Members of Congress seeking to blame President Bush’s tax cuts for blossoming deficits need to remember that the real culprit is spending excess.
Unless a House-Senate conference committee brings down the cost, Bush may finally get the chance to exercise his first presidential veto when the highway bill hits his desk.
The $295-billion version of the bill passed by the Senate 89 to 11 on May 17 exceeds by $11 billion the veto threshold level set by the White House. While Bush’s use of the veto pen is long overdue, any veto may be largely symbolic as both the House and Senate have passed their bills by margins well in excess of the two-thirds vote needed to override.
Even the slightly cheaper House version of the highway bill is no bargain. The legislation is crammed with 4,100 earmarks costing $12.4 billion (see table). Included in those earmarks is everything from snowmobile trails to museums to funds for the reconstruction of the home of James Madison.
The whole enterprise of massive federal spending on highways is bad economics. When hundreds of billions of dollars are sent to Washington to be reallocated based somewhat on need and somewhat on politics, the entire process guarantees very inefficient allocation of resources. The problem goes beyond wasteful pork-barrel projects. If dollars were kept in state and local hands, they could be better directed to building roads according to need (or returned to taxpayers if the spending is not needed). Further, federal funding subjects states to all sorts of expensive requirements, from Davis-Bacon rules to “Buy America” provisions.
Control over highway spending needs to revert to the states. Indeed, the 1956 Federal-Aid Highway Act stipulated that the federal government was supposed to get out of the road-building business in 1972, after completion of the interstate highway system.
There have been some efforts in Congress toward this end, such as Rep. Jeff Flake’s (R.-Ariz.) proposal last year—the Transportation Empowerment Act—that would devolve most federal highway functions to the states. Unfortunately, far too few of Flake’s colleagues want to offer anything more than lip service to the idea of states’ rights. Members of Congress prefer controlling highway spending themselves, thereby reaping campaign cash from the well-heeled and tenacious road builders’ lobby.
There is some good news in terms of overall funding levels. The original House bill was a whopping $375 billion and included a 5-cent-per-gallon tax hike on gasoline (which would have been added to the current 18.4-cent federal levy per gallon). By finally engaging in a spending fight, Bush has played a positive role in driving down the cost of the bill (and wiping out the tax increase). It’s too bad that the White House has refused to expend political capital on almost all other spending fights.
But the highway bill will continue growth in federal transportation spending, already up smartly during the Bush years. And House Transportation and Infrastructure Chairman Don Young (R.-Alaska) has been openly seeking to add onto the bill’s spending levels just as soon as it is enacted into law. Department of Transportation outlays in 2005 will be 40% higher than in 2000. This increase mirrors spending hikes elsewhere. In fact, spending across all categories of government in 2005 will exceed 2000 levels by 39%.
Members of Congress seeking to blame Bush’s tax cuts for blossoming deficits need to remember that the real culprit is spending excess. If the federal government had merely limited total spending growth over the past six years to 3.2% annually, the Congressional Budget Office would today be projecting a small surplus for the current year, instead of a $365 billion deficit.