By Jeff Mason and David Lawder
WASHINGTON (Reuters) – President Barack Obama on Tuesday threw his weight behind a temporary fix for the depleted Highway Trust Fund during an event to tout his administration’s work with the private sector to develop cars that communicate using wireless technology.
The Republican-controlled House of Representatives was poised on Tuesday to approve a $10 billion infusion for the fund, enough to keep money flowing to road, bridge and transit projects at least through the end of May 2015.
Without new money, the Department of Transportation has said it will start to cut back federal funding for projects by nearly a third on August 1, putting hundreds of thousands of jobs at risk. Congress begins a five-week summer recess that same day.
White House support for the 10-month extension has annoyed some Democrats who are opposed because it would push decisions on long-term funding to a newly elected Congress next year.
Obama weighed in on the issue shortly after taking a wild ride in a car simulator at a highway research center in McClean, Virginia, near Washington.
“The good news is there are bipartisan bills in both the House and the Senate that would help with a short-term fix. And I support that. At the very least, Congress should be keeping people on the job who are already there right now,” Obama said.
“But all this does is set us up for the same crisis a few months from now. So Congress shouldn’t pat itself on the back for averting disaster for a few months, kicking the can down the road for a few months, careening from crisis to crisis when it comes to something as basic as our infrastructure.”
The Highway Trust Fund, which has been supported by fuel tax revenues since its inception in 1956, has run chronically short of money in recent years because of higher construction costs and improved vehicle fuel economy. Trucking firms and many other industry groups favor an increase in fuel tax rates, which have remained unchanged since 1993.
House Republicans have ruled that out, and their temporary measure would be funded by revenues from pension accounting changes and increased customs fees, which have received support from both Democrats and Republicans in the past.
The Senate Finance Committee has approved a similar extension, with some different offsets to improve tax compliance. Both versions would also transfer $1 billion in existing money to construction projects from a fund for cleanup of leaking underground fuel storage tanks.
CARS OF THE FUTURE
During his visit at the research center, Obama touted work on so-called vehicle-to-vehicle and vehicle-to-infrastructure communication technology to improve navigation. The technology allows cars, trucks and other vehicles to send real-time information wirelessly, an innovation researchers hope can help reduce accidents and boost fuel efficiency by alleviating traffic.
“As the father of a daughter who just turned 16, any new technology that makes driving safer is important to me,” Obama said, referring to his oldest daughter, Malia.
U.S. regulators are already crafting a proposed rule that would require all new vehicles to use the new technology, which could be put in place by early 2017, before Obama leaves office.
The event was meant to showcase efforts to ensure vehicle-to-vehicle communication is safe, pointing to a joint effort between leading carmakers and the University of Michigan Transportation Research Institute.
Ford Motor Co, General Motors Co, Honda Motor Co, Hyundai Motor Co, Daimler AG’s Mercedes-Benz Research and Development North America, Inc., Nissan Motor Co, Toyota Motor Corp, and Volkswagen AG are all part of the research effort, according to the White House.
HOUSE AVOIDS TRANSPORTATION FUNDING SHORTFALL
The U.S. House of Representatives on Tuesday overwhelmingly passed a $10.9 billion extension of U.S. transportation funding through May 2015, a measure aimed at averting cutbacks in August in federal money for road, bridge and transit projects.
The measure, paid for largely through revenue generated by pension accounting changes and higher customs user fees, passed on a 367-55 bipartisan vote, despite opposition from outside conservative groups.
Senate Majority Leader Harry Reid said that “as soon as I can get to it,” the Senate would begin considering a similar, $10.8 billion measure with some alternate funding provisions in the coming days.
Without new money for the Highway Trust Fund, the Department of Transportation has said it will start to cut back federal funding for projects by nearly a third starting on Aug. 1, the same day Congress begins a five-week summer recess.
“If Congress fails to act, thousands of transportation projects across the country and hundreds of thousands of construction jobs will be at risk,” said House Transportation and Infrastructure Committee Chairman Bill Shuster, a Pennsylvania Republican. “This legislation provides much needed certainty and stability for the states.”
The Highway Trust Fund, which has been supported by fuel tax revenues since its inception in 1956, has run chronically short of money in recent years because of higher construction costs and improved vehicle fuel economy. Trucking firms and many other industry groups favor higher fuel tax rates, unchanged since 1993, to return it to solvency.
But House Republicans have ruled that out, and the biggest revenue source in the House-passed bill is often called “pension smoothing,” which allows companies to reduce near-term contributions to employee pension programs by assuming a higher, historical average rate of return. That move is expected to boost corporate tax collections by the U.S. Treasury by about $6.4 billion over 10 years.
WHITE HOUSE WELCOMES EXTENSION
The bill would transfer $1 billion in existing money to construction projects from a fund that helps pay for cleanup of leaking underground fuel storage tanks.
The $10.8 billion companion measure passed by the Democratic-controlled Senate Finance Committee would also fully fund transportation projects through May, although it would rely less heavily on pension changes and more on revenues from measures to boost tax compliance.
The White House said on Monday it would welcome the 10-month extension, to the chagrin of some Democrats who say it would push any decisions on long-term funding to a newly elected Congress next year. Among those is California Senator Barbara Boxer, who Reid said would get a Senate vote on her plan for a shorter, $8 billion extension. Boxer has argued a shorter extension is needed to force Congress to act on a long-term funding plan during the “lame duck” legislative session after November elections.
(Reporting by David Lawder; Editing by Peter Cooney)