Issue in Focus
Dec 04 2015
The Senate this week took two steps forward and one step back.
On Thursday evening, a Republican majority passed an historic budget reconciliation package designed to relieve American families, workers, and businesses from the most onerous and costly provisions of Obamacare. Shortly thereafter, a bipartisan majority passed a federal highway bill designed to satisfy the demands of K Street lobbyists and federal regulators, while imposing on the rest of America the same ineffective, overpriced federal highway policy that has failed to meet our infrastructure needs for decades.
Just as objectionable as the discredited substance of the legislation are the bill’s irresponsible and unsustainable funding mechanisms and the cynical process that produced it.
Of the $70 billion this bill uses to bailout the Highway Trust Fund over the next five years, more than $50 billion comes from an accounting gimmick that steals money from the rest of the Treasury’s general fund. The bill also purports to raises $6.2 billion in revenue for transportation and infrastructure projects by selling oil from the Strategic Petroleum Reserve – assuming a price of $93 for a barrel of oil, even though it’s currently selling for less than $40 per barrel.
If we’re going to start selling federal assets at fantasy prices, there is no limit to the number of things we can pretend to pay for.
But as bad as the bill’s funding schemes are, the cynical process used to secure votes in its favor is even more troubling.
For instance, this bill adds back $3.5 billion in crop-subsidy spending that we cut just last week in the budget deal. Is this really how we do business in the United States Senate? Reduce spending one week in order to appear fiscally responsible, only to reverse course the very next week when nobody is expecting it? You don’t need to oppose crop subsidies to see the dishonesty and cynicism of this maneuver.
Even worse, this bill would not have a chance of passing the Senate were it not for a deal to include a renewal of the Export-Import Bank.
There’s little need to revisit the mountain of evidence proving that the Export-Import Bank is one of the most egregious, indefensible cases of crony capitalism in Washington, D.C. But it is worth highlighting some of the so-called “reforms” that Ex-Im’s supporters included in the bill.
First, there’s the new “Office of Ethics” created within the Bank. Presumably this is supposed to help the Bank’s management reduce the rate at which Ex-Im employees and beneficiaries are indicted for fraud, bribery, and other wrongdoings. Since 2009, there have been 85 such indictments – or about 14 per year.
The bill also creates a new position – called the “Chief Risk Officer” – and requires the Bank to go through an independent audit of its portfolio.
Only in Washington will you find people who believe that an organization’s systemic ethical failings can be overcome by creating a new “ethics” bureaucracy… or that hiring a new a risk-management bureaucrat is a suitable replacement for market discipline… or that giving another multi-million-dollar contract to a well connected accounting firm will substitute for real political accountability.
Finally, this bill does nothing to fix our fundamentally broken highway financing system, which makes it harder and more expensive for state and local policymakers to meet the transportation needs of their communities.
Under the status quo system, federal bureaucrats divert at least 25 percent the states’ gas tax dollars to non-highway projects, including mass transit, bike paths, and other boondoggles like “vegetation management.” Federal Davis Bacon price-fixing regulations artificially inflate construction costs by at least 10 percent. And federal environmental regulations, like those issued under the National Environmental Policy Act, add an average of 6.1 years in planning delays to any federally funded project.
We can have honest disagreements over policy, but we must not continue to tolerate the kind of corrupt process that produced this bill – the backroom deals, the about-face on crop subsidies and the Export-Import Bank.
The American people deserve better than this. And it’s up to the Republican majority in Congress to ensure that we will do better than this in the future.