Streetsblog Capitol Hill

Source: Donald Shoup

If you drive to work, you can get a $230 monthly parking benefit, subsidized by the federal government and paid through your employer. If you take transit, right now you can get up to $230 per month, but the cap may revert to $120 when the current transit benefit law expires this fall. And if you ride a bike? If your employer can even figure out how the bike benefit works, you get twenty bucks. Don’t spend that all in one place, kiddo. (Full disclosure: even Streetsblog hasn’t worked through the confusing bureaucracy enough to give its bike-commuting staff this benefit.)

Rep. Earl Blumenauer announces the introduction of the Commuter Relief Act outside a metro station. Photo: Meghan Cahill/League of American Bicyclists

The privileged position of cars in the employer-benefits paradigm could soon change. As Rep. Jim Moran (D-VA) said today, “We need to take away subsidies that incentivize people to do just the opposite of what we ought to be doing.” As a congressman representing the second most congested part of the country, Moran said it was “stunning” that the tax code “is designed to subsidize congestion.”

Moran is a co-sponsor of Rep. Earl Blumenauer’s (D-OR) Commuter Relief Act, introduced today as a way to bring some equity to different transportation modes. Why should drivers get up to $230 a month to foster oil dependency, greenhouse gas emissions, and congestion when everyone else gets so much less?

Blumenauer’s proposal contains a menu of options that lawmakers can choose among – or they can choose all of them. They are:

• Transit equity: sets the cap for all transportation benefits at $200 a month – parking and transit.
• Self-employed extension of transportation benefits: gives self-employed workers transit benefits for their work travel.
• Parking cash-out: requires employers who offer a parking benefit to also offer the option to take cash instead (reducing the incentive to drive).
• Van-pool credit: creates a 10 percent tax credit for spending on vanpool services.
• Bike benefit: raises the cap for the bike benefit from $20 to $40 and makes the procedures easier for employers. It also allows commuters to combine the bike benefit with transit or parking benefits, which they’re now not allowed to do.

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Democrats and Republicans are jockeying for the title of Gas Price Slasher, though neither party has a plan that has any potential to reduce prices. While Democrats propose cutting oil company subsidies, Rep. Doc Hastings (R-WA) has introduced three bills to expand oil drilling, saying that they’ll spur employment in the Gulf and reduce U.S. dependence on foreign oil.

Republicans: remember the Deepwater Horizon? Still think it's a good idea to expand oil drilling? Photo: Charlie Riedel/AP

The Natural Resources Defense Council’s David Goldston, in his excellent summary of the legislation on NRDC’s Switchboard blog, says these bills would “open almost all the waters of the U.S. to oil drilling; prevent any judgments from being made about where and when and how to drill; tie the hands of this and future administrations and the courts; and weaken the system of safety and environmental review. Quite a legacy.”

Congress hasn’t passed a single piece of legislation since the Deepwater Horizon disaster last April to make drilling safer. The House passed a safety bill (when it was still controlled by Democrats) but the Senate blocked it. If passed, these bills would be the first action Congress takes on drilling since the spill.

The three bills the Republicans are bringing to the floor – two of them as early as tomorrow – are:

• H.R. 1229, the Putting the Gulf of Mexico Back to Work Act, which would set a 30-day time limit for reviews of drilling permit applications, with automatic approval kicking in after 60 days
• H.R. 1230, the Restarting American Offshore Leasing Now Act, which would mandate that the government sell oil and gas drilling leases in the next year for the central and western Gulf of Mexico and off the coast of Virginia – areas the administration decided not to lease after the Gulf oil spill last year. The bill also blocks court review of controversial environmental impact statements done before the spill.
• H.R. 1231, the Reversing President Obama’s Offshore Moratorium Act, is by far the most controversial (and has such a partisan name it virtually guarantees that no Democrats will vote for it). It would mandate that at least half the unleased area off the East Coast, the Southern California coast, the Arctic Ocean and Alaska’s Bristol Bay be put up for lease sales every five years until there’s nothing left to lease. Most troubling, future administrations could not reconsider or change this mandate, even in the event of a spill, or economic damage to tourism or another industry, or because there was no capacity to handle a potential emergency.

“This is replacing oil policy with a kind of oil mania,” wrote Goldston. It’s as if Hastings set out to prove just how addicted the country is to oil, he went on: “Under these bills, the U.S. would truly be acting like an addict, willing to sell out any principle, dispense with any caution, endanger any asset to get its next fix.”

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President Obama is about to sign the controversial tax-cut compromise into law, now that the House and Senate have both voted in favor of the bill. That means the transit benefit extension, hidden inside the $858 billion package, will become law as well.

Transit riders get to keep their equal tax benefits, thanks to pressure from advocates. Image: Metro Jacksonville

Nearly four years ago, Congressman Jim McGovern (D-MA) introduced a measure to offer tax parity for commuters on different modes. ““It’s time for mass transit commuters to get some respect,” he said. “It’s time to level the playing field between commuters who use mass transit and those that drive alone. It’s time to fix a tax structure that penalizes mass transit commuters.”

The time didn’t come for another couple years, when the stimulus went into effect, including a $230/month cap for tax-free transit benefits (up from $120/month.) But now that transit riders have been enjoying the savings for a couple years, they were loath to give them up while drivers were allowed to keep theirs.

Now they won’t have to.

The Senate voted 81-19 to support President Obama’s plan to extend the Bush tax cuts this afternoon. Some of those Senators probably didn’t even realize that they were also voting to extend equal tax benefits for transit commuters, on par with parking credits.

One Senator was certainly aware. Democrat Bob Menendez of New Jersey told Streetsblog:

New Jersey rail and bus commuters were hit by the largest fare hike in history this year, which is a prime reason that I led the push to deliver this tax relief. Instead of making it more expensive to commute by train and bus, we should be encouraging transit ridership to cut family transportation costs, take cars off the road and clean the air we breathe.

We’ll track this bill as it moves through the House, where the tax cut package makes progressive Democrats breathe fire.

No matter how you feel about extending the Bush tax cuts for the wealthy, there’s one reason to hope it passes: it includes an extension of the transit benefit.

Transit riders' tax benefits hinge on Congress ironing out an agreement on tax cuts for the rich. Image: WOL

The tax-free benefit for transit used to be capped at $120 a month, but the stimulus raised it to $230, on par with driving benefits.

Ya-Ting Liu has been leading the Tri-State Transportation Campaign’s push to extend the benefit. “In addition to this very political debate over tax cuts for the wealthy, there are all these other things are wrapped up in it,” said Liu, “including unemployment benefits, and the tax credit for the working poor, all these other things. It’s become this hodge-podge packet of provisions, some of which we really like.”

If you’ve been following the political tug-of-war over the tax cut provisions, you know it’s been contentious, but the transit benefit could pass quietly as part of the package. Liu says, as far as she’s heard, there are no efforts to strip it out of the larger bill.

The Senate voted overwhelming last night to invoke cloture, ending debate on the bill. We’re still waiting for a final vote.

The real test will come in the House, where Democrats have publicly revolted against President’s compromise on tax cuts with the GOP. The House could vote on the bill as early as Thursday.

Today, U.S. taxpayers see the cost of oil wars in the Middle East taken out of every paycheck, all to feed America’s driving habit. A new proposal for more transparent pricing would shift that burden to the automobile drivers themselves by imposing a new oil security fee at the pump.

That’s just one of the recommendations in Taking the Wheel: Achieving a Competitive Transportation Sector Through Mobility Choice, a new report by the Mobility Choice Coalition. [PDF] The coalition brings together fiscal conservatives, environmentalists, and national security interests to propose transportation reforms that would reduce oil dependence.

Unlike many similar reports, the Mobility Choice study doesn’t put emissions reductions front and center. They’re more interested in fiscal restraint and national security – well-timed considerations for our current political climate.

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The scene of Monday's Metro crash in D.C., where the local transit agency still has 15 outstanding "SILO" tax deals. (Photo: AP)

The D.C. Metro accident that killed nine riders this week has renewed calls for rail safety upgrades and reminders that car travel remains far riskier than transit. But the crash is also shedding light on a problem that goes beyond Washington: tax shelter deals between banks and struggling transit agencies -- deals that were given a retroactive pass by Congress even though the IRS considers them illegal. 

The tax shelters at issue are called "sale in, lease out" deals, also known as SILOs. Starting in the 1980s, local transit agencies began selling rail cars and other equipment to Wall Street firms, which would then turn around and lease the goods back to the agencies.

Why would either side want to get into such arrangements? Sarah Lawsky, an associate professor at George Washington University Law School, has explained the situation in detail. But the short answer is that banks got tax write-offs for their newly leased transit equipment, while local agencies got a cash benefit for giving away tax deductions they could not use.