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Expert’s take: GOP housing and transportation bill

Expert's take: GOP housing and transportation bill

House Republicans are looking to implement a housing and transportation bill that cuts about $1.8 billion from current program funding. What is the bill’s chance of making it through the Senate, and what does it mean for Americans? Emily Goff, transportation and infrastructure policy analyst at the Heritage Foundation, sets us straight:

Briefly, what does the newly proposed housing and transportation bill say?

In the Transportation, Housing, and Urban Development (or THUD) bill, House appropriators propose spending $52 billion in fiscal year (FY) 2015. The THUD budget always offers many opportunities to cut or spend taxpayer dollars more wisely. (Last year, Heritage identified several bold reforms to accomplish this.) But the appropriators have not taken advantage of these opportunities.

On the housing side, the bill won’t change business as usual at the Federal Housing Authority (FHA). While it cuts Housing and Urban Development’s budget to adjust for changes in projected revenue from insurance fees, taxpayers will still be on the hook for the mortgages that the FHA ensures. That won’t change until Congress reforms FHA.

With transportation, the bill reduces the Transportation Investment Generating Economic Recovery (TIGER) grants program to $100 million—down from $500 million in 2014—and restricts its use. This is a step in the right direction. TIGER grants are essentially administrative earmarks that let the Obama administration pick transportation winners and losers and advance its misguided green” livability” agenda. The goal should be to eliminate TIGER grants altogether.

Two more positives: the bill eliminates funding for the boondoggle that is high-speed rail and sets limits on overtime for employees of Amtrak, the federally-subsidized passenger rail service. The latter should help Amtrak to run more efficiently.

On the downside, the bill continues its massive subsidies for Amtrak’s operating ($340 million) and capital ($850 million) expenses.  It also keeps pouring federal funds into purely local transportation programs such as transit systems ($10.5 billion).  And it funds the expensive, risky implementation of NextGen ($852 million)—a major redesign of the Federal Aviation Administration’s Air Traffic Control (ATC) system.

Congress should instead be exploring the path toward privatizing or commercializing the operations of these entitles. This would not only reduce taxpayer costs, it would remove the politicization that currently plagues their funding.

What is the status of the bill? How does the Senate view it, and does it have a future?

The THUD bill has been reported out of the House appropriations subcommittee, and the full committee will soon consider it in what is called a mark-up session, where changes may be made. Then it goes to the floor for consideration by all House lawmakers. It is one out of 12 appropriations bills the House is supposed to consider each year as it works to agree with the Senate on a budget. See the Heritage Foundation’s annual appropriations tracker, an easy-to-read, regularly-updated table that tracks the status of these bills.

If recent history is any guide, a final THUD appropriations bill—called a conference bill—will more closely resemble whatever the Senate proposes, rather than what comes out of the House. And you can count on the Senate version to be significantly more expensive. (That’s what happened last year.)

If THUD proves contentious, Congress may pass it as part of a so-called “minibus,” which is a bill consisting of several appropriations bills. In the end, Congress may pass a combination of conference bills and minibuses before FY 2015 starts on October 1.

What are the most important aspects of the bill as far as affecting Americans’ day-to-day lives is concerned?

Obviously, a seamless, efficient transportation system matters to Americans as individual citizens who travel to and from work, on vacation, and take care of day-to-day chores. It matters to the owners and employees of businesses both big and small who want to deliver their goods and services efficiently. It matters to the states, which seek that competitive edge. The question is: Which aspects of that system is the federal government best equipped to provide for and oversee?

Lawmakers should recognize that it is impossible for distant bureaucrats, politicians, and special interest groups in Washington to know the priorities and needs on the ground in states and local communities—and how best to address them. This THUD bill, however, continues the status quo of a Washington-centric transportation system.  It would do better to start cutting federal programs and hand over the authority to fund and manage elements of our transportation system to the states, localities, and private sector.

Such reforms, often called devolution or privatization, are not far-fetched, as some inside the Washington Beltway would have you think. Federal lawmakers have introduced proposals to give states control over their road, bridge, and transit funding and spending decisions. Decentralizing control of infrastructure has been done successfully in other countries America admires, such as the privatization of Canada’s Air Traffic Control system or that of the British Airports Authority in Great Britain. Further, much of America’s non-highway infrastructure, from pipelines (think plans for Keystone XL) to electrical grids to freight railroads, is predominantly funded and managed by the private sector.

Any federal government role in transportation should be limited to programs of national scope and significance that the private sector cannot or will not provide, even if feasible. That means this appropriations bill should not fund purely local activities such as transit systems (buses, subways, streetcars), so-called transportation alternatives (bicycle paths, streetlamps, and sidewalks), Amtrak, or the TIGER grants.

By refocusing the federal role on a smaller set of priorities, Washington can do those more efficiently and free the states and private sector to innovate and solve the remaining transportation challenges.

Cutting spending for such local activities in the THUD bill would be a good place to start.

Emily Goff analyzes transportation and infrastructure policy proposals for The Heritage Foundation’s Roe Institute of Economic Policy Studies.

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