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A Republican Highway Bill Fiasco

07-28-2015

Later this week the Highway Trust Fund officially runs out of money unless Congress authorizes more funding for roads and bridges. But the bill that is being pushed by Democrats and some Republicans is starting to look like a Republican party Dunkirk that could infuriate conservative voters and even wind up costing the GOP the 2016 election.

The $320 billion six-year public works funding bill would raise government spending, increase taxes on businesses, and possibly provide a new lease on life for the corporate welfare queen: the Export-Import Bank. This happens every time a highway bill comes up for a vote. Republicans toss out their fiscal conservative credentials and line up for the pork.

Some Republicans are even suggesting that a gas tax hike should be part of the plan. This would sock middle class voters, who haven't seen a pay raise in seven years and are financially strained. Polls show Americans hostile to new gas taxes paid at the tank.

Democratic Sen. Chuck Schumer of New York is drooling for a deal and pressing Republicans to drop their no new taxes pledge in a bipartisan package. Of course, the army of Washington lobbyists, from the AFL-CIO, to road builders and the civil engineers (who say that hundreds of billions of dollars more need to be spent) are pulling a full court press to get the money deal done.

But it's a complete dud. One plan would ?link "reform" of the corporate tax system - which is admittedly an abomination - with highway funding. But that deal could end up being a net tax INCREASE on American companies who already face the highest corporate tax rate in the world.

The White House thinks that as much as $200 billion could be plucked from corporate America over the next six years. Tax reform should be tax neutral at best, not a back door way to raise taxes.

One plan would force U.S. companies to pay a new "minimum tax" of as much as 10 percent on their overseas profits whether they bring the money back to America or not. Currently the corporate tax isn't applied to those earnings until the money is brought back to these shores.

If we want to fix the corporate tax system, simply cut the tax rate from 35 percent to closer to the international average of 25 percent. But that isn't what's on the table here and the plan being hatched would put U.S. firms in a deeper competitiveness hole. We are already seeing American companies like Medtronics and Burger King flee the United States.

As for a gas tax hike, every penny increase pulls $1.5 billion from American families. A 15-cents-a-gallon increase would cost consumers and businesses close to $25 billion. Republicans were elected to cut taxes not raise them.

The big canard here is that the Highway Fund is running out of money and that bridges will start collapsing if taxes aren't raised. Nonsense. ?The federal gas tax of 18.3 cents a gallon and other fuel taxes raise some $35 billion a year - more than enough to pay for roads and bridges and highways.

The problem is about 20 cents of every dollar raised isn't used to fund roads. Rather it goes to transit projects and bike paths and other pork. Unions make out like bandits because of the Davis Bacon Act that inflates wages and salaries on federal construction projects.

The worst feature of the highway robbery bill is that it could resurrect the Export-Import Bank. Republicans would be surrendering to the corporate cronyism lobby at a time when we should be pushing co?mpanies like Caterpillar and Boeing off the dole. Mitch McConnell, the Republican Senate majority leader, is insisting on a vote to re-finance the bank, and the sad thing is that at least a dozen Republicans want to vote yes.

In place of the wretched tax and spend deal, Congress needs to instead repeal Davis Bacon and make sure that every dollar of gas tax money goes for roads. These two steps solve the "infrastructure crisis" that Washington created. Maybe we could get Washington out of the road building business altogether and turn these programs back to the states.

A tax increase to fund more pork road projects with new corporate welfare funding is the antithesis of what Republicans told voters they stand for in 2014. The old saying is that there is a dumb party and an evil party in Washington and sometimes Republicans act dumb and evil at the same time.

*Stephen Moore is a Fox News contributor and author of The Wealth of States.

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