The decision by House Democratic leaders to reauthorize an insolvent Highway Trust Fund and give it a massive spending increase without increasing its dedicated revenues raises an interesting question: what happens after the bill ends?

Not that H.R. 2 is in any danger of being signed into law “as is,” but in order to analyze the impacts of legislation, we have to assume that it will be enacted into law on time. And were H.R. 2 to be enacted into law, it would essentially double the size of the Trust Fund’s annual insolvency problem. The unified cash deficits of the Trust Fund (both account together, outlays minus revenues and interest) would go from a $20 billion per year problem to a $40 billion per year problem.

(Ed. Note: Something about the first rule of being stuck in a hole is to stop digging, etc.)

The Congressional Budget Office’s March 2020 baseline projections for Trust Fund tax receipts under current law (extended indefinitely), plus enacted fiscal year 2020 spending levels given annual inflation increases indefinitely, showed the Trust Fund running a $15 billion deficit in fiscal 2021, and that would rise to $21 billion in 2025, $22 billion in 2026, and $26 billion in 2030.

Using ETW’s unofficial estimates of the outlays from the spending increases under H.R. 2, we show the bill increasing the Trust Fund’s operating deficit by $4 billion in 2021 alone, with the deficit rising to $38 billion in 2025, $40 billion in 2026, and $46 billion in 2030.

The problem with that CBO baseline is that it did not anticipate coronavirus, which is currently knocking Trust Fund tax receipts downwards sharply. The Department of Transportation briefed Congress earlier this month on an adjusted baseline with lower end-of-2020 balances, so our projections below use those post-COVID starting points for Trust Fund balances in each account. When we did that, H.R. 2’s $145.3 billion in transfers from the General Fund to the Trust Fund ($106.7 billion for the Highway Account and $38.6 billion to the Mass Transit Account) fit right in. Using DOT’s post-COVID start date balances with the rest of our CBO model showed the Highway Account’s end-of-bill balance on September 30, 2025 being $4.6 billion and the Mass Transit Account’s balance on the same date being $1.2 billion. In both cases, assuming that the bill’s drafters were aiming for the ballpark of the “prudent minimum” balances of $4 billion and $1 billion, respectively, this is exactly what we would expect.

So the amount of the transfers contained in the bill do look like they would be enough to support the spending in the bill through the end of the bill (barely). But what happens after that? Apres INVEST, le deluge. 

If you wanted to follow the INVEST in America act with another five-year Trust Fund reauthorization, and not allow any spending increases except small annual inflation adjustments over the fiscal 2025 levels provided in INVEST, the Trust Fund would need an additional $213 billion in additional tax revenues (or more general fund transfers) to sustain that spending from the 2026-2030 period. ($207.9 billion in projected end-of-2030 revenue hole, plus highway and transit cash cushions of $4 billion and $1 billion, respectively.)

Summary: the FAST Act needed a $70 billion transfer from general revenues in order to sustain its Trust Fund spending for five years. The INVEST Act would make a $145 billion transfer from general revenues in order to sustain its Trust Fund spending for five more years. And a five-year bill to follow up INVEST would require a transfer from general revenues of at least $213 billion, if Congress remains unwilling to increase excise taxes.