Congress must act on budget, transportation

From The Beacon, September 2011
With the U.S. economy teetering on a razor’s edge between a slow recovery and harmful stagnancy, even one small misstep could be enough to propel the nation into a double-dip recession. The gravity of the situation is such that one would expect every leader, party and caucus in our nation’s capital to redouble their efforts to work collaboratively to buffer the economy from further shocks.

But economists and political observers all seem to agree that the broken political situation in Washington is more splintered than ever – and Capitol Hill’s failure to unite on balanced and meaningful federal policies to guide spending, investment and revenues is weakening our economic prospects with each passing day.

The recent near-shutdown of the federal government over raising the debt ceiling was a close call, but not the last word on long-term deficit reduction plans. While the overall framework calls for reduced federal spending in the years to come, the last-minute compromise delayed the toughest decisions until later this year, when a “Super Committee” of 12 legislators (including our own Sen. John Kerry) will report to the House and Senate with a plan to slash an additional $1.5 trillion in spending over 10 years, beginning in 2013.

Meanwhile, Congress is so far behind on its obligation to enact a federal budget for fiscal 2012 by Sept. 30 that the deadline now appears impossible to meet. Further complicating matters is the likelihood that the House of Representatives will ignore the fiscal 2012 budget authorization level that was included in the debt ceiling legislation – which House and Senate leaders agreed on in early August, and which would cut federal spending by $7 billion compared to this year – and will insist on cutting another $24 billion from the federal budget, which the Senate and the president will certainly oppose.

With the House scheduled to meet for only 12 days in September, and the Senate following a similar schedule, Congress will probably pass a resolution to allow the federal government to keep running until November or December. This would then link the timing of the federal 2012 budget with action on the joint deficit reduction report that will be issued by the Super Committee by Nov. 23. Without agreement on a continuing resolution, there could be a renewed threat of a federal government shutdown on Oct. 1.

Adding to the drama is the looming deadline to renew the nation’s surface transportation laws, which also expire on Sept. 30, including the highway funding programs, the federal fuel taxes and transportation-related user fees that finance the acts. SAFETEA-LU is the funding law that provides states and localities with essential dollars for state, regional and municipal road and bridge infrastructure projects. The law expired two years ago and has been extended by continuing resolutions ever since.

Congress must also extend or reauthorize the federal gas tax. Otherwise, all federal surface transportation programs would be halted, and the federal highway trust fund would run out of money. Until recently, all stakeholders were confident that reauthorization would happen. Last month, however, Congress allowed federal airline ticket taxes to lapse for two weeks, losing $350 million in revenue and forcing the temporary furlough of 4,000 FAA employees.

Again, the House and Senate appear far apart on the legislation. Rep. John Mica, chair of the House Transportation and Infrastructure Committee, has issued his six-year plan, which would slash annual federal highway funding by 34 percent. The Federal Highway Administration estimates that the Mica plan would reduce annual federal surface transportation funds to Massachusetts by $216.3 million, cutting our annual amount from $579.6 million to $363.3 million, a 37 percent hit. The Highway Administration analysis projects that a cut of this magnitude would cost Massachusetts 7,522 jobs – a serious blow to our economy, by any measure.

Sen. Barbara Boxer, chair of the Senate’s Environment and Public Works Committee, has countered with a two-year extension of SAFETEA-LU at current levels. Because even the current level of federal spending cannot be sustained with existing federal gas taxes, and there is no way that the House will vote to increase the gas tax, the Senate plan would require $12 billion in additional funding, which the House could also block.

An impasse over the federal surface transportation act and the gas tax would have a nasty impact in every state and municipality, threatening or delaying thousands of construction projects across the nation and stalling vital investment in our economy when we need it the most.

The stakes are high for our state: $216.3 million in federal transportation funding hangs in the balance between the House and Senate committee plans.

That’s just one example of how dependent our budgets and our economy are on federal investment. According to estimates by Gov. Deval Patrick’s administration, Massachusetts receives $200 million a week from the federal government for Medicaid, food stamps, transitional assistance, transportation projects, housing and environmental projects, research grants, and everything in between. A federal shutdown would certainly cause massive problems for the state and for cities and towns.

But that would be temporary. The long-term cuts as proposed by the House would be even more harmful and corrosive over the next several years, when our economy will be too weak to absorb the blow.

So now, more than ever, we need Congress to pass a timely and responsible federal budget, to reauthorize and finance the federal transportation program and gas tax at necessary levels, and to reexamine its relationship with cities, towns and states.

This is a time for balanced policies that are both prudent in expectation and sufficient in resources. Washington needs to recognize that cutting and slashing alone is not the balance we need and could very well shove us into another recession in the next few months.

The next several months will demonstrate what will prevail on Capitol Hill, a commitment to broken politics, or a commitment to fix what is broken.