Updated 2:33pm

The Senate-passed jobs bill (Hiring Incentives to Restore Employment Act or the Jobs for Main Street Act) contains a number of wasteful transportation-related provisions which should concern taxpayers:

1.  Kicks the political can down the road (again).  This bill serves as the third short-term extension of the nation’s transportation program—which expired on September 30, 2009—until the end of 2010, at which time Congress will either pass another extension or attempt to pass a bill during the lame-duck session after the November elections.  The idea of a lame-duck bill gained traction last night when Sen. George Voinovich (R-OH) explained that he was promised a vote on a multi-year extension before the end of 2010 in exchange for his vote to end cloture.

2.  Transfers $19.5 billion from the general Treasury to the Highway Trust Fund (HTF).  Congress continues to find ways to justify general fund transfers to the HTF—which wouldn’t survive the year without these infusions—but shows no willingness to roll up its sleeves and find a long-term funding solution that will keep the nation’s transportation program solvent.  In addition, this transfer will immediately increase the nation’s debt by $19.5 billion.  Proponents of the transfer argue that the HTF is “owed” this money as a result of “foregone interest.”  Prior to fiscal year 1999, the HTF was allowed to keep the interest that was earned on the investment of unspent gas tax dollars, but since that time the interest has gone into the General Fund.

From the “Budget Perspective” out of Budget Ranking Member Judd Gregg’s office (emphasis in original):  “The excuse the authorizers are using this time for this $19.5 billion transfer is that it represents the amount of interest “forgone” by the HTF since 1998, even though as a matter of law (TEA-21), it was the explicit and clear intent of Congress that the HTF earn no interest since 1998 (since money was being spent as fast as it could come in and not held long enough to have to compensate with interest). The Bureau of the Public Debt (the only entity authorized to do so) has not done (and is not expected to) a calculation of what interest might have been had the law required that interest be paid.”

In addition, the bill allows for “interest” (keep in mind, the HTF has little or no money in it at the moment) payments to continue to move from the General Fund into the HTF.  This will result in as much as an additional $1 billion transferred to the HTF, which will result in an increase in the debt of the same amount.

3.  Increases Contract Authority by $33 billion in the next two years (and $142.3 billion over the next ten years). To justify this one, proponents point to the recission of funds that occurred at the end of the most recent transportation bill and in the most recent appropriations bill.  Recissions, which essentially take back unused contract authority, are useful tools for legislators who want to make a bill seem smaller by requiring states to return a share of the bill's funding.  The trick works when the funding levels are restored before the recission actually takes effect.  This time around, Congress didn’t have the stomach to restore the authority—until now.  Even better is that the authority being restored for FY10 is actually much higher than the amounts that were rescinded.  But who’s counting?  And restoration of all of this budget authority—which is permission to spend without yet having the money in hand—will lead to additional increases in what the HTF will have to pay out in the future, likely necessitating other transfers of general funds to the HTF in the future.

4.  Employs on additional budget gimmick to free up even more money for the HTF.  This bill also shifts the burden for gas tax rebates (for entities that pay the tax at the pump but are actually exempt from paying, so are eligible to have the taxes they paid returned to them) from the HTF to the General Fund.  This will amount to approximately $1.7 billion being spent out of the General Fund instead of the HTF, resulting in another debt increase of that same amount.

5.  The Senate extends funding for an earmarked account, whereas the House proposes to make the funds available through a competitive process.  Two earmarked accounts in SAFETEA-LU, Projects of Regional and National Significance and the National Corridor Infrastructure Improvement Program (think Bridge to Nowhere), were simply extended by the Senate's bill, meaning that the few states that benefit from the earmarks continue to win.  The House proposed spreading these funds around through a competitive process with all states eligible to receive a portion.  The House approach is far better than continuing to distribute funds in a manner where a few states get the lions share of the money.

All told, these provisions will require the transfer of some $47 billion from the General Fund to the HTF over the next ten years ($19.5 billion in foregone interest and $27 billion between the tax rebate gimmick and the interest allowance), plus the unknown cost of the addition of contract authority.  Not only will this drive up the nation’s debt to even greater heights, it’s an easy way to avoid the heavy lifting to fix the funding mess in which the nation’s transportation program currently finds itself.

Additional Resource:

Congressional Budget Office score of the bill: HERE