Will the Bipartisan Infrastructure Bill Breach the Debt Ceiling?

Will the Bipartisan Infrastructure Bill Breach the Debt Ceiling?

August 20, 2021  | Jeff Davis

What does the debt ceiling have to do with bailing out the Highway Trust Fund? Quite a lot, actually.

  • Section 80103 of the Senate-passed bipartisan infrastructure bill “hereby” appropriates $118 billion from the general fund of the Treasury to the Highway Trust Fund ($90 billion to the Highway Account and $28 billion to the Mass Transit Account).
  • “Hereby” means immediately, on the date of the enactment of the bill.
  • 26 U.S.C. §9602 makes it “the duty of the Secretary of the Treasury to invest any such portion of any Trust Fund established by subchapter A as is not, in his judgment, required to meet current withdrawals. Such investments may be made only in interest-bearing obligations of the United States.”
  • Those “interest-bearing obligations of the United States” are subject to the overall ceiling on the public debt.

Since the debt ceiling was reset on August 1, 2021, that statutory limit has been $28,401.463 billion. Table III-C of the Daily Treasury Statement shows how Treasury has been trying to maintain a total debt level $25 million below the ceiling every day since, using minor day-to-day variations in trust fund intragovermental debt to offset small changes in the publicly held debt subject to limit.

If the bipartisan infrastructure bill were signed into law today, the Secretary of the Treasury would be caught between two contradictory laws: 31 U.S.C. §3101, which states that “The face amount of obligations issued” shall not exceed the debt ceiling, and the aforementioned 26 U.S.C. §9602, which gives the Secretary the duty to invest the new $118 billion in Highway Trust Fund deposits into interest-bearing Treasury obligations.

If the Secretary obeys the Trust Fund law, the new deposit causes a $93 billion breach in the debt ceiling (the $118 billion transfer minus yesterday evening’s $25 million headroom).

A more likely option would be for the Secretary to delay the investment and just keep the $118 billion transfer as cash, not bearing any interest, until the debt ceiling is lifted.

As of July 31, the Highway Trust Fund had a $14.7 billion balance invested in Treasury securities, in addition to any cash being held at DOT itself in anticipation of immediate outlays. $9.2 billion was held by the Highway Account and $5.5 billion was held by the Mass Transit Account, so both accounts should be solvent for the next few months even if the large transfer from the infrastructure bill is delayed a few weeks.

Share

Related Articles

White House Endorses 3-Month Gasoline Tax Holiday

White House Endorses 3-Month Gasoline Tax Holiday

President Biden today endorsed a three-month suspension of the 18.4 cent-per-gallon federal excise tax on gasoline. The President made...

Biden Calls on Congress to Enact 3-month Gas Tax Holiday

Biden Calls on Congress to Enact 3-month Gas Tax Holiday

“All this does is make the trust fund even more dependent on the general fund [for maintaining roads and bridges], as opposed to moving...

Gas Prices, Adjusted for Inflation, Now Highest Since 2008

Gas Prices, Adjusted for Inflation, Now Highest Since 2008

The U.S. Energy Information Administration reported this week that the average retail price of a gallon of gasoline rose to $4.55 on...

CBO Shares Predictably Bad HTF Outlook, but Evidence of COVID Aid Replacing Transit Spending

CBO Shares Predictably Bad HTF Outlook, but Evidence of COVID Aid Replacing Transit Spending

The nonpartisan Congressional Budget Office's new baseline projections contain mixed news for the federal Highway Trust Fund. Highway...

USDOT Gets FY22 Highway and Transit Formula Funding Increases Out the Door

USDOT Gets FY22 Highway and Transit Formula Funding Increases Out the Door

Twin announcements from the U.S. Department of Transportation in the last week have given state and local governments permission to spend...

Budget Gives Update on Post-IIJA Highway Trust Fund Shortfall

Budget Gives Update on Post-IIJA Highway Trust Fund Shortfall

After the Highway Trust Fund was reauthorized in the Infrastructure Investment and Jobs Act (IIJA) with a $118 billion general fund...

Administration Predicts HTF Will Need Additional Bailout Before End of IIJA

Administration Predicts HTF Will Need Additional Bailout Before End of IIJA

This afternoon, the Treasury Department released the quarterly Treasury Bulletin for March 2022, which contains the first Treasury-OMB...

Case Study: How Inflation Can Nullify Transportation Funding Increases

Case Study: How Inflation Can Nullify Transportation Funding Increases

If you follow economic news, the last few weeks have seen unsettling signs of inflation. On February 10, it was announced that the Consumer...

Vulnerable Senate D's Propose $20B Gas Tax Holiday

Vulnerable Senate D's Propose $20B Gas Tax Holiday

With high gas prices much on the mind of voters, a group of Democratic Senators led by Mark Kelly (D-AZ) and Maggie Hassan (D-NH) this week...

"The Bucks Stop Here: The Absurdity of the Highway Trust Fund" Centennial Recap

The year was 1955. The Salk vaccine hit the shelves. The first McDonalds opened. And in Washington, D.C., a highway funding proposal was...

Treasury Deposits $118 Billion Bailout in Highway Trust Fund

Treasury Deposits $118 Billion Bailout in Highway Trust Fund

The Treasury Department's official report on Highway Trust Fund finances for December 2021 is now out, and it shows that the $118 billion...

Debt Limit Likely to Be Increased Next Week, Allowing HTF Bailout to Be Processed

Debt Limit Likely to Be Increased Next Week, Allowing HTF Bailout to Be Processed

The latest debt ceiling crisis will be solved by the middle of next week, without having to delay the latest bailout transfer of the...

Be Part of the Conversation
Sign up to receive news, events, publications, and course notifications.
No thanks