The Federal Highway Trust Fund will live on for another 6 months or so:
In April, Mr. Obama sent Congress a proposed transportation program that would spend $302 billion over four years, financed both by traditional gasoline taxes and the elimination of some corporate tax breaks. Senator Bob Corker, Republican of Tennessee, and Senator Christopher S. Murphy, Democrat of Connecticut, also proposed an increase in the gas tax to make up for more efficient cars and trucks that have sapped tax revenues as infrastructure needs have soared.
But Republican leaders have adamantly opposed anything that looks like a tax increase. Few Democrats have embraced Mr. Obama’s plan in an election year either.
The path to averting a funding crisis now appears clear, Senate Democratic and Republican aides say. With legislative days running short, Senator Harry Reid, Democrat of Nevada, the majority leader, is likely to ignore the bipartisan highway funding bill that emerged last week from the Senate Finance Committee and put the House’s version to a vote, likely just before the long August recess. That would obviate the need for House-Senate negotiations to iron out the differences between the bills.
The House’s overwhelming passage — 181 Republicans joined 186 Democrats to vote yes — was another in a series of defeats for conservative groups like Club for Growth and Heritage Action, the political arm of the Heritage Foundation, both of which had said they would score lawmakers negatively for voting for it. The most ardent conservatives have said the highway fund should go broke and responsibility for highways and bridges should return to state and local governments.
An increase in the gas tax is one of the more economically efficient policies that Congress could pursue. User fees, aka tolls, are also an efficient way to pay for roads.
Two other things:
1. According to Josh Barro 3 days ago (This road work made possible by underfunding pensions), the new funding will lead to long term problems:
The latest proposal [for the Federal Highway Trust Fund ], which passed the Republican-controlled House Ways and Means Committee on Thursday, works like this: If you change corporate pension funding rules to let companies set aside less money today to pay for future benefits, they will report higher taxable profits. And if they have higher taxable profits, they will pay more in taxes over the 10-year budget window that Congress uses to write laws. Those added taxes can be diverted to the Federal Highway Trust Fund
Unfortunately, this gimmick will also result in corporations paying less in taxes in later years, when they have to make up for the pension payments they’re missing now. But if it happens more than 10 years in the future, it doesn’t count in Congress’s method for calculating budget balance. “Fiscal responsibility,” as popularly defined in Washington, ignores anything that happens after 2024.
A higher gas tax and tolls also happen to be fiscally responsible.
2. Remember when states were in charge of environmental policy? I don't either since it was before 1970, but I've read and taught that it didn't work so well. States competed for firms by having low environmental standards. So, how would this work if states were in charge of their portion of interstate highways? My guess is that it wouldn't work out well as some states competed to attract firms with better roads and others competed with by having crappy roads (the motivation for this is something I don't really understand).