Obama drives transport into tax debate

Bloomberg NewsFebruary 26, 2014 

— President Barack Obama is pressing Congress for money to repair and modernize U.S. roads, bridges and rail systems as the Highway Trust Fund runs low and proposals to raise revenue are debated in Congress.

A week before his 2015 budget is released, Obama is reviving his proposals for infrastructure spending with a four- year, $302 billion package of projects. They would be paid for partially by changes in business taxes that would bring a one- time gain in government revenue of $150 billion.

The president made his pitch Wednesday in St. Paul, the twin city to Minneapolis where an interstate highway bridge collapsed in 2007 and became a symbol for crumbling U.S. infrastructure.

“Nobody knows better than Minnesotans, when we’ve gone through a winter like this, roads are wrecked,” Obama told an audience in a railroad depot. “Roads and bridges should not be a partisan issue.”

The issue has become more urgent as the federal Highway Trust Fund, supplied by taxes on gasoline and diesel fuel, is at risk of running out. The Department of Transportation has projected that current demands on the fund will cause it be running a deficit as early as August. State and municipal funding for roads also are under stress.

Business groups have said infrastructure spending is needed to boost U.S. economic growth, while benefiting construction companies including Caterpillar. The Obama administration also said it would mean more jobs.

Transportation funding was one of the subjects that Obama discussed Tuesday during a private meeting at the White House with House Speaker John Boehner.

Boehner, an Ohio Republican, said Wednesday there are no plans to shift general revenue from the Treasury to the trust fund.

“There’s no conversation about bailouts,” Boehner told reporters in Washington.

“We’ve got to find a funding mechanism to fund our infrastructure needs,” Boehner said, adding that leaders have been looking for at least a year and a half for a solution. “I wish I could report to you that we’ve found it, but we haven’t.”

House Ways and Means Committee Chairman Dave Camp is proposing a boost for the highway trust fund as part of a broader restructuring of the U.S. tax code that eliminates dozens of tax breaks to pay for reductions in corporate and individual rates.

The Michigan Republican’s proposal would add money to the trust fund for eight years using some of the revenue generated from a one-time tax on some income earned overseas.

Obama hasn’t given specifics of the tax changes he would seek to bring in more money for roads and rail. Josh Earnest, a White House spokesman, said the president wants to end tax advantages for companies that move jobs overseas and tax the share of private-equity managers’ profits in buyout deals, known as carried interest, at ordinary income rates.

Earnest said the administration recognizes that major tax changes don’t stand much chance of moving through Congress this year.

“There is not a lot of optimism on Capitol Hill for any kind of legislative proposal that seems complicated,” Earnest said. “We’re realistic about the prospects of a difficult piece of legislation like this.”

Transportation Secretary Anthony Foxx told reporters traveling with the president that the administration wants to get beyond the “Band-Aid” solution of trying to keep patching up roadways, bridges and rail lines.

Foxx said the administration will keep working with Congress to find a funding source, even with raising the fuel tax off the table.

“The one thing nobody wants to do is see the highway trust fund go insolvent,” he said aboard Air Force One.

The U.S. Chamber of Commerce and AAA, the nation’s largest motorist club, are among the groups that back raising the gasoline tax, which has been at 18.4 cents a gallon since 1993. The Chamber has endorsed legislation that would boost the tax by 15 cents a gallon over three years.

“We need user-related revenues that are stable, predictable and growing to provide the certainty needed for planning and making capital investments,” Janet Kavinoky, executive director of transportation and infrastructure at the U.S. Chamber of Commerce, said in an email.

AAA said in a statement that “one-time patches must not be the only funding solutions considered.”

Obama Wednesday also announced that the Transportation Department is making $600 million in competitive grants available for projects. The money is part of a program, Transportation Investment Generating Economic Recovery, that originally was part of the economic stimulus package passed in 2009. The grant program was funded in the bipartisan budget deal that Obama signed on Jan. 17.

Obama spoke at Union Depot, which was shuttered in the 1971 as railroad passenger service in the United States declined.

As Obama’s first transportation secretary, Ray LaHood in 2009 and 2011 traveled to the depot in St. Paul, the first time when it was in shambles and seeking federal support for a $243 million renovation and the second time in 2011 after a renovation was under way. The depot is in the city’s downtown and now includes retail and event space as well as a station opening later this year for the region’s light-rail transit system.

– –With assistance from Derek Wallbank and Jonathan Allen in Washington.

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