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CBO Report – “Get used to the potholes!”
Joseph Kile from the CBO testified
before congress today. This was a discussion of the Federal role in
maintaining/building the nation’s highway system. Central to the
presentation was the status of the Highway Trust Fund. Like all the
other government Trust Funds (Social Security, Medicare) The Highway
Fund (“HF”) is, well, running out of gas. This chart shows the problem:
Note the dark blue line on the bottom. It goes negative in about one
year. That is because gas tax receipts and other revenues are falling
behind expenditures. The CBO sums up the problem:
Under current law, the Highway Trust Fund cannot incur negative balances.
Hmmm. If the law prohibits the HF from running red ink why is the CBO showing all the deficits? The CBO explains:
Highway Trust Fund balances once were stable, but over the past decade, the fund’s receipts have fallen behind its expenditures.
The trust fund will be unable to meet its obligations in a timely manner by the summer or fall of 2012.
Jeepers! Another trust fund going broke. In a year! Actually, these trust funds don’t go broke, they just cutback on what they are paying out. How big a cutback?
Cuts would need to decrease spending by about one-third.
Cutting spending by 1/3 would add to those potholes. It would also be a
drag on the economy. Given that this bad news is going to hit in the
middle of a presidential election year I think it is unlikely that the
administration is going to allow spending to fall by this much. So what are the options? The CBO always has the answers:
If the Congress chose to boost revenues, it could do so by increasing taxes that are dedicated to the Highway Trust Fund or by making transfers from the Treasury’s general fund.
Ah! We can raise the tax on gasoline and diesel (89% of
the HF’s revenues) or we can do more deficit spending. Well, neither of
those things are going to be very popular, so they won’t happen. The
consequence of these dominoes falling:
The Department of Transportation has stated that if the fund faced a shortfall, it would ration the amounts it reimburses to states.
Welcome to America. The land of potholes.
Two Notes:
Go back to the CBO chart and look again at the top two lines. Compare
them with history. Note that ‘planned’ expenditures are greater than
‘revenues’. Generally speaking that has not been the case in the past. It is the rule in the future. Every economic forecast that is made in D.C. is based on the assumption that more debt is incurred. Don’t trust those forecasts, is my take from that.
This business of the HF is really not that big a deal. It comes to
$30-40b a year as a possible shortfall. That’s peanuts in the scheme of
things. I think this will be glossed over for another few years. They
will not raise the gas tax. The shortfall will be funded with debt.
I do think the status of the HF is worth noting as it is symptomatic of so many of the federal programs that exist. They are all running on empty.
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In Germany, the tax (alone) on unleaded fuel is about equivalent to $4.80/gallon. Pretty similar story across the EU.
I bet the Highway Trust is jealous.
maybe buffet knew what he was doing when he bought that railroad
Great pick me up Bruce... thanks.
Hey Bruce, the Fox News brigade is after you, today.
Huh? What's that mean?? I'm clueless as usual.
bk
That's nothing PIMCO was after the ZH today also.
Bruce,
I drive the interstates of New York and Connecticut a lot, and I is it just me, or have they both been getting worse and worse on unfixed holes and rips the last 5 years. In my opinion, we are already not spending enough just for basic maintenance.
I'm just glad I don't have to cross a major bridge twice a day!
Uh huh, the ole "dedicated trust fund" bait n switch.
Or we can get rid of federal highway spending. Duh.
As far as I'm concerned, federal highway spending exists solely to coerce states into passing drunk driving laws, seat belt laws, motorcycle helmet laws. No actual, legitimate purpose is served by this frivolous spending.
Interstate commerce.
No, the federal govt has a BIG stake in the highways. Also, the system was designed to accommodate airplane landings if needed (militarism baked into the cake).
All major Interstate highways are Federally Owned.
Eisenhower was instrumental in gettting them built............
So he told me.
Throw out the DMV too! I have never had a good experience in their building with all the over-paid neanderthals! Just an extra hassle that costs me $$$$.
You should see the pot holes in Russia, unbelievable.
Try Mexico Interstate 101. I helped pull a piglet out of one of them near Zihio. Milestones
You mean ... potholes in Russia?
Regards,
Cooter
We have the largest bridge to nowhere - it is called proping up the banks with taxpayer funds so they will go bankrupt later as oppossed to sooner - and the bankers have safely purchased their hide away in the bahamas....
High speed rail - fly over the potholes.
(ODammer's solution)
High speed rail was really being pushed (locally) several years back, when, I believe, Bush was in office. Not like this makes a big fucking difference, just shows how easy it is to make a stupid comment...
High speed rail from China Inc. No thanks.
How bout High speed internet and work from home.
Sell motorcycle stocks
I believe the HF only funds new construction, so it is unlikely to result in increased potholes per se. However, it is the silliness of the fund in general that it is not used for general maintainence...we likely have enough roads and bridges to no where.
About 10 years ago I suggested that we stop ALL new road construction and take a large portion of that budget and kick it back in the form of tax credits to businesses hiring local people: in essence a commute trip reduction program on steroids. The benefits would be that we'd stop creating more road workers (it's going to stop anyway), promote local business "growth," and reduce traffic congestion. A person running for a local office (GOP) stomped his feet over this idea, saying that he should be able to work anywhere he wants: dumb shit! if a company wants you then they'll be happy to make sure that you can get to the workplace.
I've already spent time learning bike repair (and have several bikes). Now, however (spent a good 5 years commuting via bicycle, rain, snow, all conditions, every day), I've got a bit of a commute (until I'm able to get my farm operations generating enough revenues to keep me home).
and on the side(walk) I'm learning bike repair....
I'm going long bicycles, monster trucks and veggie diesel conversion systems....
The sheeple can barely afford a fill up at the pump, let alone the most expensive replacement part behind transmissions and engines
"We can raise the tax on gasoline... or we can do more deficit spending. Well, neither of those things are going to be very popular, so they won’t happen."
Deficit spending isn't popular? Which United States are you talking about?
long autozone, pepboys, advanced auto parts
no joke, i was in cleveland last weekend, and my cabbie said "damn these roads are almost as bad as where im from" and i said, "wheres that" he replied, "Nigeria"....
America is slowly become a third world country in regards to infrastructure and education.
hahaha! That's great cause I was telling my dad last week how the Dominican Republic had better paved roads than NJ! And, no tolls!
Slowly?
Another .gov trust fund eligible for non-negotiable Treasury IOUs. There...all better.
AAMCO bitchez!
oh please, you guys got nothing on montreal, compared to here the roads in the states are smooth as glass...
That Socialism will rot the system.
We are just beginning to see the collapse of our infrastructure.
Monies appropriated for roads, are long gone.
Personally I believe the states need to maintain their own.
Stop sending money to the Feds for the Interstates, as they are .gov property anyway.
at least we are allowed to play dodgeball, basketball, kids can have lemonade stands, and we keep our kids camps open. our pensions belong to us!
.
Yes, but we Americans were grievously cheated out of the glory of a spectacular Canadian royal wedding:
http://www.youtube.com/watch?v=XyFj7ibK-bY&feature=related
http://www.youtube.com/watch?v=rLlpCu7xz0U&feature=related
Let's see how those "fuel efficient hybrids" handle off-road conditions in the good old U.S.A.
Imagine a "smart car" meeting "pot hole".
College tuition for the union bosses' kids is skyrocketing. This has always been a union welfare fund.
Amen. Fire the union and outsource the work using a global tender. America will get at least 3 times its money's worth. I bet you the South Korean contractors like Hyundai and Daewoo would do a much better job.
Thanks to these unions and other bureacratic red-tape, New York State computed the cost of replacing the Tappan Zee bridge at more than $15B. I bet you that the cost will triple by the time the project is mid-way (making it impossible to reverse course) just like they did it at the NY-NJ Port Authority tunnel project. The Chinese have constructed comparable bridges at less than half the cost.
Politicians forget that such construction projects are meant to simplify the lives of the citizens so that folks can get to work on time and be more productive, goods can be shipped around the country for less and much more efficiently, etc. The US Govt is not in the business of employing these unionized workers (who are a major drag on the system).
Rather than celebrate the fact that the govt spending saved a few 100 hundred union jobs, the focus should be to construct as many highways and bridges throughout the nation in order to stimulate massive job growth in the private sector.
You can always build cheap roads, to last only the current administration, and leave the burden of repair to the next guy:
http://www.taringa.net/posts/noticias/5789442/Agujeros-en-China.html
Most of the best roads I've seen have been in rich areas, not necessarily in rich countries.
There best roads I've seen were in Johannesburg and environs... those were pristine and anyway they paved them again in no time with huge machines. Within a couple of days, the highways from Germiston and Bedfordview to Sandton were new again... I could not believe that.
This is the setup for the mileage tax.
Makes sense.
I have an idea, if you havent found a job after a full year of collecting unemployment, how about you work for the government filling pot holes - 20 hours a week - so you can spend the other 20 hours looking for a higher paid job. The taxpayers should get something for their $$$ while they help out the unemployed by giving them A JOB.
Although I do not believe it is the majority of folks who are unemployed, I have seen it happen right in front of my eyes.
Nah, this government misappropriated my tax money in a ridiculous way! My turn to get some of my dollars back! Go after the real system milkers, at least the unemployed did work at one point in time!
Exactly my thoughts. Nearly every damn highway in my area is a toll. Add on top of that who knows how many billions in fuel taxes and excise taxes. Where the hell is the money going?
"Where the hell is the money going?"
pensions
go long front axles.
Just get rid of the"prevailing wage"scam, and there will be plenty of money.
IL taxed the fuck out of me for 12 years and the roads NEVER got better. It all went to someone's pockets.
So be it.....
Maybe to finance BHO 2008 campaign ... thanks max for your contribution