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Highway crisis looms as soon as August, U.S. warns

  • President Barack Obama speaks about transportation and the economy, Tuesday, July 1, 2014, at the Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs.  (AP Photo/Charles Dharapak)

    President Barack Obama speaks about transportation and the economy, Tuesday, July 1, 2014, at the Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs. (AP Photo/Charles Dharapak)

  • President Barack Obama waves after his remarks about transportation and the economy, Tuesday, July 1, 2014, at Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs.  (AP Photo/Charles Dharapak)

    President Barack Obama waves after his remarks about transportation and the economy, Tuesday, July 1, 2014, at Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs. (AP Photo/Charles Dharapak)

  • President Barack Obama speaks about transportation and the economy, Tuesday, July 1, 2014, at the Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs.  (AP Photo/Charles Dharapak)
  • President Barack Obama waves after his remarks about transportation and the economy, Tuesday, July 1, 2014, at Georgetown Waterfront Park in Washington. The president said 700,000 jobs could be at risk next year if Congress doesn't quickly agree on how to pay for highway and transit programs.  (AP Photo/Charles Dharapak)

Gridlock in Washington will lead to gridlock across the country if lawmakers can’t quickly agree on how to pay for highway and transit programs, President Obama and his top officials warned yesterday.

States will begin to feel the pain of cutbacks in federal aid as soon as the first week in August – peak summer driving time – if Congress doesn’t act, Transportation Secretary Anthony Foxx said in a letter to states. That’s because the balance in the federal Highway Trust Fund is dropping and will soon go below $4 billion, the cushion federal officials say is needed for incoming fuel tax revenue to cover outgoing payments to states.

The cuts will vary from state to state, but will average about 28 percent, Foxx said at a breakfast with reporters. By the end of August, the trust fund’s balance is forecast to fall to zero and the cuts could deepen.

A second deadline is coming Sept. 30 when the government’s authority to spend money on transportation programs expires.

As many as 700,000 jobs could be at risk, Obama told a crowd of about 500 gathered beneath the Key Bridge that spans the Potomac River and joins the District of Columbia with Virginia. “That would be like Congress threatening to lay off the entire population of Denver, Seattle or Boston,” he said.

Revenue from federal gas and diesel taxes continues to flow into the trust fund, but the total is expected to be about $8 billion short of the transportation aid the government has allocated to states this year. Over the next six years, a gap of about $100 billion is forecast if transportation spending is maintained at current levels.

At the same time, transportation experts and industries that depend on the nation’s highways to get their products to market are calling for greater spending on transportation to shore up aging roads, bridges and tunnels and to accommodate population growth.

“Right now there are more than 100,000 active projects across the country where workers are paving roads and rebuilding bridges and modernizing our transit systems,” Obama said. “And soon states may have to choose which projects to continue and which ones to put the brakes on because they’re running out of money.”

Already some states are cutting back on construction projects because of the uncertainty of federal funding, Foxx said. “I think people will see it in the traffic. I think people will see it in the condition of our roads, he said.

The reason for the shortfall is that revenue from the federal 18.4-cent-a-gallon gasoline and 24.4-cent-a-gallon diesel tax hasn’t kept pace with transportation needs. The taxes haven’t been increased in more than 20 years, while construction and other costs have continued to go up.

The most obvious solution is to raise fuel taxes, which is what several blue-ribbon commissions have recommended and business groups such as the U.S. Chamber of Commerce and the American Trucking Associations have urged. But neither political party nor the White House wants to get out front on a proposal to raise taxes in an election year. Foxx didn’t rule out Obama signing legislation that raises the gas tax, but he indicated the administration doesn’t believe there is enough support in Congress to pass a gas tax increase.

“We have said if Congress acts on something, we’ll keep an open mind,” Foxx said.

Instead, Obama is pushing a plan to close tax loopholes and use the revenue to pay for increased transportation spending for the next four years.

“We have a proposal we think is politically acceptable,” Foxx said.

House Ways and Means Committee Chairman Dave Camp a Michigan Republican floated a similar proposal in April. But many Republicans say they’d rather offset increases in transportation spending with cuts to other government programs rather than tax increases. And many lawmakers say they want to continue to the trust fund’s “user pays” principle by raising money from people who most use the roads, if not through a gas tax then some other means.

Nearly a dozen proposals to address the problem have been floated in Congress, but none has gained traction. House Republicans recently proposed a short-term patch based on savings associated with ending Saturday mail delivery by the postal service. The plan died a quick death when it became clear that many GOP lawmakers wouldn’t support it.

Senate Finance Committee Chairman Ron Wyden, an Oregon Democrat, offered a plan last week to keep transportation aid flowing for another six months. The plan, which included raising taxes on large trucks, ran into opposition from Republican senators. He dropped the truck tax, but Republicans say they want more spending cuts as part of the package. Further action is expected when Congress returns to work from a Fourth of July break.

In the House, Camp has said he will offer a new plan to shore up the trust fund next week.

The federal Highway gas tax was created to originally retire the Federal War Debt. President Eisenhower proposed the Interstate Highway system and the Republicans fought it tooth and nail claiming the Interstate Highway system would be an interferance in states rights and a waste of Federal Money. Maybe it's time to use the gas tax money to retire the Federal debt again and let the states figure out how to pay for the entire bill. Maybe go back to the old method of toll roads and let the users pay for it.

What a hypocrite. Only $9B of the $1T stimulus went to fixing highways and bridges. Most of the rest of it went to cronies and unions and supporters of Democrats.

democrat gridlock. If you believe this AP story then you are a LIDV. If you do know what has happened to legislation reported out of committee you may be informed. Ask yourself this question how many working days are left in the whole year for the democrat controlled Senate. Ask yourself this question - When was the last time the democrat controlled Senate passed a budget with the House that went on to be signed by the president?

This is why I will be outsourcing 50 jobs offshore...no obamacare...no regulation...more profit. You did it to yourself, America.

Sure you will...

Why not make it 51 jobs and go yourself.

LMAO! Move over Minnie Pearl, cuz Bette Davis is now inna' house!

I am used to the rhetoric, they used to tell my ancestors to go back to Africa...

Izzat where you're taking them 50 jobs, Laurie?

You should be used to it, you sure know how to initiate it.

Tillie, is 51 jobs like 57 states that Obama visited? Perhaps the Navy Corpse man is living off shore working as well. But Tillie, telling Laurie to go herself and she is an African American, tsk, tsk........sounds "racist" to me.

No, it was done to us by 1.) sociopathic businesses who don't give a damn about the people who buy their products and 2.) the corporatist politicians who follow the orders of their contributors instead of their constituents. Go ahead and make your money with cheap overseas workers. Then tell us what you sell so we can be sure not to buy it.

"Sociopathic businesses"? Isn't that a little over the top. If they did not care about their customers there would be no customer service. That sounds more like the private sector. And, in reality, you don't have to buy anything.....it is your choice.

Close the tax loopholes. Business wants the government to spend the money on infrastructure but they don't want to pay for it. As many companies have already done, Walgreens appears to be joining the group of relocating their corporate headquarters to Switzerland. $72 billion in sales last year and the tax loophole known as “tax inversion” would allow it to continue cashing in on U.S. profits, while dodging an estimated $4 billion in taxes over the next five years. That's $4 billion from ONE company.

It is NOT "dodging" it is smart business sense. This President has NOT been business friendly. He has attacked companies at every turn. Many have said, "enough is enough". If you don't like what Walgreens has done, don't spend your money there. People are driving less and spending less. Obama and radical environmentalists pushing anti fossil fuel energy agendas impact fuel prices. If less people drive less miles, you have a shortfall. You can't have your cake and eat it too. Wages are stagnant and unemployment is high because of Obama and his policies. He cares not about the average person on Main Street, he only cares about his ideological agenda. And as far as "if Congress won't act, I will"....that is hyperbole, rhetorical threats and it is un-Presidential. He needs to understand that under the Constitution, he does not get whatever he wants and get to do whatever he wants. He is 1/3 of the government and his ONLY clearly defined responsibility is to live by the Constitution and uphold ALL laws, not the ones he chooses. All crises presently can be traced to and blamed on Obama and his unwillingness to work with anyone, just rant on about what he wants. That is not good for anyone.

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