Speaker Looks to Create Bond Between Drilling, Highway Fund

Published Oct 19, 2011. By Alan K. Ota.

Speaker John A. Boehner has begun working with a Republican ally on an unorthodox proposal to use money raised through the sale of bonds linked to expanded offshore oil and gas drilling to replenish the Highway Trust Fund.

Ohio GOP Rep. Steve Stivers has talked with the Speaker about his plan to refill the highway fund with proceeds from the sale of bonds that would be repaid with lease payments on expanded offshore drilling on the outer continental shelf.

Stivers said Boehner has taken a personal interest in developing the proposal, estimated to raise $10 billion to $15 billion annually for five years. The Speaker first telegraphed his interest in pairing transportation money and offshore energy production in a Sept. 15 speech to the Economic Club of Washington. The talks with Stivers provide the first details of what Boehner might be considering as a way to renew the depleted Highway Trust Fund until Congress reauthorizes surface transportation programs.

But the use of borrowed money might run afoul of conservatives who waged a fierce battle this summer over raising the government’s borrowing authority. Robert Bixby, executive director of the Concord Coalition, a conservative fiscal group, said leaders would need to show that the bonds have a “credible payback plan” and explain how they planned to avert an increase in the deficit or the debt.

“It might sound inconsistent to the members who fought a debt limit increase. They would have to explain why this new debt should not count as new debt,” Bixby said.

The Speaker’s interest “in the concept of paying for expanded infrastructure spending with expanded American energy production” was clear from his Washington speech, said Michael Steel, Boehner’s spokesman. Steel said the Speaker is “active in exploring” ideas along those lines, but declined to say whether he has a favored proposal.

Unlike other GOP proposals to funnel future oil lease payments into the highway fund, Stivers’ proposal would provide a relatively quick infusion of money once the bonds are issued.

“The Speaker is going to be all over this,” said a senior Republican lawmaker familiar with the Speaker’s interest in the proposal.

Currently, about half of the revenue from offshore drilling leases goes to the Treasury, and much of the rest is shared by states and the federal land and water conservation fund. Stivers said his proposal effectively would direct those proceeds into the Highway Trust Fund, currently financed by gasoline taxes.

The proposal is likely to face stiff opposition from the Obama administration and Democrats, who have strongly opposed Republican calls to expand offshore drilling, citing environmental concerns.

“I’m sure they got advice from one of those geniuses on Wall Street who got us into the economic ditch,” said Rep. Henry A. Waxman, D-Calif.

Rep. Edward J. Markey, D-Mass., said the proposal would effectively turn lease payments into “earmarked money” for transportation projects and divert it from Medicare, the military and other activities.

Still, some Democrats are open to the idea. “There’s drilling in the gulf already that could be expanded. That’s a creative idea,” said Rep. Robert E. Andrews of New Jersey.