Transportation Budget from the White House – Deja Vu All Over Again

It is that time of year for a President Obama transportation tradition. Each of the past six years, the President has sent a transportation proposal, concept, or list of guidelines to Congress. And each year Congress, in a bipartisan manner, has rejected the President’s proposals as being completely unreasonable. Some hoped, with the prospect of corporate tax reform, that this year’s budget would be different. But while somewhat better than past years, this year’s budget is still an unrealistic document that is more focused on politics than policy.

The White House submitted a $95 billion budget request for USDOT for fiscal year 2016. The budget is a $22 billion or 31% increase, over 2015. And the Administration proposes to achieve this increase by removing Amtrak, transit new starts grants, TIGER grants, high speed rail funding, and a few other items controlled by the Appropriations committee. If this sounds familiar it is because the White House has submitted a variation of this proposal for the last several year; it has been rejected on all occasions in a bipartisan manner.

The first problem with this approach is it takes power out of the Appropriations committee and gives it to the White House. Appropriations committee members like the power of the purse and are unlikely to give it up even if they and the President agree on transportation policy.

The second problem is this proposal changes the fundamental users-pay/users-benefit nature of the highway trust fund. Both roadway and transit interests have dedicated funding in the current system. While transit might receive more funding under the President’s proposal, the funding is not guaranteed so it is unclear they would support this change. Other than passenger rail interests, it is unclear who would support this change.

The final and biggest problem is finding the money to pay for this proposal. The President is proposing a 14% tax on repatriated profits. However, there is bipartisan consensus that 14% is too high. Senators Boxer and Paul have introduced a 6% rate which is far more likely to pass. But the 6% does not provide enough money to fund the proposal. And both taxes are short-term fixes that do not provide the long-term certainty the transportation community is seeking.

For the seventh year in a row, the White House has proposed an overtly political budget which has no chance of passing. It is déjà vu all over again.

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