Will Transportation Bill Negotiations End Up in a Stalemate?

Published August 9, 2011

The standoff between Senate Democrats and House Republicans over a short-term Federal Aviation Administration funding bill foreshadows the possibility of a similar impasse in the negotiations on the surface transportation reauthorization bill.

That is the sober assessment offered by seasoned Washington observers on both sides of the political divide.

FAA Showdown

The basis of the FAA showdown was Senate refusal to accept a House-passed temporary FAA funding extension that also would cut $16.5 million in air service subsidies to 13 rural communities. (Both the House and Senate had passed long-term funding bills for the FAA earlier this year but negotiations on resolving differences and reaching an agreement have stalled over labor provisions).

Sen. John D. Rockefeller, chairman of the Senate Commerce Committee that has jurisdiction over the FAA, objected to the subsidy cut-off and insisted on a “clean” bill. The resulting impasse lasted more than two weeks while Congress was in session. When both parties failed to reach a compromise and left Washington for a month-long vacation, the White House stepped in to avert a suspension of airport construction projects and furloughs of 4,000 FAA employees.

Under pressure from the President, the Senate and House leaders agreed to put off their dispute until September. But the impasse and mutual recriminations continued.

“The stalemate over FAA funding offers a foretaste of what awaits us in September when Congress gets down to discussing the transportation bill,” one Washington political analyst told us. “Only the stakes will be much higher and the consequences of a deadlock much more serious.”

Opposing House, Senate Postures

Indeed, the House and the Senate are poles apart in their position on the nature and funding of the reauthorization bill. The House bill, unveiled by Chairman John Mica (R-FL) on July 7, would extend the transportation program for six years and has a price tag of $230 billion, or an average of $38.3 billion a year. That is roughly the amount of tax revenue expected to be earned by the Highway Trust Fund over the six-year period of the proposed bill (FY 2012-2017) as projected by the Congressional Budget Office ($201.6 billion in the Highway Account and $30.9 billion in the Transit Account).

The Senate bill, on the other hand, whose outline was released by the Senate Environment and Public Works (EPW) Committee on July 20, would extend the program only for two years (FY 2012-13) at a price tag of $109 billion, or an average of $54.5 billion a year. Since the Highway Trust Fund is expected to receive not more than $75 billion over the next two years, the Committee proposed to partially fund the shortfall by drawing down the entire unspent Trust Fund balance expected to be left at the end of FY 2011 ($14.8 billion in the Highway Account and $6.9 billion in the Transit Account, according to CBO projections.).

That left an unfunded shortfall of $12 billion. Finance Committee Chairman Max Baucus (D-MT), bound by a pledge to finance the bill “in a way that does not increase the deficit,” has been exploring various offset options but so far has been unable to come up with a solution that would satisfy his fellow Republican committee members.

As one Washington analyst observed, “A two-year Senate bill that keeps spending at current inflated levels and has an unresolved $12 billion shortfall, and a six-year House bill that reduces spending to no more than current revenues are so fundamentally different that it is hard to imagine they could be reconciled in a conference committee.”

The Philosophic Divide

The gulf that divides the two parties is not confined to just the technical parameters of the bills. Democrats and Republicans differ fundamentally on what the proper federal role in transportation should be. The Highway Trust Fund, Mica wrote in a letter to the US Chamber of Commerce, has evolved into a slush fund with less than 65 percent of its receipts dedicated to legitimate purposes (which in Mica’s view are highway-related programs), and with much of the remaining money funneled into federally-mandated programs that are of no federal interest and have only a peripheral relation to transportation.

These mandates have depleted the Highway Trust Fund to the point of bankruptcy. Their continued support, Mica wrote, is “unproductive and misguided at best.”

Republicans in Congress, along with many conservatives at large, view the new climate of fiscal restraint as an opportunity to return the federal-aid program to its original roots. Greater spending discipline, they contend, will refocus the federal mission on projects of national significance, concentrate resources on legitimate federal objectives, restore the highway program’s lost sense of purpose and give states and localities more voice and responsibility in determining their transportation future.

The Senate view, as articulated by Sen. Barbara Boxer (D-CA), chairman of the EPW Committee, is more expansive. The Senator considers the bill as a vehicle “to help create jobs, jumpstart our economy and build the foundation for long-term prosperity.”

A cut in current transportation spending, Boxer warned, would result in 630,000 transportation jobs being lost. To the Senator and her fellow Democrats on the committee, the federal-aid transportation program is, first and foremost, a tool of job creation and economic recovery.

C. Kenneth Orski ([email protected]) is editor and publisher of the Innovations NewsBriefs transportation newsletter, where a version of this article first appeared. Used with permission.


Republicans Slam Plan as a Disguised Stimulus Measure

House Republicans argue spending money on “shovel-ready” transportation projects has had no demonstrable effect on lowering unemployment, and the Senate’s proposed $109 billion bill is but a thinly disguised short-term economic stimulus measure.

The Senate bill will merely “extend the spending binge of the stimulus era without offering a chance to plan for long-range investments,” one House GOP aide told us.     

Nor will an infrastructure bank touted by President Obama provide the desired immediate economic stimulus, in the opinion of a financial analyst who has followed the Infrastructure Bank debate closely. The elaborate governance structure of the Bank as proposed by the Obama Administration, with its layers of bureaucratic conditions and requirements, offers little hope of speedy approval of job-creating infrastructure projects.

On that score, at least, the House and Senate transportation bills agree. Neither one includes Obama’s bank proposal.

Bid for State Freedom

One sign of a partisan divide is the State Transportation Flexibility Act (S. 1446), introduced by Sen. Tom Coburn (R-OK) and co-sponsored by 13 other GOP senators. It would allow states to opt out of the Federal-aid transportation program and collect and spend gas tax revenue on transportation priorities of their own choosing, free of federal mandates and restrictions.

Although the measure is thought to have little chance of enactment, its backing by many influential GOP senators suggests that the Boxer bill is not necessarily assured of a 60 vote majority.

Let us assume, however, that both the Senate and House bill summaries will be turned into formal and detailed legislative drafts by early September. Let us further assume both drafts will obtain approval of their respective authorizing committees, and the bills will be passed by both houses of Congress (with a 60-vote majority in the Senate). 

Big Questions

Let us suspend our disbelief that Congress can accomplish all these tasks in the first two weeks of the fall session (which begins on September 6), despite other pressing business such as passing FY 2012 appropriations, and despite the distraction of the second phase of the congressional debt reduction negotiations. The next step would be to convene a House-Senate conference to reconcile the differences in the two bills and produce a compromise bill.

What shape will the compromise bill assume? Which side will find itself in a stronger negotiating position? In light of the ongoing deadlock on the FAA funding bill, is it reasonable to assume that the House and Senate will settle their differences before the current law is set to expire on September 30?

Or will the negotiations drag on indecisively into October (or November), necessitating another extension of the existing law? How long an extension will be necessary and at what level will it be funded? Or should we give up the hope altogether of seeing a multi-year reauthorization enacted before 2013?

The month of September will offer the answers. 

C. Kenneth Orski