CHN: Congress Agrees to Use Funding Identified for Unemployment to Pay Highway Bill Patch

On July 30, with time winding down to their August recess, the Senate agreed to the House version of the Highway and Transportation Funding Act (H.R. 5021). The House passed the bill (367-55) on July 15. One of the objections of many Democratic Senators to the House version is the funding sources that pay for most of the nearly $11 billion cost of funding road, bridge, and public transportation projects through May 2015. H.R. 5021 uses the revenue from so-called ‘pension smoothing’ and some customs fees that the Senate had set aside to pay for an extension of Emergency Unemployment Compensation (EUC). Pension smoothing allows companies to defer making contributions to pension plans thus increasing their profits and generating tax revenue (See July 22 Human Needs Report). This was a bitter pill to swallow as EUC languishes even as the unemployment rate ticked back up from 6.1 percent in June to 6.2 percent in July.
The Senate passed H.R. 5021 by a vote of 81-13 but not before it had passed its own version of H.R. 5021 two days earlier. Its bill had a different set of revenue offsets and it limited the duration of the stopgap measure that provides funding for the Highway Trust Fund to December 2014. A bi-partisan group of Senators led by Senators Chris Murphy (D-CT) and Bob Corker (R-TN) hoped that a post-election December deadline might free members up to move a longer term bill paid for by increasing the gas tax by 12 cents. Currently the trust fund is paid for by an 18.4 cents per gallon gasoline tax and 24.4 cents per gallon tax on diesel fuel. The tax is not indexed for inflation and has not been raised since 1993. Rather than raising the tax Congress has taken over $50 billion from general revenues over the last six years to supplement the fund.  The White House supported a much bigger four-year $302 billion extension of highway funding.

In the absence of a longer term bill, there was bi-partisan agreement that Congress needed to act before leaving for their 5-week break. The current transportation bill would have expired at the end of September. The Department of Transportation was set to begin rationing payments to states by cutting their allocations beginning on August 1. This could have resulted in the loss of as many as 700,000 jobs.

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