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Tuesday, November 30, 2010

Changes in Airport Passenger Screening Technologies and Procedures: Frequently Asked Questions


Bart Elias
Specialist in Aviation Policy

In the autumn of 2010, the Transportation Security Administration (TSA) began deploying new technologies and procedures for screening passengers at airport checkpoints. Reports of negative public reaction to some of these changes have prompted intense congressional interest in TSA passenger screening. This report addresses some of these concerns.


Date of Report: November 23, 2010
Number of Pages: 12
Order Number: R41502
Price: $29.95

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Friday, November 26, 2010

Transportation, Housing and Urban Development, and Related Agencies(THUD): FY2011 Appropriations


David Randall Peterman
Analyst in Transportation Policy

Maggie McCarty
Specialist in Housing Policy


President Obama requested a total of $123.7 billion for the agencies included in H.R. 5850/S. 3644, the Transportation, Housing and Urban Development, and Related Agencies Appropriations (THUD) bill for FY2011. This request represented an increase of approximately $1.6 billion (1.3%) over the $122.1 billion provided in the FY2010 THUD appropriations act. The House-passed bill would provide $126.4 billion (3.5% over the FY2010 enacted level); the Senate Committee on Appropriations recommended $122.8 billion (less than 1% over FY2010).

The single largest new item in the budget request was $4 billion for a national infrastructure investment fund to provide federal funding for, and promote investment from other sources in, infrastructure projects of national or regional significance. Neither the House nor the Senate funded this request.

The President’s FY2011 budget requested a total of $77.7 billion in funding for the Department of Transportation (DOT). That was $2.0 billion (2.6%) above the $75.7 billion provided for FY2010. The House-passed bill would provide $79.4 billion; the Senate Committee on Appropriations recommended $75.8 billion. Since both bills rejected the request for $4 billion under DOT for a new infrastructure fund, this freed up $4 billion to be applied to existing programs within the overall requested level.

The President’s FY2011 budget requested about $45.6 billion in net new budget authority for the Department of Housing and Urban Development (HUD), a decrease of about 1% from the FY2010 enacted level. However, the requested decrease in net new budget authority would actually represent a 3% increase in new funding for HUD programs, as the overall increase in appropriations would be more than offset by a substantial increase in offsetting collections and receipts, which are expected to come from proposed changes to the Federal Housing Administration (FHA) mortgage insurance programs. The FY2011 HUD funding bill approved by the House would provide about $1 billion more for HUD than requested by the President, a 1% increase in net new budget authority over the FY2010 enacted level and a 5% increase in appropriations for HUD programs in aggregate. Like the House bill, the FY2011 HUD funding bill approved by the Senate Committee on Appropriations would provide about $1 billion more for HUD than requested by the President. Like the House bill, the Senate Appropriations Committee bill would provide a 1% increase in net new budget authority over the FY2010 enacted level and a 5% increase in appropriations for HUD programs in aggregate.



Date of Report: November 17, 2010
Number of Pages: 26
Order Number: R41492
Price: $29.95

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Friday, November 19, 2010

Surface Transportation Funding and Finance

John W. Fischer
Specialist in Transportation Policy

Robert S. Kirk
Specialist in Transportation Policy

William J. Mallett
Specialist in Transportation Policy


Federal surface transportation programs are currently funded primarily through federal fuel taxes on gasoline, diesel, and other fuels that are deposited in the highway trust fund. Although there has been some modification to the tax system, the basic fuel taxes have not been increased at the federal level since 1993. Prior to the recession that began in 2007, annual increases in driving, with a concomitant increase in fuel use, were sufficient to keep revenues rising steadily on an annual basis. This is no longer the case. Further, future changes in the nation’s vehicle fleet as a result of federal fuel economy standards, including increased use of electric hybrid and fully electric vehicles, are expected to suppress future fuel use even if annual increases in vehicle mileage resume.

Congress has yet to address the surface transportation program’s revenue issues, except by increasing transport spending from the U.S. Treasury general fund. Many members of Congress have expressed an aversion to raising fuel taxes, and alternative methods of financing surface transportation have not received serious legislative consideration.

These financial issues have delayed reauthorization of federal surface transportation programs. In the past Congress has reached agreement on reauthorization only when it could count on sufficient revenues to meet many of the competing demands for funding. With efforts to reauthorize the existing, but already expired, surface transportation program at a standstill, the programs authorized by the Safe, Accountable, Flexible, Efficient Transportation Equity Act: A Legacy for Users (SAFETEA-LU or SAFETEA) (P.L. 109-59) continue to operate as a result of extension legislation and cash infusions to the trust fund from the U.S. Treasury general fund.

This report focuses on possible revenue sources for surface transportation infrastructure. It begins with a brief discussion of the problems associated with the trust fund financing system and then explores possible immediate and longer-term solutions to the financing problem. Some of the major issues discussed in this report are:
  • Raising motor fuel taxes offers a simple short-term solution to the revenue issue, but is not a long-term solution due to likely future declines in fuel consumption.
  • Proposals such as replacing current motor fuel taxes with a fuel sales tax or a fee based on vehicle miles traveled (VMT) pose their own problems, and in any event will require overcoming numerous administrative and political barriers.
  • The trust fund system itself may be a barrier to increased or more effective federal transportation spending, and its continuation in its current form could be reconsidered.
  • The general aversion to taxation in the current economic climate has drawn attention to private and nontraditional funding sources, such as tolls, leveraging private capital through pubic-private partnerships (PPPs), existing federal loan guarantees, and creation of a national infrastructure bank. These nontraditional funding mechanisms could potentially make an important but somewhat limited contribution to overall national infrastructure needs.


Date of Report: November 10, 2010
Number of Pages: 31
Order Number: R41490
Price: $29.95

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Monday, November 1, 2010

General Motors’ Initial Public Offering: Review of Issues and Implications for TARP


Bill Canis
Specialist in Industrial Organization and Business

Baird Webel
Specialist in Financial Economics

Gary Shorter
Specialist in Financial Economics


In the fourth quarter of 2010, General Motors Company (GM) is planning to issue an initial public offering (IPO) of stock to investors, seeking to become a publicly traded company and shed its image as “Government Motors.”

General Motors Corporation (Old GM) was a publicly traded company from 1916 until its bankruptcy in 2009. As part of restructuring, GM and Old GM combined received over $50 billion in federal assistance through the federal Troubled Asset Relief Program (TARP). In exchange for this financial support, most of Old GM’s assets were sold to General Motors Company, a new corporation owned by the U.S. Treasury (60.8%), the United Autoworkers (UAW) retiree health care trust fund (17.5%), the governments of Canada and Ontario (11.7%), and a group of bondholders (10%).

GM is not the only company that received TARP funds as a result of the severe September 2008 financial panic. More than 700 institutions received support, with the federal government taking ownership stakes in five large companies: GM, Chrysler, GMAC (now called Ally Financial), AIG, and Citigroup. The federal government stake in GM is unusual, however, in that GM is both not publicly traded and is majority-owned by the federal government. The Obama Administration and GM have both indicated interest in reducing or eliminating the federal stake in GM. In October 2009, GM and its owners agreed that the federal government would launch an IPO in July 2010, unless GM had already begun such a process.

The success of the GM IPO largely hinges on two major factors: GM’s internal restructuring changes and the performance and outlook of the U.S. economy, including U.S. retail auto sales. Since General Motors Company was created in 2009 with many of the assets of its predecessor company (General Motors Corporation), it has closed plants, cut its hourly and salaried workforce, shed three brands, reduced debt, introduced popular new vehicles, and implemented changes in retiree legacy costs that had been a major financial drain. In addition, the U.S. Treasury appointed new management at the company and new members to its board of directors. These management changes have arguably worked to reorient the GM corporate culture to be more responsive to the auto markets. Allthough GM acknowledged in a recent filing with the Securities and Exchange Commission (SEC) that more needs to be done, these benchmarks suggest to some that there will be a favorable response from potential shareholders.

For the first half of 2010, U.S. gross domestic product (GDP) was expanding, unemployment was very slowly dropping, and auto sales were rising from their 30-year low in 2009. In August 2010, however, the macroeconomic outlook became more uncertain. A number of economic indicators deteriorated: unemployment claims unexpectedly rose in mid-August, GDP growth estimates were revised down, and U.S. auto sales forecasts have been pared down. One relevant indicator of the overall health of the U.S. economy—sales of existing homes—hit a 15-year low in July 2010.

GM has filed the necessary paperwork with the SEC to issue an IPO this fall. This report discusses the IPO process, the factors that will affect its success, and the impact on TARP. A number of important details—such as size of the IPO and stock price and how much the U.S. Treasury might recover from this initial sale—have not yet been determined. This report will be updated when these key elements are determined or upon other major developments.



Date of Report: October 19, 2010
Number of Pages: 30
Order Number: R41401
Price: $29.95

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