The White House has warned that if the Highway Trust Fund, which funnels federal money to state transportation projects, runs out of funding this summer as projected, it could cost the economy as many as 700,000 construction jobs within a year.
The administration said that the insolvency of the fund would mean the delay of about 112,000 road projects and 5,600 transit projects.
The trust fund is the main source of funding for state projects, and many would have to halt if it runs out of money. That’s looking likely as the federal gas tax, which keeps the fund afloat, hasn’t been raised since 1994. It still stands at 18.4 cents per gallon, but if it had kept up with inflation, it would be about 26 cents per gallon. If it were indexed to increasing gas prices, it would be about 35.4 cents. The Congressional Budget Office has said that to keep it flush with money, lawmakers will either have to increase the gas tax by 10 to 15 cents per gallon or find between $13 billion and $18 billion a year from other sources.
One solution proposed by the Obama administration is allowing states to start tolling on the interstate highway system. Obama has also proposed a four-year infrastructure spending plan that would replenish the fund with $150 billion. While on Thursday a bipartisan group of Senators on the Environment and Public Works Committee approved a bill to keep transportation spending at current levels plus inflation, finding money for the Highway Trust Fund is the responsibility of the Finance Committee. Chairman Sen. Ron Wyden (D-OR) hasn’t said how he plans to do that.
Meanwhile, the country’s roads merit just a D grade from the American Society of Civil Engineers, while our infrastructure overall gets a D+. To upgrade all of our bridges, roads, waterways, and other infrastructure, we would need to spend $3.6 trillion by 2020. Doing so would move in the opposite direction when it comes to jobs. Standard & Poors estimates that investing $1.3 billion over the next year would add at least 29,000, while also boosting economic growth by $2 billion and reducing the deficit by $200 million, with even more benefits in the long term.
But besides the possibility of the Highway Trust Fund running dry, there are other reasons to think increased infrastructure spending is highly unlikely. Government spending has fallen by about $60 billion and spending on infrastructure, along with other long-term priorities like education and research, is below any level seen since World War II.