Streetsblog Capitol Hill

Congress has already delayed their holiday recess by a week, and members are hoping another delay won’t be necessary. Among the yet-unfinished business: an extension of the payroll tax cut. House Speaker John Boehner plans to hold a vote today on his bill, which marries an extension of the payroll tax cut to the controversial Keystone XL pipeline. While expected to sail through the House, such a partisan bill is unlikely to pass the Senate. Enter Senators Claire McCaskill (D-MO) and Susan Collins (R-ME).

Senators Collins, left, and McCaskill at their press conference. Image: STLtoday

Last week, McCaskill and Collins introduced the ambitiously-named Bipartisan Jobs Creation Act. The bill begins with the payroll tax cut and wraps it in additional tax cuts, deregulation measures, and a $35.8 billion infrastructure investment program. The whole thing would be paid for by eliminating some subsidies for oil companies and by instituting a surtax on millionaires’ income—though exceptions will be made for small business owner-operator “job creators.”

The two senators are generally touting this bill as a tax relief bill first, and a pay-your-fair-share bill second—infrastructure gets third-stringed at best, but the provisions are still worth looking into.

The McCaskill-Collins infrastructure plan [PDF] includes $10 billion to capitalize state infrastructure banks and $25 billion for highways and bridges—just highways and bridges. Out of $25 billion—about half an average year’s transportation spending by the federal government—not a dime goes to transit.

By promoting state infrastructure banks, McCaskill and Collins are throwing their weight behind the Republican vision for infrastructure spending and against the President’s. The President and a number of other prominent figures have advocated to no avail for the creation of a National Infrastructure Bank, and Politico reports that they’ll try again next year—to the familiar tune of $10 billion. Meanwhile, House Transportation Committee Chair John Mica has included support for state infrastructure banks—not a national one—in his reauthorization bill. The senators opted for state I-banks in this case because they are an existing program that could be expanded, while “there is no consensus yet on how to address a National Infrastructure Bank,” according to Senator McCaskill’s press secretary, John LaBombard.

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If you live in Durham County, North Carolina, Montcalm County, Michigan, Cincinnati, Ohio, or anywhere in Washington state, today is Election Day – and you’ve got decisions to make about transit.

Rally for Proposition 1 in Clark County, WA to prevent deep transit cuts. Photo: Preserve Our Buses

There are six ballot initiatives up for a popular vote today that will determine the future of transit service in these areas. They follow two referenda last week in Colorado on sales taxes to pay for transit service. One, to implement a new 0.35 percent sales tax increase in Avon, CO to pay for bus replacements, bus stop improvements, and other expenses, was voted down 38 percent to 62 percent. But another measure, in Sterling, CO, that merely sought to extend indefinitely a 0.1 percent sales tax increase to fund the transit system, was approved 70 percent to 30 percent.

So how will transit-related measures fare today? Here’s a rundown of what’s on tap (thanks to the Center for Transportation Excellence for collecting this important information):

A “Candy Store” for Buses and Bikes in Seattle, WA: Seattle’s going right to the source in proposing a $60 increase on the vehicle license fee. The allocation of the $204 million in expected revenues (over a decade) is supremely civilized: 49 percent to transit, 29 percent to road maintenance and safety, and 22 percent to bike/ped infrastructure. Opponents say it’s a “candy store” for special interests. The campaign chairman of “Citizens Against Raising Car Tabs” takes a page out of the Tom Coburn/Rand Paul playbook by blaming bike/ped spending for crumbling bridges, too. Proponents of the measure say it corrects mistakes of the past, when the city declined to make necessary investments and got “four decades of political paralysis and gridlock” as a result. They say revenues from the “car-tab” fee would improve transit, double the annual investment in sidewalks and repaving projects, and expand “family-friendly bicycle infrastructure.” More on other Washington state measures below.

Cincinnatians for Progress logo for fight against streetcar ban.

Streetcar Bans for Cincinnati, OH: Cincinnati is voting on a different kind of measure. This is a city charter amendment to deny funding for transit, not provide it. The amendment would prohibit the city from spending or borrowing money to move forward the streetcar project planned for downtown. The ban would last until 2020. It’s the second time in two years Cincinnati voters have gone to the ballot to decide whether the city should continue with its plans for a streetcar. Transit advocates call the measure “disastrous” because it would keep the city from taking advantage of new technologies and potential funding sources to build commuter and light rail, in addition to the streetcar, and it could “undermine the city charter… by usurping the lawful functions of elected officials.” As of about a week ago, streetcar advocates had raised about 800 times more money than Citizens Against Streetcar Swindle, which had raised a total of $116. CASS is trying to tie streetcar money to layoffs for police officers and firefighters.

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Tuesday night, the Senate blocked a vote on the president’s jobs plan. As had been forecast, Republicans voted unanimously against the plan, and they weren’t alone: Two Democrats joined them – Sens. Jon Tester of Montana and Ben Nelson of Nebraska. Now it’s on to Plan B, which involves breaking up the bill into pieces to be voted on separately.

Sen. Schumer's plan to salvage the jobs bill wouldn't resuscitate plans for $50 billion in transportation spending. Photo: AP

New York Sen. Chuck Schumer has proposed narrowing the bill down to two parts – one favored by Democrats, the other by Republicans. Under the plan, an infrastructure bank would be created in the model endorsed by the president and the Kerry-Hutchison BUILD Act. In exchange, there would be a tax holiday for corporations to bring back to the U.S. profits they made overseas.

Obama’s bill had also called for a $50 billion investment in transportation infrastructure, and that appears to be dead as the Senate pursues Schumer’s plan. The House had dismissed the transportation component long ago, with Republican leadership saying they might hold a vote on the pieces of the bill that appeal to them (surprise — stimulus spending isn’t one of them). Meanwhile, some insiders say that Republicans in the House are getting serious about passing a transportation reauthorization before March 31 so that they can show that they, too, are serious about job creation.

Of course, the path they seem to be setting out on involves paying for a higher level of transportation spending with oil drilling, a proposal that’s sure to run up against massive Democratic opposition and possibly even a presidential veto.

And many think that not much is going to happen on any of this until the super committee comes back with its proposals for deficit reduction before Thanksgiving.

Back to the Schumer jobs plan: We’ve written a lot, and will be writing more, about the pros and cons of an infrastructure bank. But what about this idea of repatriating overseas profits?

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President Obama has proposed a plan to pay for the American Jobs Act, the $447 billion bill to create 1.9 million jobs, including $50 billion for infrastructure. His “pay-for” plan includes limitations on itemized deductions for the wealthy and the elimination of some tax loopholes for oil and gas companies.

Republicans have never met a problem that couldn't be solved with a little more of this.

Republicans have a different idea, though: oil drilling. Several GOP representatives have introduced bills to expand fossil fuel extraction and use the proceeds to fund transportation infrastructure.

Somehow, whatever the problem is in Washington, Democrats want to solve it by raising taxes on the wealthy, and Republicans want to solve it with oil drilling.

When it comes to funding a quick jolt to the economy, it’s pretty clear that oil drilling won’t really cut it. “Any royalties from any new energy development wouldn’t start flowing to the Treasury for years,” said Erich Zimmermann of Taxpayers for Common Sense. “Essentially this would be like spending money now to be paid for with revenues that may or may not be realized at some future time. Sounds like a recipe for a doubling down on our current deficit mess.”

Some speculate that a GOP oil drilling plan would explain the recent news that House transportation leader John Mica, with permission from his party’s leadership, is looking to raise transportation funding levels by an extra $15 billion a year in his proposed six-year reauthorization bill. After all, they’ve said that raising the gas tax is off the table.

A plan to pay for transportation and infrastructure through oil drilling would erode the entire basis of the transportation funding system, which historically rests with the Highway Trust Fund, paid for with fuel taxes and a smattering of other fees on driving and vehicles. In fact, Congress requires that at least 90 percent of what the Highway Trust Fund spends must be generated from taxes “related to the purposes for which such outlays are or will be made.”

“Generating additional revenues from an increase in energy production, therefore, would likely violate this requirement and at the very least result in an override of the Budget Act,” Zimmermann said, “but would also call into some question the importance of the ‘user pays’ principle itself as it relates to paying for the transportation system.”

Whether or not Mica is planning on paying for his transportation bill with oil drilling is a matter of speculation at this point. But several other Republicans have already introduced bills to that effect.

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Deron Lovaas is the federal transportation policy director for the Natural Resources Defense Council. This story is cross-posted on his blog.

As debt negotiations continue in Congress, President Obama appears to be sticking to his guns on repealing the enormous tax breaks enjoyed by the oil and gas industry. The industry takes advantage of tax breaks dating back to the dawn of the oil age – the kind of fiscal encouragement intended to support nascent businesses, not consistently profitable ventures.

Getting rid of tax breaks for the multi-billion dollar oil industry is one of the few debt-reduction schemes that people can cheer about. Even George W. Bush suggested rolling back tax breaks for the oil industry in 2006. Why has Congress not managed to follow through on a popular idea that would create billions of dollars of yearly revenue for the government (and that could be sensibly plowed into the underfunded transportation program)? In part because of the efforts of The American Petroleum Institute (API), the powerful trade association that lobbies on behalf of the oil and natural gas industry.

API’s job, like that of any trade association, is to cater to the lowest common denominator – to protect lagging companies and maintain the status quo that will allow them to stay in business, no matter how outdated their business model is.

In this way, associations are even more deadly than individual companies. Under API President Jack Gerard’s leadership, for example, API no longer considers research into alternative energy a priority. The group is focused today on opening every inch of American soil and coastal waters to drilling, and ensuring that Big Oil hangs on to its precious subsidies.

API claims that losing the subsidies will put Americans’ retirement savings at risk, because many 401(k) plans hold stock in oil and gas companies. This argument is sheer nonsense.  Pension funds hold stock in many blue-chip companies. Is API suggesting, as Steve Ellis of Taxpayers for Common Sense asked, that the government should make a practice of subsidizing profitable companies in order to bolster pension funds? If I may quote Joe Biden: C’mon man. Let’s get real.

API isn’t concerned about America’s future any more than they are concerned about the pension plans of those poor, hard-working teachers and police officers they mention in their ads. Their goal is to lock in immediate payoffs for their clients – oil and gas billionaires.

Retaining massive subsidies for a mature industry while slashing funding for programs that will define our future — education, health care and transportation – is a short-sighted way to govern. What does America gain by handing over billions of taxpayer dollars to the oil and gas industry? A continued, dangerous dependence on a commodity we cannot control.

Lisa Margonelli, director of the New America Foundation’s Energy Productivity Initiative, hit the nail on the head on the problem with Congressional action on oil subsidies. Yesterday, she wrote in Politico that ending Exxon’s unjustifiable tax breaks would be nice, but there are far more egregious examples of U.S. government handouts to big oil:

Oh well, never mind that. Oil drilling permits for everybody! Photo: Steadfast TV via National Geographic

Really, a bigger problem is that the U.S. taxpayer simply doesn’t charge the oil companies enough for the oil that we own. A 2008 GAO report found that the US government “take” from oil sales in the Gulf of Mexico ranked 93rd out of 104 countries that sell their oil. THAT subsidy to the oil industry is huge, much larger than the $2.1 billion that is the subject of today’s Congressional theater.

The really problematic U.S. oil subsidies are not even on the table. Here we’re discussing a relatively small $2.1 billion in subsidies, when today American drivers will spend $1.5 billion on gasoline alone. Why? Because even more than we’ve subsidized oil production, we’ve subsidized oil demand. We encourage oil consumption, and even throw money at it through everything from paying for highways without charging for their use, to giving tax write offs for parking spaces and fuel consumption, to selling auto insurance in a “one-size-fits-all” price regardless of whether you drive 3000 miles or 25,000 miles per year, to prohibiting private mass transit systems like jitneys from competing in many cities.

And then there’s the massive amount of money we spend on maintaining military hegemony in the oil producing and shipping hot points around the world without adding that fee to the price of gasoline. These are the subsidies we really need to address and Congress should drop the charade and get to work.

When you add that all up, gas is a whole lot more expensive than even today’s prices would suggest. The late Milton Copulos, president of the National Defense Council Foundation, estimated that if you add in “things like the cost of defending the flow of oil in the Persian Gulf, the loss of domestic jobs and investment, the uncertainties that enter the economy and the costs related with oil supply disruptions,” gas would cost $11.06 a gallon. And that was in 2006.

We pay for those things out of our income taxes (and our grandkids are paying for them through our massive debt load). And to think drivers say that they pay the full cost of the infrastructure that supports their driving habit. We’re all paying for it.

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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.