Administration won’t rule out post office cuts to fund highway bill

The Obama administration is not ruling out a Republican proposal to fund the nation’s highways with cuts to the U.S. Postal Service, the head of the Transportation Department said Tuesday.

DOT Secretary Anthony Foxx emphasized that he and President Obama strongly prefer a four-year plan to refill the nation’s highway trust fund with new corporate tax revenues, warning Congress to end the “gimmicks” when it comes to transportation funding. 

{mosads}But he also stopped short of saying the administration would reject the GOP’s one-year fix, which is offset largely by ending Saturday letter deliveries. 

“We have an approach that we favor, which is pro-growth business tax reform,” Foxx told reporters after a closed-door meeting with House Democrats in the Capitol.

“We think it’s a smart approach that addresses the principles that people on both sides of the aisle have expressed to us, including not raising [tax] rates and also not increasing deficits,” he continued.

“[But] all along, we’ve said that if there are other ideas that emerge … we would be willing to consider those ideas,” Foxx added. “And I suppose that’s where we are.”

Lawmakers in both parties and chambers are grappling with ways to extend the DOT’s highway trust fund beyond August, when the money is expected to run out. In April, the Congressional Budget Office reported that the fund will run $10 billion shy of meeting existing obligations in fiscal 2015, with the shortfall rising to $55 billion in five years.  

GOP leaders estimate that their proposal to end Saturday delivery of first-class mail would raise $10.7 billion over a decade – enough to extend the highway fund for as long as a year. They’re quick to note that Obama included the postal reform provision in his latest budget blueprint.

“Given the limited window for action, we believe it is important that an offset be simple and have the support of the administration and congressional Republicans,” House GOP leaders wrote to members of their conference last month.

But Democrats are pushing back hard. Sen. Patty Murray (D-Wash.), head of the Budget Committee, said Tuesday that the GOP’s strategy is “the wrong way to go.”

Rep. Xavier Becerra (Calif.), chairman of the House Democratic Caucus, said Republicans are playing a “zero-sum game” by eliminating one program, Saturday delivery, to fund another, highways.

“We don’t have to pit one American against another to make the program work,” he said.   

The Obama administration is pushing an alternative plan that fills the trust fund for four years, including annual increases funded by corporate tax hikes.

“We’ve had 27 Band-Aids over the last several years: Eighteen continuing resolutions in transportation and nine extensions,” Foxx said Tuesday. “And a 28th and 29th short-term measure will be more of the same for state and local governments. It will not give them the ability to make long-term plans.”

The highway trust fund has historically been filled by the federal gas tax. But that tax – currently 18.4 cents per gallon – hasn’t been raised in more than two decades, while advances in the fuel efficiency of automobiles have reduced the revenues feeding the fund.

Those trends, combined with the rising costs of infrastructure projects and upkeep, have forced lawmakers to seek alternative sources of revenue.

“We’re driving less and we’re driving more fuel efficient vehicles,” Becerra said Tuesday. “And so the reality is you can’t just look at the gas tax as a solution because it’s going to continue to draw down in terms of the amount of money you can rely on.

“We have to be more innovative.”