House Ways and Means Chairman Paul Ryan (R-Wis.) backed the five-month extension in hopes of using the extra time to finalize a plan to pay for a long-term reauthorization of the fund through a pot of money generated by changing the tax code for multinational corporations. While [Senate Majority Leader Mitch McConnell] does not favor this approach, the bipartisan House vote could increase pressure on Senate Republicans to now embrace a short-term extension of the program so negotiations over a years long extension can be given a chance to work. [...] Money for highway funding would come from a one-time tax on all of the cash and assets companies are already holding overseas, a process known as "deemed repatriation." The broad outlines of the plan are in place but critical details, like what rates companies will pay, have not yet been determined.
The Highway Trust Fund, which plays a key role in financing U.S. infrastructure projects, was set to run out of money in May, but Congress approved a two-month extension. The stop-gap measure was necessary -- it prevented an abrupt halt to a variety of ongoing projects -- but the need for a real, lasting solution didn't disappear.
The good news is, even Republicans don't want the Highway Trust Fund to run dry. The bad news is, with another deadline looming in two weeks, members are once again weighing a short-term extension.
And the worst news is how the GOP-led House is crafting its solution.
The House yesterday approved a five-month extension of the Fund -- it passed 312 to 119 -- which is intended to give members even more time to work on a long-term package. The Washington Post reported yesterday on what some Republican leaders have in mind.
This probably sounds complicated, but stick with me. This is going somewhere.
The Highway Trust Fund is currently financed through a federal gas tax, which hasn't been raised in over 20 years, pushing American investment in infrastructure to its lowest point in nearly 70 years. Neither party is happy with this -- apparently, Republicans rely on roads, bridges, trains, ports, and runways, too.
The obvious solution is to raise the federal gas tax a little and use the revenue to improve infrastructure and stimulate the economy. This is the one solution GOP leaders have said they will never consider -- because no tax can ever go up by any amount at any time for any reason.
This in turn pushed lawmakers to get creative since the easy solution was ruled out before the process even began. What they came up with is a plan that would identify foreign profits made by U.S. corporations, impose a one-time tax on those profits to finance American infrastructure, and then offer those same corporations a massive tax break over the long term.
Or as Mother Jones' Kevin Drum put it the other day, "The business community is willing to support a small, one-time gimmick that will cost them around $200 billion or so -- and free them to repatriate all their foreign earnings and bring that money back to the US -- but only if it's tied to a large, permanent corporate tax change that will save them far more in the long run."
The plan is still coming together -- it's why lawmakers want a five-month extension instead of something shorter -- but it's an elaborate gimmick made necessary because of Republicans' anti-tax orthodoxy. New York's Jon Chait had a great piece the other day, noting that when GOP lawmakers try to govern, they routinely run into a problem: their anti-tax crusade makes policymaking practically impossible, so they meander from one revenue-creating gimmick to the next.
"It's possible to find temporary workarounds rather than confront the irrationality of the Republican anti-tax religion," Chait noted. "But there are only so many gimmicks and they only last so long. What's going to happen the next time Congress needs to support research or finance some roads?"