The obligations of the Federal Highway Corporation issued for interstate system improvements should be secured by a contract between the Corporation and the Treasury Department under the terms of which, it should be provided that the Corporation will receive certain specified amounts annually as authorized by the Congress, always sufficient to meet its obligations. It is estimated that these amounts plus those proposed herein for continued allocations to the other Federal-aid highway programs, will be approximately equivalent to that portion of the receipts from Federal taxes on gasoline and lubricating oils.
These and other moneys received by the Corporation would be pledged in the first instance for payment of the interest and principal on any obligations issued by the Corporation. All balances remaining after the payment of debt service would be used solely, apart from setting up such operating reserve as may seem desirable, for improving the interstate highway system, the approved urban feeders and other purposes described above.
The Corporation should have a mandatory call on the United States Treasury for loans up to some agreed total, possibly $5 billion outstanding at any given time, in order to assure investors of ability to meet obligations when due through borrowing temporarily from the Treasury, if ever necessary.
In order to broaden the market for the bonds of the Corporation, the enabling act should permit commercial banks to underwrite and deal in its securities in the same manner as those of the farm credit agencies and the International Bank for Reconstruction and Development. This would provide the widest possible trading as well as investment interest.
ANNUAL COSTS OF THE PROGRAM
A table on the following page illustrates a possible schedule of annual debt service requirements. This indicates that the cost of the recommended program is offset by the anticipated growth in a single revenue source without an increase in present rates (January 1955) and without the need to reduce the continuing Federal-aid program for other roads. It is not recommended that the tax received from any source be earmarked or linked to the amount of construction program. However, the table does show that the proposed additional program could be paid for with the anticipated increase in revenue from the established gasoline tax. Thus, the program creates no demand for further taxation for its accomplishment.
The general outline of this program has been discussed with Treasury Department representatives, the Council of Economic Advisers, Department of Commerce, and Department of Defense as well as with State and municipal representatives who have indicated in a general way their acceptance of the program. Banking and investment banking experts have approved the proposed financing as feasible.
In estimating the value of the project the Committee has made no attempt to evaluate possible revenue from rentals to concessionaires serving the traveling public nor has it attempted to estimate the additional tax revenue which will result from the creation of new values in real property resulting from the improvement.
