Buried in Highway Bill, Congress Quick Fixes Student Loans

What does the federal direct student loan program have to do with flood insurance and transportation?

All are part of the 584-page congressional bill known as H.R. 4348. The bill was named the Moving Ahead for Progress in the 21st Century Act, or more simply the MAP-21 Act. In this series of posts, we’ll discuss the impact of this new legislation on Arizonans.

Moving Ahead for Progress in the Twenty-First Century

Once again, our congressional representatives passed law under pressure at the eleventh hour. Another piece of legislation crammed with unrelated provisions as election year pressures intensify? Well, not entirely – about 90% of the bill is focused on transportation.

H.R. 4348 was sponsored by Rep. John Mica (R-FL 7) and co-sponsored by Rep. David Camp (R-MI 4) and Rep. Lee Terry (R-NE 2). The bill passed the Republican controlled House on April 24 – the vote was 373 to 52. The bill then passed the Democrat controlled Senate with changes on Friday, June 29 – the vote was 74 to 19.

The changes? Among other things, the Senate balked at the Keystone XL Pipeline provision in the original bill, which was cut. (The Keystone provision threatened presidential veto.) President Obama signed MAP-21 into law on Friday, July 6.

Highway To Employment

Congress just passed what is arguably the biggest jobs bill to come along this year. Coming in right under the wire, the legislation extended existing transportation and student loan programs that would have expired the following day on June 30.

Where will the money come from to fund MAP-21? The legislation comes with a $127 billion taxpayer price tag. The transportation allocation is $105 billion for two more years of highway, road and bridge construction, rail and bus transit improvements, and transportation safety programs.

Fuel Tax Continues. Most of the cost will be carried by extending federal taxes on gas and diesel fuel for another two years. That would be 18.4 cents per gallon of gas; 24.4 cents per gallon for diesel fuel. However, the fuel tax is insufficient to cover the cost of extending these transportation programs.

Transportation Bailout. An additional $19 billion will come from transfers from the U.S. Treasury. Ryan Alexander, president of Taxpayers for Common Sense (the non-profit organization tracks federal spending of taxpayer dollars) referred to MAP-21 as a “massive Treasury bailout of the transportation program.”

Pension Programs Change. Another $20 billion will be raised by reducing tax deductions on companies’ pension contributions. Businesses will also pay increased fees for federal insurance on their pension plans. This will have short- and long-term consequences in how employers go about funding employee pension programs.

The official description of MAP-21 is a bill to “authorize funds for Federal-aid highways, highway safety programs, and transit programs, and for other purposes.” In our next post on this legislation, we’ll pick up with those “other purposes” – namely changes to the direct student loan program.