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- Feb. 20, 2014 -


Supply Chain Graphic of the Week: Where Will US Highway Funding Come From?


CBO Presents Tough Look at Expected Shortfal Between Revenue and Planned Spend; Something has to Give


By SCDigest Editorial Staff



There is perennial debate relative to US logistics infrastructure, whether that is in claims that major improvements are needed to keep the US competitive to seeing new infrastructure spend as an important jobs creator and more.

All those discussions ought should be informed by the graphic below, produced a couple of weeks ago by the (officially at least) non-partisan Congressional Budget Office (CBO).


It shows the projected budget condition of the so-called highway trust fund that provides direct federal money to pay for some infrastructure projects (e.g., federal highways) as well as sending money to the states for some of their expansions and improvements.


It is not a pretty picture.



Source: US CBO

As can be seen, starting in 2015, the CBP says that under the status quo, the trust find will run a deficit of a few billion dollars. That will grow to some $90 billion by 2022 on the current course - although that actually can't happen.


Either the federal government would have tot transfer money from the general fund to the highway trust fund to make up the gap, additional revenues for the fund would have to be raised, the spending on infrastructure would have to be scaled back, or some combination of all three approaches. The fund itself cannot run a deficit.


Which option do you prefer? Many politicians and others, including the American Trucking Associations (ATA), are in favor of some substantial increase in gasoline and diesel taxes at the pump to raise the revenue line - but politicians are very reluctant to go there due to votes dislike of such increases, especially in a still tepid economy.


We have to question the CBO's revenue projections as well, wondering if receipts will really stay flat over the next eight years as the CBO forecasts, given continued increases in fuel mileage, alternative fuel vehicles, etc. that could reduce fuel consumption and thus tax collection. It is already happening.


The main takeaway, SCDigest believes, is that it is going to be tough enough to find a way to maintain current spending levels, as the CBO chart indicates. The idea that there will be much additional infratructure spending to improve highway conditions while creating lots of jobs is just not realistic.


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