Cutting the Post Office to Fund Highways

June 10, 2014

Congress needs to stop spending more money on transportation than it has, contends Randal O'Toole, senior fellow at the Cato Institute.

As the Highway Trust Fund continues to run out of money, Washington lawmakers have proposed a number of fixes:

  • Most recently, Republican leaders have proposed to end Saturday mail delivery, putting the savings into the highway fund.
  • President Obama has proposed to restructure the corporate income tax, closing loopholes to increase revenues, which would be used to supplement the trust fund.
  • Others have proposed increasing the federal gas tax.

However, these proposals are short-term fixes that are not sustainable, says O'Toole. It would take 10 full years of cuts to the Post Office in order to cover just one year of the Highway Trust Fund deficit. President Obama's corporate tax proposal would only increase revenues in the short run, reducing corporate obligations in the long-term. And increasing the gas tax would have little long-term effect: The combination of inflation and more fuel-efficient cars has made the tax less and less valuable, and any increased gas tax revenue would lead to funding of pork projects like high-cost, low-capacity rail.

O'Toole offers a simpler answer: the federal government should stop spending more on transportation than it collects in transportation revenue. When Congress built the Interstate Highway System, it did so entirely out of user fees, funding the project on a pay-as-you-go basis and never letting the fund run dry.

Congress has already spent a staggering $55 billion in general funds to bail out the trust fund. Rather than impose these ineffective, short-term fixes, O'Toole suggests that Congress go off the "transportation cliff."

Source: Randal O'Toole, "Cut Saturday Mail to Fund Highways?" Cato Institute, June 9, 2014. 

 

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