Obama Releases Grow America 2.0

U.S. Secretary of Transportation Anthony Foxx released details on an Administration proposal for a sixyear, $478 billion surface transportation reauthorization. The plan, called Grow America 2.0, would spend $317 billion on highway programs, with the vast majority going to improving and maintaining the infrastructure that is critical to the national economy and freight movement. Additionally, $115 billion would be allocated to transit systems, $18 billion would be dedicated to a new multimodal freight program, and $7.5 billion would go to the TIGER (Transportation Investment Generating Economic Recovery) competitive grant program.

Paying for a long-term highway program extension remains a sticking point for both political parties. The Grow America 2.0 proposal would pay for approximately half of the program with a onetime-14% tax on the overseas earning of U.S. corporations. Spending on highway programs historically has been funded with taxes of 18.4-cents per gallon on gasoline and 24.4-cents per gallon on diesel, or through transfers from the U.S. Treasury’s general fund. However, current projections for the next ten years are that income for the Highway Trust Fund will fall $12 billion to $15 billion short each year of the amount needed to maintain and improve the U.S. highway system. In order to fill that gap, Congress will be forced to either raise the federal gas tax or find alternative funding means.

Congressional leadership did not act on the Administration’s proposal for a four-year, $302.3 billion highway program extension last year. Rather, they passed a 10-month extension. With the funding for highway programs set to expire on May 31, it is unlikely that Congress will consider Grow America 2.0 either. Republican leadership in the House and Senate are currently preparing a plan to provide longterm funding for highway programs through the Congressional budget process.