With just two days left before lawmakers leave Washington, D.C. for a five-week-long recess, the House and Senate still have not agreed on how to keep funding federal highway and construction spending.
As of now, the Senate and House have dueling legislative proposals to keep afloat the Highway Trust Fund, which provides federal money for transportation infrastructure projects.
The Senate offered the latest volley on Tuesday, passing a bill to extend highway and construction funding through December. House members passed their own Highway Trust Fund bill last week that would keep the money flowing until May of next year. But in addition to the different timetables, the two bills propose different methods for financing the fund and House leaders vowed to reject the Senate bill hours before it even officially passed.
The Obama administration has warned that federal transportation funding to states would slow by as much as 28% beginning Aug. 1, because the federal Highway Trust Fund is expecting a shortfall sometime next month absent congressional action. The fund finances tens of thousands of construction projects around the nation, and the administration has warned as many as 700,000 jobs are at risk.
Despite the disagreements in Congress, a highway bill is still expected to get to President Barack Obama’s desk by the time Congress skips town — but the competing legislation in the two bodies has increased the uncertainty ahead of what some lawmakers have dubbed a potential “construction shutdown.”
The sponsors of one of the Senate amendments that altered the House’s bill — Sens. Tom Carper (D-Delaware), Barbara Boxer (D-California), and Bob Corker (R-Tennessee) — said they wanted to force Congress to agree on a long-term solution to shore up the Highway Trust Fund sooner rather than later.
“With a December deadline, Congress has more than enough time to consider the variety of solutions available to us. I am confident this Congress can get it done and I will continue to fight to make sure we do,” Carper said in a statement Wednesday night.
The Senate also adopted an amendment from Sens. Ron Wyden (D-Oregon) and Orrin Hatch (R-Utah) that changes the way the highway-funding extension is paid for. The senators said they would instead raise revenue by tightening compliance language in the tax code, making it more difficult for individuals and corporations to claim undeserved tax deductions.
Some Democratic lawmakers and groups have derided the House’s method for funding the bill, an offset which is known as “pension smoothing.” It permits employers to delay contributions to employee pension plans, thereby increasing taxable corporate income and generating revenue for the Treasury. However, Democrats and conservative groups have called it a “gimmick.”
From here, the House has a few options. Most likely, judging from House Speaker John Boehner’s comments to reporters on Tuesday, they will simply strip out the Senate’s amendments and send the bill back to the Senate.
“As Boehner said at stakeout this morning, I expect we’ll put our pay-fors back in and send it back,” a House GOP leadership aide told Business Insider.
Boehner’s office released a report on Wednesday showing perhaps a fatal flaw in the Senate legislation. According to Transportation Weekly, the Congressional Budget Office told Capitol Hill sources on Tuesday that the Senate bill falls about $US2 billion short of fully offsetting the new spending.
“The Senate-passed highway bill contains a critical error, and is not fully offset through December 19. The only responsible course is for the Senate to pass the original House-passed highway bill, which we will soon send back to them,” Boehner spokesman Michael Steel said in a statement.
With their tickets out of town already punched, analysts believe the Senate will likely blink by Thursday.
“This spells a game of chicken with the potential for a summer construction shutdown affecting approximately 100,000 road construction projects around the country and the approximately 700,000 jobs associated with them,” Guggenheim Securities analyst Chris Krueger said in a note to clients Wednesday.
But he added, “We do not believe that the Congress will leave for their 5-week August vacation (with 97 days before the midterm elections) without resolving this issue. … The odds for a partial construction shutdown are below 20%.”
This post was updated at 2:20 p.m. ET.
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