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Let the Fed Pay For Our Roads and Bridges/Heaven Forbid Users Should Pay Through Tolls and Gasoline Taxes

Thu, Nov 5, 5:11 PM ET, by Bob McTeer

Okay, the House passed a highway bill (a good thing) that included resurrecting the Import-Export Bank (I'm not sure, but probably a good thing). The House bill provided partial financing by raiding the Fed's capital surplus account (a bad thing) rather than following the Senate's lead in reducing the Fed's dividend to member banks to grab the money that way (a worse thing).

As for Fed and member banks financing transportation, that makes no sense, except that the money is there. Users of the roads and bridges should pay for them through tolls or a gasoline tax dedicated to that purpose.
Furthermore, transportation should be a matter for state and local governments, which would incidentally give people greater choice in where they live and how much tax they pay.

Federal Reserve Banks earn income by providing priced services to bank customers, and more so by their pro rata share of income earned on government securities. After covering operating expenses, paying their contractual dividends to bank owners of Fed stock and adjusting their surplus account to predetermined norms, they turn their excess earnings over to the Treasury's general fund. All taxpayers get the benefit and that benefit has grown with the size of the Fed's portfolio during these last few years.
The first raid on the Fed came when Congress in Dodd-Frank decided to give the Consumer Financial Protection Bureau access to Fed earnings rather than go through the normal processes of Congressional appropriations. That was the proverbial foot under the tent. Here is round two. The House move was a bad move, but better than the Senate alternative.


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This Article's Word Cloud:   Congress   Financial   House   Import   Senate   account   adjusting   adsbygoogle   bank   banks   benefit   better   bill   decided   dividend   earn   earned   earnings   excess   financing   foot   give   good   income   makes   member   money   move   normal   norms   operating   over   portfolio   proverbial   providing   raid   rather   round   should   surplus   than   that   their   them   these   they   thing   through   transportation   which

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