Congress approves student loan, highway bill
WASHINGTON (MarketWatch) -- Senate lawmakers approved a $120 billion highway bill Friday that would renew federal funding for transportation projects for the next two and a quarter years.
The House approved the measure earlier Friday, meaning it is now ready for President Barack Obama to sign it into law.
The bill easily cleared both chambers. In the Senate, the vote was 74-19 with a majority of both parties' lawmakers approving the legislation.
The House vote was 373 to 52 with every Democratic lawmaker who voted supporting the measure. Not as many Republicans as some had predicted voted against the legislation, though many of those who did cited concerns over the cost of the package.
The bill includes funds to continue the current 3.4% interest rate on government-backed student loans, ensuring more than seven million students don't face a scheduled doubling in interest rates from July 1. The new legislation however does exclusive graduate students from taking advantage of the program.
A five-year extension of the National Flood Insurance Program was also added to the bill as lawmakers try to clear the decks before they leave for the Independence Day recess.
The bulk of the legislation, though, renewed the formula through which the federal government contributes its share of spending on transportation infrastructure projects through fiscal 2014. Typically, state and local governments determine which transportation projects receive funding and the federal government distributes public funds to help cover the costs.
Traditionally, transportation bills have been renewed on a multiyear basis to give states certainty about funding levels to enable them to embark on major projects. But for the last three years, funding has operated on a short-term basis as lawmakers have been unable to agree on a longer-term deal.
The major source of disagreement has been over the shortfall that exists between revenue raised from the federal tax on gasoline sales--the primary source of federal transportation funding--and the projected cost of renewing the funding formula. Lawmakers of both parties have shown little appetite to increase the tax, which has been set at 18.4 cents a gallon for nearly 20 years.
The bill includes language seeking to streamline the approval process for transportation projects, a key priority of Republican lawmakers who have argued that the current approval process unnecessarily delays projects, costing jobs and hampering the ability of states to tackle local infrastructure needs. Democrats had countered that abbreviating the approval process could lead to shortcuts of vital environmental reviews.
Rep. John Mica (R., Fla.), the chairman of the House Transportation Committee and a top GOP negotiator on the bill, said that as a result of the changes "shovel ready will no longer be a joke."
Rep. Steny Hoyer (D., Md.), the minority whip, said that while he supported the package, he had concerns that "streamlining the environmental review of highway projects may truncate or eliminate the consideration of less-costly alternatives that can minimize environmental impacts."
Michael F. McNally, president and chief executive of Skanska USA, a unit of Swedish engineering and construction giant
"It takes so long for any of these major projects to get approved," Mr. McNally said. "It's one of the major reasons why our infrastructure is crumbling. Right now you have a transportation bill that has a two-year horizon and it takes far longer than that to plan a major transportation infrastructure project."
The two-year bill had a shortfall of roughly $10 billion, sparking considerable acrimony between the parties over how to ensure it wasn't made up by adding to the federal budget deficit. Added to this, the cost of keeping student loan rates the same for another year was a further $6 billion.
To cover the shortfall, lawmakers agreed to increase the levy charged to private sector workplace pension plans by the Pension Benefit Guaranty Corp. Firms will also be allowed to lower their contributions to defined benefit pension plans, which increases the taxes they pay to the federal government.
The extension of the flood insurance plan has no cost to the taxpayer.
The legislation also includes a provision stating that 80% of any fines levied as result of the 2010 BP Gulf of Mexico oil spill is distributed to Gulf states to use toward ongoing rebuilding costs from the disaster.