The House of Representatives and Senate were unable to agree on a long-term highway funding bill. Instead, both chambers approved a highway funding extension that will cover spending until the end of October. As you listen to senators and congressman, you might think the only issue is how to find funds to maintain the current system. There is little discussion of serious reform. Current transportation spending is often driven more by politics than economic merit. Funds are diverted to non-highway uses and unnecessary regulations drive up project costs. These short-term patches increase policy uncertainty, harming the economy. Big-time reform is needed.
The Republicans have taken raising the gasoline tax off the table. The president proposed using a portion of corporate taxes to make up for the shortfall between gasoline tax revenues and highway spending, and Republicans in the House have shown interest in this proposal. But while reforming the corporate tax code is long overdue, legislators should not entangle it in the highway funding morass.