Even if you don’t follow the normal news cycle – and we wouldn’t blame you if you don’t – matters in Washington are once again thrusting themselves into our lives. As lawmakers battle over the debt ceiling, the economy is once again held hostage. This begs the question: Haven’t we seen all this before? Surely the national debt is a problem, but money spend should be money paid.
Once again Washington D.C. battles, with Democrats and Republicans lodging accusations. What are the latest updates on fiscal policy in our nation’s capital? And how do they impact trucking companies? Furthermore, we’ve all still been waiting patiently for the infrastructure bill to pass. What’s the latest on that? Let’s dive in.
The Debt Ceiling
At the same time every year the United States must pay on its debts. Just like every citizen in the country, bills have got to be paid. Yet lawmakers in Washington continually play with this obligation, using it as political leverage. Wondering what exactly the debt ceiling is?
In short, the debt ceiling is a restriction Congress puts on the federal government that relates to how much money it can borrow to pay its bills. The cycle essentially looks like this: The U.S. borrows money. When the U.S. runs out of money, Congress votes to lift the debt ceiling, which then allows the U.S, to borrow more money.
There is a law stating that whenever the Treasury Department runs up against the debt ceiling, it must ask Congress to raise it. The main reason for this is because the government spends more money than it takes in. This is not a responsible way to run a household, but whoever called the government responsible?
Why the Debt Ceiling Matters
To be sure, the debt ceiling is a purely man-made problem. It was first past in 1917 to reign in federal agencies that were ignoring Congress’s constitutional power to designate how much money the government can spend. It was amended in 1939, with World War II raging, so that the treasury could have more leeway in how it applies the debt ceiling.
The debt ceiling began to matter when the federal debt first hit $1 trillion in or around 1980. Ronald Reagan famously made the debt ceiling one of his primary campaign issues. Many would say that it was the debt ceiling that got him re-elected that year. Ironically, the debt would triple by the end of the 1980s.
Clearly, the debt limit needs to be raised. But the question remains: how often can Congress raise it? The answer is essentially whenever they want. To-date, the debt ceiling has been raised, modified, or temporarily suspended 98 times. In the 1980s and 90s, raising the debt ceiling was a routine maneuver. It was regularly passed without making news. How times have certainly changed.
The Infrastructure Package
President Biden’s domestic agenda includes some truly eye-popping numbers. The infrastructure proposal by itself amounts to around $1 trillion in spending. But this is just he most recent number. As negotiations have dragged on the top-line number has moved from $2.2 trillion to just under $1 trillion to as much as $6 trillion and now back down to $1 trillion. And keep in mind, the dollar figure is just the starting point.
One would think as an outsider looking in that it shouldn’t be a problem to pass with Democrats in control of the White House and Congress. But unfortunately, it isn’t that clear-cut. Democrats are well-known for squandering opportunity when they have power. They simply lack the discipline that Republicans have when it comes to getting bills passed. The problem, many insiders would say, is that the Democrats are very good at going to war with themselves.
Still, the infrastructure bill is important for many reasons. Trucking companies and trucking advocacy organizations have been pushing hard to get the bill moving. The transportation sector has much to gain from better roads and highways. And many would argue this funding is long overdue.
But that is just on the basic infrastructure needs. The law, if passed, would spend a lot more on other initiatives not related to infrastructure.
Wrangling Continues on Capitol Hill
The roadway and transportation aspects of the American Jobs Plan are ambitious in and of themselves, but that is just half the package. The other half would be spent on a whole plethora of new initiatives. They include everything from boosting manufacturing to investing in critical technologies. President Biden has said that they will pay for these initiatives by raising taxes on corporations, which would add more than $2 trillion over the next 15 years and essentially pay for the new spending.
Now, the question is where do these plans stand? Currently, the Democrats have linked the infrastructure bill to another spending package they have put together under something called reconciliation. This is a little-known budgetary maneuver that allows the Democrats to pass laws under budget bills with a simple majority in the Senate. Otherwise, with the filibuster rule in effect, Democrats must get at least 10 Republicans to join them in passing the bill. And the chances of that? Next to nothing.
The problem is that not everyone in Congress is on board with raising new taxes, and not just Republicans. Two prominent Democratic senators, Joe Manchin of West Virginia and Krysten Simena of Arizona have both publicly stated they do not support tax hikes of any kind to pay for the additional spending, and both moderate and progressive Democrats are at odds on not just how much to spend, but how to spend it.
Historic Policy Efforts on the Brink
Both the infrastructure and reconciliation bills are by themselves epic lifts. Many would consider them historic policymaking, if for nothing else than their breadth and scope. The problem now lies in the debt ceiling battle. It appears the annual fight over the debt ceiling is now encompassing the battle over Biden’s policy initiatives.
The infrastructure bill currently remains on the two tracks it has been on since the spring. The giant but traditional infrastructure bill – for roads, bridges, broadband internet, and the like – has passed the Senate. That track could be completed if the House essentially rubber-stamps the Senate bill. This is the approach preferred by moderate House Democrats.
But the other track has liberal House Democrats pushing Speaker Nancy Pelosi (D-CA) to combine the infrastructure bill with the reconciliation bill. They essentially want to hold the infrastructure deal hostage to ensure they get what they want out of the reconciliation bill. Then throw in the debt ceiling, which needs to be figured out before the other two deals are passed, and time quickly runs out.
By the time you read this, we will know whether Congress managed to get a new spending bill passed or if the government shut down. But it is likely we still will not know what the fate of the infrastructure or reconciliation bills are. Only time will tell how it plays out.
Trucking Advocates Push Back on Truck-Only Tax
Meanwhile, trucking companies and associations representing the commercial trucking sector have come out hard against a general fuel tax that targets trucks. During a May 18 Senate Finance Committee hearing, the Owner-Operator Independent Drivers Association (OOIDA) submitted a letter to legislators calling truck-only taxes discriminatory.
They specifically have a problem with the truck-only vehicle miles traveled (VMT) tax as a funding Highway Trust Fund funding mechanism. The battle started when Sen. John Cornyn (R-Texas) said during the hearing that big trucks do “six times more damage to roads and bridges than private vehicles.” As a result, he proposed Class 7 and 8 CMVs pay 25 cents per mile to help pay for infrastructure improvements.
In response the American Trucking Association (ATA) responded with a Tweet provocatively asking, “Why does John Cornyn hate truckers?” While the ATA and OOIDA have long supported the fuel tax as the primary funding mechanism for the Highway Trust Fund, they are opposed to a truck-only tax. Whether or not the truck-only tax passes both chambers of Congress remains to be seen. Certainly, there is a lot going on in Washington D.C. We will keep you up-to-date on the latest that affects truckers and trucking companies.