fiscal 2010 $134 billion spending measure, including $23.6 billion for military and veterans construction. The Senate version of the bill is slightly bigger than the parallel House appropriation, and includes $5.7 billion for construction at military hospitals and dispensaries, $1.9 billion for construction at VA hospitals and clinics, $12.6 billion for construction at active military bases and reserve centers, $2 billion for construction of military family housing, and $1.4 billion for military construction in Afghanistan.

I appreciate Mr. McConnell's insights. I have noticed that he seems to have gone from wild enthusiasm to WTF!!! in the last month or so. At least he seems to be waking up some.

Edited July 7, 2009 by SUNTZU

[Bigiron]

Ahhhh. More taxes so our ruling elite can meet their spending goals. There will never be enough revenue from us peasants to appease them. Pardon me if I refuse to kneel.