The National Journal’s "Congress Daily" reported Wednesday that Senate staffers had become very pessimistic about the chances this year for a multi-year reauthorization of the federal transportation program.

The news service said that Republicans were at loggerheads over how to pay for an larger transportation program. House Transportation and Infrastructure leaders on both sides of the aisle favor an increase in the U.S. gas tax. House leadership and the White House are against a tax hike. Various senators have proposed a new category of federal bonds to underwrite parts of the program.

The "Congress Daily" report suggests there has been little progress to reconciling these positions and approaches. It cited a "Senate source" who said it is "probably pretty definite that we're not going to get anything done this month," and that there would not be enough time to approve a massive spending measure after Congress’ August recess.

Other sources said that, as a result, "TEA-3" could be put off until 2005, since the White House and Republican congressional leaders are unlikely to address the need for spending increases during a national election year. In the absence of new legislation, Congress would have to approve bills continuing the 1998 TEA-21 transportation funding program. TEA-21 expires in September.

Interestingly, a NY Times review of leading economists’ thinking about economic stimulus policy suggests that a transportation spending surge may be just what the U.S. economy ordered – but now, not in two years. Thursday’s "Economic Scene" column recounted work by Harvard’s James Medoff on the job-creating benefits of government spending. Medoff finds that the best-paying jobs are created by infrastructure spending, followed by spending on education, health care and the military. The weakest job-creating spending is on the consumer economy. Today’s federal income tax cuts can be viewed as government spending on consumers. Not only are consumer-related jobs low-paying, but much of such "spending" today rewards importers, so the rate of domestic job creation is also reduced. 

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