Transportation traditionally has been funded by the federal gas excise
tax, on the sound reasoning that people who drive on highways should
help build and maintain them. Yet this tax, stuck at 18.4 cents per
gallon since 1993, no longer raises sufficient revenue. And for
political reasons the House leadership ruled out an increase — blocking
Democrats from even bringing the issue to a vote on the new, more open
House floor.Instead, the six-year bill cobbles together financing from expedients:
one-time strategic petroleum sales; ostensibly improved tax compliance;
and, most dubiously, a raid on the Federal Reserve’s capital. The Fed
returns the vast majority of earnings on its portfolio (swollen by
recession-fighting expansive monetary policy) to the treasury. But it
retains some each year, matched by payments from banks, as a buffer
against losses. The practice strengthens the Federal Reserve’s balance
sheet and thus increases public confidence in its ability to weather a
crisis, albeit marginally. It is part of what makes the Fed a credible,
independent central bank.
Yet the House bill would undermine this long-standing
practice, a version of which other major central banks around the world
also follow, by taking $29.3 billion that the Fed has socked away — and
forbidding the bank from replenishing it.
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