core sector communique

If the Debt Ceiling Isn’t Raised, What Will Happen to U.S. Infrastructure?

 Posted on Thursday July 28th by Eric Jaffe

The Bipartisan Policy Center has released a report  on what will happen to various federal programs if the United States fails to raise the debt ceiling by August 2. After that date, according to the report, U.S. spending will be limited to its intake of roughly $172 billion for the rest of August. That means funding to certain programs will abruptly cease. The question, of course, is which programs.

Under the report’s first scenario, which funds “big ticket” programs like Social Security and Medicare and Medicaid, all but five major federal programs are cut off from Uncle Sam, including transportation. The following list details the damage:

• Military Active Duty Pay $2.9 b
• Veterans Affairs Programs $2.9 b
• Federal Salaries + Benefits $14.2 b
• Dep. of Education (e.g., Pell grants, special ed. programs) $20.2 b
• Food/Nutrition Services + TANF $9.3 b
• Dept. of Labor (e.g., training and employment services) $1.3 b
• Dept. of Justice (e.g., FBI, federal courts) $1.4 b
• Dept. of Energy (e.g., energy research, national nuclear programs) $3.5 b
• Health and Human Services Grants $8.1 b
• Federal Highway Administration $4.3 b
• Environmental Protection Agency $0.9 b
• IRS Refunds $3.9 b
• Small Business Administration $0.3 b
• Federal Transit Administration $1.3 b
• HUD Programs(e.g., housing assistance for the poor) $6.7 b
• Other Spending $52.8 b

For infrastructure advocates that’s not a pretty picture. The Federal Highway Administration would be out $4.3 billion, the Transit Administration would lose $1.3 billion, and HUD programs would be short $6.7 billion. And that’s just forAugust. That may mean immediate employee furloughs and stop-work orders on big projects, as with the current F.A.A. shutdown. Even in a second scenario offered by the report that’s kinder to the poor and keeps HUD, the highway and transit authorities get the axe. 

Today’s Washington Post ran a collection of responses to the crisis by federal workers whose roles are potentially on the chopping block. They are unanimously (and anonymously) not happy:

“I report to work at 4:30 a.m., work 8.5 hours per day, including weekends and holidays. My net pay is about $45,000 per year. However, I believe I will be a scapegoat for the politicians who need to prove that they are controlling expenses.” — Transportation Security Administration, New York

“I think it’s obvious that if we reach August 2nd without a deal, the government will have to prioritize obligations. We need to know where we fall in such a priorization, so we can prepare for the possibility of a furlough.” — Housing and Urban Development, the District

Assuming some compromise is reached — no longer the safe assumption it seemed to be weeks ago — the next hurdle for infrastructure will be the long-term transportation reauthorization. The competing plans, right now, are the six-year, road-heavy House proposal that limits spending to what the Highway Trust Fund takes in, and a general outline of a two-year plan by the Senate that does not yet have all funding in place. The current authorization expires September 30.

Also expiring that day, according to Politico (via Streetsblog), is the federal gas tax. By coincidence, on September 30 all but 3.4 cents of the 18.4-cent tax will expire. Regular readers of this space know the gas tax is already both too low and politically untouchable. The fear now is not that lawmakers will refuse to raise the gas tax — that’s a certainty — but that they might even cut it entirely. The impact of such a move on a long-term transportation deal is hard to predict, but probably means a lot more walking and Segways.

If you thought the last few years were bad for infrastructure, you may not want to see the next few months.