Are Deficit Hawks Being Fooled by Big Spenders into Supporting Bill to Take Transportation Spending Off-Budget?

Apparently under the impression that the U.S. government has been hoarding money raised for transportation projects by transportation taxes, and then using the surplus to mask the true size of the deficit, dozens of deficit hawks have joined more than half of Congress in sponsoring H.R. 842, the "Truth in Budgeting Act." H.R. 842 would move the Highway, Harbor Maintenance, Airport and Airway and Inland Waterway Trust funds off-budget. But contrary to what some sponsors seem to think, it would not stop transportation trust fund surpluses from being used to mask the deficit -- as there is no surplus. Since 1980, for example, the federal government has spent $14 billion more on Highway Trust Fund programs than the fund has collected. What's more, since 1956 the federal government has spent $38 billion on highways without debiting $38 billion from the Highway Trust Fund's account. Rumors that the Highway Trust Fund has been stockpiling transportation taxes intended for road construction are simply false. Even the paper surplus listed for the Highway Trust Fund account is attributed to accumulated interest, not unspent tax revenues.

The true motivation of most H.R. 842 sponsors seems to be a desire to take transportation funding off-budget so transportation expenditures won't be subjected to the same budgetary disciplines as other federal programs. This view is supported by the fact that a special interest coalition consisting of 61 national organizations with an interest in seeing transportation spending increased, the "Alliance for Truth in Transportation Budgeting," has urged its local members to lobby Members of Congress hard in support of H.R. 842 during the Easter recess. Opponents of H.R. 842, led by Budget Committee Chairman John Kasich, Appropriations Chairman Bob Livingston and Ways and Means Chairman Bill Archer, are citing several reasons why H.R. 842 would increase the deficit, and on March 21, 1996 circulated a "Dear Colleague" letter setting out four facts about H.R. 842 to correct what they call a "misinformation campaign" in support of it. The three Chairman say that passage of H.R. 842 would give transportation spending a "de facto entitlement status." In an unusual move, Federal Reserve Chairman Alan Greenspan has joined opponents of the bill, saying in a letter to Rep. Frank Wolf, Chairman of Appropriations' Transportation Subcommittee, that passage of H.R. 842 "could engender cynicism in financial markets and the public at large about the commitment and ability of the federal government to control federal spending."

H.R. 842 is scheduled for a vote in the full House during the week of April 15-19, 1996.

--The National Center for Public Policy Research, April 1996.


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